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Supply chain technology critical for dealing with issues

As supply chains face new and unprecedented pressures on a number of fronts, companies look to emerging technologies to automate tasks, get intelligence and become more resilient.

Supply chains are facing a number of challenges, and companies are looking to advanced technology to address the problems.

A new Gartner survey highlights attitudes about supply chain technology by practitioners, and underpins the research firm's findings about the top supply chain technology themes for the next few years. Gartner said it received about 350 responses from professionals directly involved in supply chain operations in organizations across industries, geographies and size.

Dwight KlappichDwight Klappich

Conventional wisdom may claim that the COVID-19 pandemic caused the current supply chain disruption, said Dwight Klappich, research vice president at Gartner. However, the survey indicates that supply chain professionals believe the pandemic exposed already existing supply chain vulnerabilities and amplified the effects.

"That's why two years into this now we're still seeing some of these issues," Klappich said. "Now there's the war in Ukraine, rising energy prices and inflation, and they've all put pressures on supply chains."

In the survey, more than one-third of respondents (34%) said that adapting to new technology will be the most important strategic change for supply chain organizations in the next five years.

"It's not like in the past, where technology is viewed as tools that they use to do their day-to-day jobs," Klappich said. "Now it's really fundamental to their business. [Supply chain leaders] are putting a lot more emphasis on technology."

This shows the top eight supply chain technology themes for 2022, according to Gartner.
Top supply chain technology themes for 2022.

Top supply chain technology themes

There are eight significant supply chain technology themes that fall into three categories: automation, intelligence and resilience, according to Klappich.

Companies implement automation technologies to deal with supply chain labor challenges, such as trying to drive more efficiency and productivity as workforces shrink. Gartner identified the automation technologies as the following:

  • Hyperautomation 2.0, which orchestrates technologies like AI and machine learning to identify and automate supply chain processes such as warehousing, transportation and production.
  • Next-generation robots, which are becoming more flexible and adaptive, and are being increasingly used for a variety of supply chain tasks to augment or support human activities.
  • Autonomous things, which include robots but also non-robotic devices such as drones and autonomous vehicles that perform intensive manual tasks like warehousing and transportation.

Intelligence technologies are being implemented to improve the response speed and quality of supply chain decisions. Gartner identifies the top intelligence technologies as:

  • Digital supply chain twins, which create a digital representation of a physical supply chain, often multi-enterprise, that can be used to model various scenarios and enable decisions that are aligned horizontally and vertically across the supply chain.
  • Analytics anywhere, which enables business intelligence reporting, data visualization and advanced analytics across the supply chain.

Resilience technologies are intended to improve security, collaboration and the ability to respond to disruptions. Gartner identifies the top resilience technologies as:

  • Security mesh, which is a structured framework of governance rules and applications within supply chains aimed at securing systems, tools and people in increasingly dynamic, interconnected and digitized supply chains.
  • Ecosystem collaboration, which are digital applications and services that can create environments in which stakeholders within and outside of an enterprise share information and collaborate on processes in the supply chain.
  • Sustainability, which are applications and services that support initiatives for sustainability, environmental and circular economy goals and mandates.

Companies have invested heavily in supply chain technology during the past 40 years, and those systems are for the most part doing what they are intended to do, Klappich said. However, companies are now looking for technologies that can solve new problems as quickly and effectively as possible.

[Companies] are investing in emerging [supply chain] technology, but they're not just investing and playing around with it, they are adopting these technologies and using them to drive better business value, it's not just nice-to-have stuff anymore.
Dwight KlappichResearch vice president, Gartner

"They are investing in emerging technology, but they're not just investing and playing around with it," he said. "They are adopting these technologies and using them to drive better business value -- it's not just nice-to-have stuff anymore."

Technology is valuable, but it has limits

New technologies like advanced analytics can help manage supply chain issues, but they can be somewhat limited, according to supply chain expert Zachary Collier, an assistant professor of management at Radford University.

Zachary CollierZachary Collier

Analytics can look at past events and help make predictions about what may happen in the future, but it may not be able to see one-off "black swan" events that affect supply chains, Collier said. Because of this, companies need to adopt good risk management practices along with technologies.

For example, companies may need to have extra inventory to absorb shortages, or rely on a pool of suppliers instead of relying on a single supplier for important components or materials, he said.

"What's really important is how you react and quickly bounce back from disruption," Collier said.

Investment not paying off yet

Although companies are adopting new supply chain technologies, there are indications that it will take time for the investments to pay off, according to a recent survey report from PwC.

In the PwC survey of supply chain professionals, 80% of respondents said that investments in digital supply chain technologies have not yet delivered expected results.

Matt ComteMatt Comte

This is largely because deployments of these technologies take longer than expected and are more expensive than anticipated, said Matt Comte, operations transformation practice leader at PwC.

"It's requiring a higher level of functional business investment in time to make those things successful," Comte said. "They've got huge problems, and by and large they're not seeing the value returned that they need on their tech investments."

This creates an environment where companies might think it's too risky to push too heavily into new technologies but may deploy some on the edges, he said.

However, there's no doubt that companies will continue to invest in technologies that can help with supply chain problems, Comte said.

"We're in an unprecedented time of supply chain and manufacturing," he said. "The headwinds will continue, and the organizations that come out better are ones that can meet their current demands from customers while putting a firm foot into the capabilities they need in the future."

Jim O'Donnell is a TechTarget news writer who covers ERP and other enterprise applications for SearchSAP and SearchERP.

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