4 supply chain predictions for 2018
Manufacturers, distributors and retailers continue to shift to digital as a way to improve visibility and improve efficiencies. Experts say 2018 will be another year of transition as digital transformation becomes more important than ever in supply chain planning, fulfillment and procurement.
From widespread adoption of the cloud and greater use of artificial intelligence to the potential applications of blockchain, here are 4 supply chain trends and predictions for 2018.
1. Movement to mass adoption of the cloud
Supply chains will continue to move from analog to digital in the coming year, according to a recent report from International Data Corporation. IDC said there will be a continued focus on ecosystems and experiences and on attaining greater intelligence in operational processes.
While supply chains have been migrating to the cloud for the past few years, it's now reaching mass-scale adoption. IDC predicts that by 2020, approximately 80% of supply chain interactions will happen across cloud-based commerce networks.
Companies will continue to adopt data-driven logistics, using algorithms, data-visualization strategies and smart analytics to shorten delivery times and increase efficiencies. The resulting boost in resiliency could reduce the impact of supply chain disruptions by up to one-third, according to IDC.
Kimberly Knickle, research vice president of IT Priorities and Strategies at IDC Manufacturing Insights, said manufacturers have prioritized cloud adoption initiatives in their supply chains because there is "so much information that needs to be shared with terminal constituents."
Retailers and distributors are also investing in cloud-based unified commerce platforms to drive a seamless experience for customers, said Jim Barnes, president and CEO of supply chain consulting firm Envista.
Multi-enterprise visibility will be key as stakeholders in all areas of the supply chain move to new platforms at a faster rate in the coming year.
"This has already been happening but I think you're going to see more of it in 2018. Decades-old transactional-based systems aren't cutting it anymore," Barnes said.
2. Beyond simple analytics to artificial intelligence
The coming year will also bring a shift beyond simple analytics to more widespread use of artificial intelligence and machine learning, Knickle said.
IoT devices are now being deployed through all areas of the supply chain to help manufacturers understand where their goods are in transit and how they can improve material procurement and product distribution.
"We're seeing sensor information pulled in through live feeds, taken through EDI downloads and translated into machine learning, so we can understand predictively what will happen," Knickle said.
Robert Handfield, executive director of the Supply Chain Resource Cooperative at North Carolina State University, said machine learning capabilities will "grow significantly in 2018."
AI will be used for automation and to augment decision making. It will help streamline processes, optimize to the level of near-perfect planning and improve virtually every aspect of transportation.
While machines will become smarter and gain the ability to process more information, humans will always remain in the loop, Handfield said.
"It's not going to be like a rise of the machines. Machines will provide information to humans so they can make better decisions based on more data more quickly," Handfield said.
3. Building on blockchain
Blockchain will also be a growing topic in 2018. Within the next three years, roughly one-third of manufacturers and retailers will be tracking goods through blockchain, according to IDC.
Blockchain has recently emerged as a valuable tool for creating immutable records in a distributed ledger that can allow all participants in a certain supply chain to understand the movement of goods.
This can offer better visibility into the state of goods and delivery which will give manufacturers, wholesalers and retailers a better understanding of the causes of slowdowns or damage.
While concern about a "bubble" in the value of Bitcoin has been dominating the news in recent months, the underlying blockchain technology has been validated by experts to have strong potential in many industries, including logistics.
"We've been hearing a lot of interest in terms of blockchain. They're in the education and learning phase but we'll definitely see a lot of opportunities for blockchain in the supply chain," Knickle said.
One area of great value will be in regulatory compliance. Manufacturers are already testing the blockchain technologies to demonstrate compliance with the Drug Supply Chain Security Act and the Food Safety Modernization Act.
Victoria Brown, senior research analyst with IDC Retail Insights, said manufacturers are discussing how they can identify markers that they want to standardize for traceability on particular items.
"It's in an early stage, but it's coming, and there will be more conversations about how it will change and impact the supply chain moving forward," Brown said.
4. Increasing reliance on robotics
Robots will be in use in half of fulfillment centers by 2019, according to IDC. This will result in productivity gains of up to 30%, help drive down the cost of operations and off set an increasing shortage of labor.
As the technology advances and costs fall, organizations are finding new applications for robots and using them in areas to reduce human movement.
Advances in perceptive abilities and grippers have given many of these machines "a greater grasp and human-like feel to them," Knickle said.
"They're able to do things on a more granular level, like pick things up and move them and handle them in ways in which they couldn't in the past," Knickle said.
Samuel Bouchard, CEO of Robotiq, said new collaborative robots are becoming easier to program and can be adapted to meet the needs of the supply chain.
Through sensors, end-effectors and programming, distribution centers and warehouses can deploy these flexible robots to handle a multitude of tasks.
"Lots of repetitive movements can be automated with collaborative robots. This will allow human operators to focus on value-added jobs, increasing quality and productivity in the process," Bouchard said.