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Gartner Predicts the Future of Supply Chain Technology

April 20, 2022

Contributor: Sarah Hippold

Emerging and maturing supply chain technology is a major source of competitive advantage.

In short: 

  • Many supply chain leaders consider technology a source of competitive advantage, with emerging technologies as a means to address digital transformation. 
  • While supply chain technologies are mostly top of mind for leaders, technologies that improve human decision making and manage assets at the edge are also areas of focus.
  • Supply chain organizations should unify  their technology portfolio and update their legacy systems. 

Technology remains a strategic imperative for supply chain organizations. In a recent Gartner survey, 61% of respondents say technology is a source of competitive advantage. Many also  identify several emerging technologies as critical investment areas, with 20%  investing in robotics.

“There are certain developments that drive further investments into technology, most notably labor constraints and the need for more agility,” says Dwight Klappich, VP Analyst at Gartner. “Given today’s volatile and disruptive environment, supply chain organizations must become more flexible, and the solution is digitalization.”

In the next three to five years, we will see an increase in the adoption of digital supply chain technologies, as well as technologies that improve human decision making.

Download now: Lessons Learned From the 2022 Supply Chain Award Winners

4 supply chain predictions for 2022 and beyond

By 2026, 75% of large enterprises will have adopted some form of intralogistics smart robots in their warehouse operations. 

In addition to labor availability constraints, rapidly rising labor rates and the residual impacts of COVID-19 will compel most companies to invest more in cyber-physical systems—  especially intralogistics smart robots that can be deployed in warehouses and distribution centers. 

These robots address the need to automate certain processes to supplement the human workforce. Implementation is faster and less expensive than more traditional means of automation, such as conveyor sortation or automated guided vehicles. 

By 2026, more than 75% of commercial supply chain management application vendors will deliver embedded advanced analytics (AA), artificial intelligence (AI) and data science.

Improved decision making through the use of AA and AI is a high priority for supply chain users in all markets and industries. Supply chain application vendors noticed and are reacting accordingly.

Many application vendors now offer AA and AI capabilities embedded within their applications and continue to expand these areas. Large megavendors and supply chain suites vendors have an advantage due to their size, which allows for more investments, but smaller vendors are catching up. 

Download report: Accelerate Supply Chain Digital Transformation

By 2026, 25% of supply chain execution (SCE) vendors will have rewritten their core application to a microservices architecture, but only 5% of supply chain organizations will have adapted to true composability. 

As supply chain complexity and volatility increases, supply chain organizations must become more agile. This means that traditional applications, built around aging architectures, are not fit for the job anymore. One way to future-proof the technological base of the supply chain is to switch to microservices-based and composable application architectures. 

However, for most organizations, upgrading or implementing a new SCE application is a costly and time-consuming process. Most supply chain leaders constantly balance the risk of not upgrading against the desire to minimize the cost. There will certainly be early adoption of modular, composable services in the supply chain — especially for enterprise-centric applications that can be managed internally. On a multi-enterprise level with different business partners and systems involved, challenges for adoption at scale remain.

Read more: CSCOs Must Prepare for the Future of Supply Chain. Here’s How.

Through 2025, 25% of supply chain decisions will be made across intelligent edge ecosystems. 

Edges are physical locations where things, people and data connect —  such as operators, machines, sensors and devices that are located across the supply chain network. Edge ecosystems allow decision making to take place close to the original source of information.

Edge ecosystems deliver the infrastructure for automated network tools, devices and applications to work in tandem with each other — be it drones, robots or connected vehicles. Advances in data communications services, such as Wi-Fi, Bluetooth and 5G will further support edge ecosystems and complement traditional centralized supply chain solutions. Across many supply chains, edge computing decision making is already occurring, and the focus over the next three years is to identify further use cases where connected, automated and autonomous networks of edge decisions can be enabled.

Read more: The Rise of the Ecosystem — and 4 More Supply Chain Predictions

Through 2026, 80% of companies will suffer significant value loss due to a failure to merge their digital supply chain twin and control tower initiatives. 

Both digital supply chain twins and control towers help unlock quality insights needed from technology investments. Although relatively unknown, these two initiatives are closely related and should be merged. Prepare for significant value loss from underperformance and missed opportunities if these initiatives are kept separate.

Digital supply chain twins approach the problem by enabling end-to-end decision making. Control towers improve execution visibility and answer resulting questions, such as “what should I do now that I can see this shipment is delayed?”

If kept separate, neither initiative operates at peak performance. The digital supply chain twin is too far removed (breadth but not depth), resulting in lower-quality, end-to-end supply chain optimization. In comparison, control towers are too granular and lack the bigger picture (breadth). Their focus is then to solve the lower-quality decisions that are being executed. The result is underperformance and missed opportunities.

Read more: What Is a Supply Chain Control Tower — And What’s Needed to Deploy One?

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