As technology drives supply chains to digital models, the talent shortage and cybersecurity remain the top barriers to their adoption

According to a new report by MHI and Deloitte, nine technologies are working together to create next-generation supply chains that are digital, on-demand and always-on. These supply chain models have the potential to create tremendous efficiencies and will soon become the new supply chain reality, with eighty percent of survey respondents saying that digital supply chains will be the predominant model within 5 years. Sixteen percent say they already are.

The 2017 MHI Annual Industry Report, titled “Next-Generation Supply Chains: Digital, On-Demand and Always-On,” covers the potential of these technologies to disrupt and transform supply chains. The technologies are:

• Inventory and network optimization
• Sensors and automatic identification
• Cloud computing and storage
• Robotics and automation
• Predictive analytics
• Wearable and mobile technology
• Autonomous vehicles and drones
• 3D printing

This year’s survey revealed the emergence of a ninth innovation, the Internet of Things (IoT), that has growing importance in the digital economy.

A full 92 percent of respondents (up from 83 percent last year) believe at least one of the nine technologies could be a source of competitive advantage or disruption in their industry in the next 10 years. The top technologies respondents say can be a source of either disruption or competitive advantage are:
• Robotics and automation (61%, up from 39% in 2015)
• Predictive analytics (57%, up from 38% in 2015)
• The Internet-of-Things (IoT) (55%, new category in 2017)
• Sensors and automatic identification (53%, up from 42% in 2015)
• Driverless vehicles & drones (54%, up from 30% in 2015)

Adoption Rates
Cloud computing and storage, along with sensors and automatic identification, are leading in terms of adoption rates (in-use today), with 50% and 49%, respectively. Over the next two years, the adoption of these technologies is expected to grow to 73% and 70% respectively.

The technology predicted to be most adopted within the next two years is Inventory and Network Optimization, forecasted at a 75% adoption rate. Over the same time frame, Robotics and Automation adoption is expected to reach a 63% adoption rate, followed by IoT at 54% and Predictive Analytics at 52%.

Cybersecurity Concerns are Slowing IoT adoption
While IoT is expected to have an adoption rate of 81% in five years, cyber security is the biggest barrier to adoption of these technologies.

Supply Chain Talent Gap
To implement any of these technologies, firms need access to a skilled supply chain workforce. This has been a theme in all four annual reports and the talent gap is growing as the adoption of these technologies increases.

According to the survey, hiring and retaining a skilled workforce continues to be the biggest obstacle facing supply chain professionals with 63% of respondents reporting the issue (up from 58% in 2016). Additionally, 50% say training their workforce to use new technologies is a top priority. Other significant challenges include customer demand for faster response times (55%) and customer demand for lower delivery cost (53%).

Smart City Logistics is seen as an Emerging Trend
In addition, this year’s report introduces the topic of ‘Smart City Logistics’ and examines how innovations and technologies are being leveraged to help cities address the growing challenges of congestion, noise and pollution associated with last mile deliveries within their increasing populations.

While 50% of survey respondents are aware of Smart City Logistics, only 6% say they have begun to collaborate with other companies and cities to utilize and develop supply chain innovations to create new opportunities for last mile delivery, urban distribution centers and logistics hubs. The report also provides recommendations for leaders in developing strategies and thriving in this ever-changing industry.

The report reflects the views of 1,100 manufacturing and supply chain industry leaders on this important topic. Survey participants represented a wide range of industries, with the majority (53%) holding executive positions such as CEO, Vice President, General Manager or Department Head. Participating companies ranged in size from small to large, with 47% reporting annual sales in excess of $100 million, and 10% reporting $10 billion or more.

Download the complete report here.