The Internet of Things presents unprecedented opportunities to digitally enable the supply chain, and to create solutions that combine digital and physical products and services.
Now more than ever, it’s crucial to prepare leaders and organizations for supply chain excellence in the digital age. The impact of technology on supply chains is uncovering new sources of value for the enterprise, pushing past traditional boundaries and driving innovation.
Leading manufacturers have started using digital technologies to build new value chains and to create unique customer experiences. Supply chain leaders must continue to innovate in order to remain successful.
With the annual Gartner Supply Chain Executive Conference 2015 kicking off in Phoenix, May 12-14, we asked Mike Uskert, managing vice president at Gartner and conference chair, to share his views on the outlook and trends for supply chain in the digital age.
Q: What’s driving supply chain innovation in 2015?
A: As the saying goes, necessity is the mother of invention, and its closest relative is innovation. There are a number of trends that are forcing supply chains to rethink everything (people, process, technology, and physical network).
A sample of current innovation drivers include the growing expectation of instantaneous service, increasing government regulation, an exponential proliferation of data, multichannel expectations, and the ever growing talent gap. Because of these drivers we are witnessing innovation advances in the areas of same-day delivery, real-time visibility across value chains, predictive analytics, automation, self-guided/driven vehicles, 3D printing, green supply chains, and fully integrated forms of commerce.
Q: How can supply chain leaders develop creative solutions that will garner success for years to come?
A: The greatest focus will need to be on creating flexible solutions. The days of supply chain networks having a 50 year, or even a 5 year life span are long gone. The need for flexible solutions is not contained to the network, they are required in the technology we use, the organizational structures we design and the people we hire. None of the drivers that are forcing change/innovation in supply chain today are static, so the solutions to deal with them have to evolve as they do.
Q: What digital trends are impacting the supply chain?
A: Gartner predicts that by 2018, 50 percent of chief supply chain officers in $1 billion+ global companies will design and manage supply chains that support digital business. This is being driven by the rapid pace of business and technology evolution which is blurring the boundaries between the digital and physical worlds to connect people, businesses and “things” in and across factories and company boundaries to support new business designs.
Take for example traditionally high volume consumer products manufacturers that now allow their customers to personalize or even design products online. These manufacturers are required to design hyperflexibility into their production lines and examine how it can alter their technology portfolio to align manufacturing with the front end of the business so that production is responsive to variable demand.
Digital business requires manufacturing operations to be connected to the front end of the business. It also necessitates manufacturing operations to be optimized frequently to produce customized products at a higher velocity and in a more sustainable fashion.
Q: What role does the IoT play in the digital future of supply chain?
A: The IoT presents unprecedented opportunities to digitally enable the supply chain, and to create solutions that combine digital and physical products and services. The IoT will have far-reaching impacts on businesses and supply chains.
With connected devices, supply chains will have unprecedented transparency in its customers, products, locations and assets. Unlike previous generations of passive sensors, the IoT will allow a supply chain to control the external environment and execute decisions. With the IoT, sensor-embedded factory equipment not only can communicate data about parameters such as the temperature and utilization of the machine, but also can change equipment settings and process workflow to optimize performance.
To profit from the IoT, chief supply chain officers need to define new processes along the entire supply chain, with the ultimate goal of fulfilling customer demand for digital and information products and services, in addition to physical offering.
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