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Supply Chain Technology Trends for 2022

Technology

Mar 9, 2022 - 5 minute read

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Rafał Imielski Content Marketing Specialist

He has two years’ experience in copywriting, translation and proofreading. His goal is to help people communicate in a concise and understandable way. Rafał is an archaeology graduate who’s fascinated by both prehistoric and modern technologies. 

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The retail landscape has changed drastically over the last few years. Online sales became more significant, omnichannel is now more important than ever and customer expectations continue to rise in many aspects. Supply chain professionals must respond to these new challenges, as well as recent unprecedented global disruptions. Many look to technology for solutions — Gartner’s survey shows that 61% of supply chain leaders see technology as a source of competitive advantage.

The challenges that need to be addressed include increasing labour constraints, the need to rapidly respond to change, better support for decision-making processes and making the supply chains more resilient.

According to the supply chain leaders surveyed by Gartner, 40% of the supply chain IT budget is spent on the basics — maintaining current services. This leaves the remaining 60% for innovation and transformation. It is crucial that organisations identify the optimal allocation of these resources for the biggest returns. In this article, we’ll cover the most frequently targeted areas and current technology trends in supply chain that can address them.

Digitalisation

The shift to digital is not new, but many organisations still have much work to do in digitising supply chain processes. As many as 71% of retailers surveyed by McKinsey pointed at the lack of digital tools as one of the main problems in supply chain management.

Digital transformation must not only continue, but in many cases, accelerate. Allowing technology to take care of manually repetitive and error-prone tasks, and letting employees focus on activities that deliver added value, is still an important goal for supply chain organisations. It’s one of the best ways to improve business efficiency and resiliency. Moreover, by turning your employees into competent technology users, you’re building a strong foundation for finding modern solutions to specific business problems in the future.

Warehouse Robotics

Interest in smart robots to support supply chain speed and efficiency has grown in recent years. As many as 96% supply chain professionals surveyed by Gartner have already invested in warehouse robotics, or are planning to do so in the next three years. At the same time, almost two-thirds of respondents expressed the need for automation and robotics engineers among their supply chain capabilities, so they can support the growth of robot fleets in the near future.

The most frequently cited reason for investment in robotics is labour constraints. Labour shortages create the risks of poor levels of availability, dissatisfied customers and lost sales. At the same time, rising labour costs challenge margins and profitability.

While the benefits of warehouse automation are straightforward, there are some important considerations, such as the cost and flexibility of the solution. It is essential to carry out thorough market research when investing in supply chain robots. Try out all the solutions relevant to your business and try to find a perfect fit in terms of dimensions, work volumes and tasks.

During implementation, it is advisable to build a Centre of Excellence devoted to robotics, to ensure proper education and knowledge sharing across your organisation. Over time, this centre can also contribute to innovation, problem solving and governance. It’s also important to choose flexible solutions. Robots that are only able to execute a single task and are attached to the warehouse floor are not well-suited in the current market.

Enhanced Decision-Making

Gartner’s supply chain survey also found that improved decision-making was the second most important area for future investment. Here, using advanced analytics and artificial intelligence to achieve that goal is one of the most impactful technology trends in supply chains.

While companies are actively searching for technologically advanced solutions, they are generally conservative in their investments. Most organisations look towards market-proven options, especially if they can be easily integrated with their existing systems. Large vendors have already begun embedding AI and advanced analytics in their products. Retail and supply chain companies that aren’t using these boxed solutions can turn towards bespoke development and the modernisation of their legacy systems.

Other types of initiatives aimed at improving decision-making are ‘digital twins’ and ‘supply chain control towers’. A digital twin is a detailed simulation model of a physical object or a system — in this case, a supply chain. It helps businesses make better decisions by providing a stronger understanding of supply chain dynamics to forecast how it may react to potential problems and irregular events.

Supply chain control towers are dashboards containing key business metrics, most important events taking place across the supply chain, and other relevant data. It aims to provide end-to-end visibility, allowing the professionals to track and understand all issues, and prioritise solving them in terms of impact.

Analysts, including Gartner, believe that many organisations fail at coordinating and aligning their efforts when creating digital twins and control towers. While digital twins are often aimed at strategic improvements and based on the holistic view of the supply chain, control towers help solve individual issues at hand in an efficient way. As such, these two initiatives can often stem from entirely different areas of the organisation. Only by ensuring they work together, you’ll be able to fully utilise their potential. The granular focus on process optimisation introduced by control towers can facilitate the strategic objectives set with the help of digital twins.

Agility

Increasing complexity and volatility of supply chains creates the growing need for agility. Here, organisations are looking to microservices, where traditional monolithic architectures are no longer sufficient in keeping up with the pace of change. The microservice approach is based on building applications out of separate, loosely connected services, each responsible for handling a specific process. This allows different teams to work on different areas of the solution independently and to optimise and implement new features. As a result, microservices provide much greater flexibility as well as easier upgrades and external integrations.

Businesses understand the need to stay adaptable in the current market, and they can’t allow the software they’re using be a blocker in that regard. As organisational goals and needs can change over time, so must the systems, and microservice architectures ultimately deliver composability, as one of the best ways to guarantee this capacity.

Many organisations are still on their legacy modernisation journeys, while some are at an early stage. It’s crucial not to overlook modularisation while replacing an old system. Other considerations include using application programming interfaces (APIs) to manage communication and integration with external systems and exploring modern technologies with strong integration tools, such as leading low-code platforms.

Supply Chain Trends

It’s unsurprising that the majority of supply chain leaders look towards technology in building their competitive advantage. The right use of technology can offer effective solutions to the main challenges currently faced by supply chain professionals.

Identifying the critical areas of your business and finding an effective way to support them, with either a product or a bespoke solution in the areas outlined here, can help your business thrive in this volatile market and build a resilient business for years to come.

References

  1. Predicts 2022: Supply Chain TechnologyGartner. 2021 
  2. Revamping Fashion Sourcing: Speed and Flexibility to the Fore. McKinsey. 2021
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Rafał Imielski Content Marketing Specialist

He has two years’ experience in copywriting, translation and proofreading. His goal is to help people communicate in a concise and understandable way. Rafał is an archaeology graduate who’s fascinated by both prehistoric and modern technologies. 

See all Rafał's posts

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