4 Factors That Will Impact the Future Supply Chain

Supply chain leaders must invest to keep up with societal and technological changes.

In 1978, record player sales peaked at $2.5 billion. Ten years later, sales had plummeted 80% to $500 million as consumers moved to cassette tapes and then CDs. The rise and fall of vinyl teaches an important lesson for supply chains: Making supply chain investments such as factory capacity and inventory from historical performance rather than an understanding of future trends can spell disaster.

The path of the music industry shows very clearly the importance of a 10-year-plan. However, a recent Gartner survey found that 70% of respondents don’t look beyond three years when developing a vision for their digital supply chain roadmaps.

AI’s ability to derive insights and make recommendations from vast amounts of big data will have dramatic implications for how supply chains operate in 10 year

“If supply chain leaders don’t prepare for the ecosystems in which future supply chains will operate, they are at risk to not foresee and prepare for the inevitable disruption. They have to have a forward view even when faced with unforeseen challenges, such as the new coronavirus,” says Michael Burkett, Distinguished VP Analyst, Gartner.

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Chief supply chain officers (CSCOs) want to make the right business decisions and invest in the right technology to prepare their organizations for the future. There are so many factors to consider and so many unknown variables that “getting it right” seems almost impossible. Therefore, it is crucial to assess the known trends to prioritize inputs to the supply chain strategy, roadmap and innovation pipeline. 

Gartner predicts that four factors will converge as we move toward this transformation. It is important for supply chain leaders to be aware of and take necessary action to capitalize on the opportunities that lie ahead.

Factor No. 1: The labor supply is shifting

The labor supply will look very different 10 years from today. Scientists expect rapid growth in emerging economies and more moderate growth in developed economies. This labor supply shift must be considered as supply chain leaders plan their global supply networks. The trend will continue and have a major impact on supply chain talent planning. Programs to attract and bind talent are a necessity.

One of the most important skills of the future supply chain workforce will be digital dexterity. The ability to adapt to technology at a rapid pace and the readiness to use advanced analytics and artificial intelligence (AI) in decision making will be crucial in an increasingly automated environment. In the factory of the future, people will orchestrate processes, handle exceptions and control the machines.

Factor No. 2: Machines are intelligent

The most recent Gartner forecast predicts that AI will create $5 trillion of business value by 2025. However, the full potential of AI has not yet arrived. This will rapidly change over the next couple of years, especially when it comes to supply chain use cases such as decision support and automation. 

“AI’s ability to derive insights and make recommendations from vast amounts of big data will have dramatic implications for how supply chains operate in 10 years,” says Burkett. “Although AI has gone through periods of disillusionment, the state of the technology and early signs of adoption are indicators that AI should see a strong ramp-up moving forward.”

Factor No. 3: Everything is connected

Already, data is moving in and out of the cloud and we access it through our mobile devices. By 2029, digital sharing will be even more common — with dramatic impact on collaboration, simulation and decision making. 

As a supply chain leader, watch out for digital twins, a technology that will redefine supply chain models. Digital twins create a digital representation of not just physical products or assets, but also process characteristics. As such, this technology is perfect for experimentation and modeling to test for critical variables.

Factor No. 4: Circular is the mainstream economy

By 2029, it will be unacceptable for a supply chain to create waste. Avoidable waste production will then be considered unacceptable by society. This means that supply chain leaders have to embrace a circular economy in which a used product is returned, recycled and then reused in some way.  

Many organizations have already started on this journey. Initiatives such as Coca Cola’s World Without Waste and Unilever’s Sustainable Living Plan are first steps toward a circular economy.

This article has been updated from the original, published on January 8, 2019, to reflect new events, conditions or research.

This article is based on insights that are part of an in-depth collection of research, tools, templates and advice available to Gartner clients.

Gartner for Supply Chain Leaders clients can read more in Supply Chain 2029: Disruptions Impacting Future Innovation by Michael Burkett, et al.

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