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Monday, August 03, 2020

Supply Chains: The Localized Manufacturing Advantage

Delaying your investment in supply chain digital transformation is unwise. Why does it matter? Innovative supply chain technologies are proven to deliver a measurable outcome for people, process performance and industry leadership.

Gartner studied current strategic supply chain technology trends that have a high potential for enabling a transformational impact. Some are now reaching critical tipping points in capability and maturity.

"The vast majority of organizations have a cautious approach to adopting supply chain applications and technologies," said Christian Titze, vice president analyst at Gartner.

Local Supply Chain Market Development

According to Gartner study findings, only 21 percent of survey respondents are willing to consider or adopt early-stage technologies. However, even cautious supply chain leaders must keep an open mind and embrace long-term perpetual change. This is the path to rapid progress and growth.

Here are the key trends from their latest study findings:

Hyper-automation: it's a framework to mix and match a vast array of technologies in the best possible way -- such as historic legacy platforms with recently deployed tools and planned investments.

The term means different things for different organizations, so supply chain leaders must first find their individual definition. If deployed correctly, hyper-automation can encourage broader collaboration across domains and act as an integrator for disparate and siloed functions.

Digital Supply Chain Twin: it's a digital representation of the physical supply chain. It is derived from all relevant data across the supply chain and its operating environment. That makes the DSCT the basis for all local and end-to-end decision making.

"DSCTs are part of the digital theme that describes an ever-increasing merger of the digital and physical world," Mr. Titze added. "Linking both worlds enhances situational awareness and supports decision-making."

Continuous Intelligence: it's one of the biggest opportunities for supply chain leaders to accelerate their organizations’ digital transformation. It leverages a computer’s ability to process data at a much faster pace than people can.

Supply chain leaders -- or other systems -- can look at the processed data in near real-time, understand what is happening and take action immediately.

"There are already several use cases for CI in decision support and decision automation. For example, retailers utilize CI to automatically react to customer behaviors when they shop online. This enables better customer service, more customer satisfaction and tailored offers that lead to higher sales revenue," Mr. Titze explained.

Supply Chain Governance and Security: it's an increasingly important macro trend, as global risk events are on the rise and security breaches impact companies on both the digital and physical levels.

"Gartner anticipates a wave of new solutions to emerge for supply chain security and governance, especially in the fields of privacy as well as cyber and data security," said Mr. Titze. "Think advanced track-and-trace solutions, smart packaging and next-gen RFID and NFC capabilities."

Edge Computing and Analytics: it's the rise of edge computing -- where data is processed and analyzed close to its collection point -- coincides with the proliferation of Internet of Things (IoT) devices. It’s the technology you need when there is a demand for low-latency processing and real-time, automated decision making.

Edge computing is right now making its way into the manufacturing industry. For example, some organizations have adopted driverless forklifts for their warehouses. Heavy equipment sellers can use edge computing to analyze when a part needs maintenance or replacement.

Artificial Intelligence: deploying AI in the supply chain consists of a toolbox of technology options that help companies understand complex content, engage in a natural dialogue with people, enhance human performance and take over routine tasks.

"AI technology is present in a lot of already existing solutions, but its capabilities evolve on a constant basis," Mr. Titze added. "Currently, the technology primarily helps supply chain leaders solve long-standing challenges around data silos and governance. Its capabilities allow for more visibility and integration across networks of stakeholders that were previously remote or disparate."

5G Wireless Networks: when compared to its predecessors, 5G is a massive step forward with regards to data speed and processing capabilities. The ubiquitous nature of 5G boosts its potential for supply chains. For example, running a 5G network in a factory can minimize latency and enhance real-time visibility and IoT capabilities.

Immersive Experience: technology that improves or enhances the user experience -- such as virtual, augmented and mixed reality -- has the potential to radically influence the trajectory of supply chain management. Those new interaction models amplify human capabilities.

Outlook for Supply Chain Solutions Innovation

"Companies already see the benefits of immersive experiences in use cases like onboarding new factory workers through immersive on-the-job training in a safe, realistic virtual environment," Mr. Titze concluded.

I believe that as more manufacturing returns to a local operations business model, once again, the requirement for supply chain innovation intensifies. It's a key point of competitive differentiation.

Chinese manufacturers will likely continue to emphasize their low-cost advantage, but many of these government-controlled organizations are unable to respond to meaningful and substantive digital transformation. Therefore, it's a huge upside opportunity for changing the rules of the game. China can be disrupted.