Resilience main driver in digital supply chain investments

Almost 50% of supply chain leaders have accelerated their spending on digital technologies, in order to make their operations more responsive and forward-looking during the pandemic

An industry report, released by MHI in collaboration with Deloitte, shows cloud computing, robots and inventory/network optimisation tools saw the biggest jump in terms of supply chain investment, with 49% or respondents increasing spending.

A whopping 83% of respondents believe that digital supply chains will be the predominant model within the next five years, with 22% believing they already are.

The pandemic has been a key trigger for technology investment. Of the companies projecting to invest at least $5 million in the next two years, 57% of companies plan to spend more than $10 million on robotics and automation, 48% plan to spend the same amount on cloud computing, 43% on predictive and prescriptive analytics, and 26% on artificial intelligence.

Widespread digital adoption coming in the near future

According to the survey respondents, nearly all the advanced digital technologies are expected to achieve widespread adoption within the next 1-2 years. Cloud computing and storage has the highest current adoption rate at 57%. Adoption is expected to grow to 88% over the next 3-5 years.

Also, in the next 3-5 years, robotics and automation is expected to double (from 38% to 76%), predictive analytics is also meant to rise by 38% from it’s current 31% and industrial IoT is meant to grow from 27% to 73%. On top of this, AI is expected to grow from  the current 17% to 62% in the same time frame.

Disruption no longer top of supply chain challenges

The survey showed that the top supply chain challenge is now hiring and retaining qualifies workers, with 52% of respondents noting this difficulty.

Close behind was customer requirements, as customers expect and demand increasingly faster response times and lower costs. Digital innovation is essential to solving this customer experience challenge, but the technologies cannot be implemented without a skilled workforce to run them.

Supply chain disruption was still a major challenge at 39%. Previous to the pandemic, companies had already begun making changes in response to the shift to a digital, always on supply chain, but disruptions from COVID-19 accelerated this process, and survey respondents reported the following as top defensive strategies that organizations are currently utilizing or plan to implement: implementing flexible manufacturing or supply chain related services (45%), and building longer-term business relationships with a few suppliers (43%).

“When the pandemic hit, consumer preferences went out the window in favour of what they needed urgently, foreshadowing a critical new normal for supply chains. Flexibility to predictable patterns is no longer enough; resiliency to unforeseeable disruption is an existential, business-critical requirement,” Thomas Boykin, Supply Chain Specialist Leader at Deloitte Consulting LLP.

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