Dramatic Growth in Digitally Connected Physical Devices by 2020 Will Significantly Impact Supply Chains
An 30 fold increase in the number of intelligent devices between now and 2020 will create a network rich with information that allows supply chains to assemble and communicate in new ways, this according to a new report by Gartner. As a result, supply chain leaders must adapt to very different customer expectations and paths-to-purchase in this new digital world.
The report projects that significant growth in digital capabilities will be seen in this decade for digital marketing, the Internet of Things (IoT) and 3D printing. Gartner defines the IoT as the network of physical objects accessed through the Internet that contain embedded technology to sense or interact with their internal states or the external environment. IoT will reach 26 billion installed units by 2020. By comparison, the market for smartphones, tablets and PCs will be smaller, at 7.3 billion. This growth will transform products, customer service and current supply chain models.
The report imagines a future where thousands of devices are connected — from the customer back through the supply chain. These devices along with increased digital marketing efforts will create new information nodes and deeper market insight that will enhance demand and supply management.
This real-time availability of more granular data will improve decisions for planning, allocation, optimization and service. However, the embedded software in these devices will increase supply chain complexity and cyber-risk. This will require new talent and capabilities throughout the supply chain. In addition, it is predicted that these digital product models will capitalize on still-emerging 3D printing technologies that support postponed manufacturing that will lead to reduced inventory while increased local agility.
How do supply chain leaders can do to prepare?
–Look at IoT potential now and put IoT maturity into perspective
–Update supply chain risk plans to mitigate the increased exposure to cyberattack brought when operational technology is connected to the Internet and enterprise supply chain systems
–Plan for the onslaught of big data and build a talent pool to harness it for your supply chain
–Plan to tap into new customer analytics to understand what customers truly value
–Ensure the supply chain is knowledgeable and aligned to digital marketing plans to improve segmentation, visibility and response rates
–Prepare for the risk of demand volatility that will be amplified down the supply chain due to finely targeted marketing programs
–Increase awareness of how digital is impacting products and build a knowledge base of 3D Printing and its potential impact on manufacturing and sourcing
–Recognize the potential for 3D Printing to disrupt traditional supply chains while realizing it’s in an early stage of application today
–Build a knowledge base of the manufacturing process technologies available today, and add to this as new types emerge
According to Gartner, by 2020, more than 7 billion people and businesses, and at least 35 billion devices, will be connected to the Internet. This digital business world will blurr the digital and physical worlds and will disrupt existing business models and create new revenue opportunities. The time to prepare is now.
Click here to read the full report.
These and additional emerging innovations that are impacting supply chains were included in the recently released 2014 MHI Annual Industry Report – Innovations That Drive Supply Chains. Click here to learn more.
