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Supply Chain Disruption is Driving Tech Investment

April 13, 2022
A new report says it’s time for companies to “transform or die” when it comes to supply chain digitalization.

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As organizations worldwide continue working through the ongoing impacts of the global pandemic, more of them are turning to technology to help them run their supply chain operations better, faster and smarter. From labor constraints to transportation snarls to supply chain shortages, the list of challenges that these companies are facing right now are plentiful, and seem to be multiplying as 2022 progresses.

Companies have taken notice and are making changes that help them adapt to these shifts and operate in a more agile and resilient manner. And because hiring new employees has become just as difficult as keeping the good ones in place right now, technology is stepping in to help on a number of different fronts.

Ripe for an Overhaul

The global supply chain is one area that’s been ripe for a technological overhaul for some time, and it appears to be getting one. A new report from MHI and Deloitte found that nearly 80% of supply chain leaders have accelerated their digital transformation as a result of the pandemic. In fact, MHI’s 2022 Annual Industry Report, Evolution to Revolution: Building the Supply Chains of Tomorrow, points to supply chain disruption as one of the biggest drivers of technology investment right now.

“Supply chain leaders have never been in a better position to drive impactful and lasting change for the industry,” said MHI CEO John Paxton. “With the white-hot media spotlight chronicling the after-effects of the pandemic, the importance of supply chain is finally coming into focus in boardrooms across the world.”

Who’s Buying What?

The new report provides insights into trends and technologies that are transforming supply chains and the priorities of the people who run them. Here are some of the key findings that MHI and Deloitte uncovered during their research:

  • the 64% of respondents who are going to be buying more digital supply chain technology, two out of three say they will spend more than $1 million over the next two years.
  • Investments are particularly growing in the middle ranges from $5 million up to $100 million—where 41% say they spend more than $5 million and 18% say they will spend more than $10 million.
  • All technologies covered by the survey are expected to achieve an adoption rate of 66% or higher over the next five years. Here’s a snapshot of some of the top technologies and how quickly they’ll be adopted within that period:

    • Cloud computing continues to have the highest current adoption rate at 40%—a number that’s expected to climb to 86% by 2027.
    • Inventory and network optimization is expected to rise to the top over the next five years, with an expected adoption rate of 87%.
    • Artificial intelligence (AI) will experience the highest accelerated growth, according to MHI, rising from 15% to 73% over the next five years (a nearly five-fold increase).
    • Predictive analytics is expected to grow to 82% over the next five years, up from a current adoption rate of 22%.
    • The Industrial Internet of Things (IIoT), which is currently at 21%, is expected to grow to 80% adoption.
    • Robotics and automation, currently at 28%, is expected to reach 79%.

The Tech-Driven Supply Chain

MHI says robotics and automation continue to top the list of innovations that survey respondents believe have either the potential to disrupt the industry (17%) or to create competitive advantage (39%). However, several other technologies are following very closely behind, including predictive and prescriptive analytics; sensors and automatic identification; autonomous vehicles and drones; and AI technologies.

“Supply chains are becoming more and more a technology-driven industry,” said Deloitte’s Supply Chain Specialist Leader Thomas Boykin. “While firms have not adopted some technologies as quickly as they thought they would back in 2014 or 2015, what we are seeing now is a big jump in these investments. Where we used to say evolve or die, what we now say is transform or die.”

About the Author

Bridget McCrea | Contributing Writer | Supply Chain Connect

Bridget McCrea is a freelance writer who covers business and technology for various publications.

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