Supply chain technology is experiencing seismic shifts and is changing rapidly as new, innovative solution providers outpace traditional legacy players.
Tremble. seismic shifts. In supply chain management technology, there is a fault line between new, innovative technology vendors and traditional supply chain software vendors, and the gap between them is widening.
In fact, the supply chain management technology market is changing dramatically. On the one hand, I see market consolidation among traditional application providers, which does not bode well for innovation (a topic I will discuss later in this article). On the other hand, I see startups exploring how innovations like artificial intelligence and blockchain can be applied to the supply chain.
Where do the most important seismic shifts and changes take place?
Here are five fundamental shifts in supply chain technology that companies need to be aware of:
Redefining decision support software
Decision support includes all forms of planning: demand, supply, revenue, manufacturing, and transportation. There is a lot of noise in this market right now.
Over the past few months, I’ve spoken to several emerging cognitive computing companies trying to redefine decision support technologies. Cognitive computing uses self-learning systems to extract data, recognize patterns, and process language to mimic how the human brain works. The incorporation of cognitive computing into decision support will make the traditional applications obsolete in the markets for advanced planning solutions.
Disintermediation of Business Process Outsourcing (BPO)
In the past, companies have focused on outsourcing labor and third-party solutions to reduce headcount. The result? While they have shifted costs down the value chain, they have also lost control of process integrity.
To regain control, companies should eliminate BPO providers through the use of machine learning and automation. Additionally, blockchain and cryptocurrencies can and should disintermediate business process outsourcing.
Emergence of digital manufacturing technologies
Technologies such as robotics, wearables, the internet of things and additive manufacturing (3-D) are redefining manufacturing. These new technologies will change the way manufacturers define spare parts requirements, schedule maintenance and schedule production.
They have the opportunity to become even more revolutionary when combined with other new technologies such as cognitive computing, blockchain and analytics.
Introduction of autonomous vehicle technologies
Logistics is already being transformed by autonomous vehicle technology. For example, some companies are exploring how drones can use machine learning to perform real-time inventory counts in warehouses, and others are considering using self-driving vehicles for deliveries.
Redesign of B2B transactions
For the past two decades, we’ve been trying to squeeze pennies out of business-to-business (B2B) transactions through hands-free processing and automation. We now have the opportunity to use blockchain to redefine and redesign these practices.
For example, blockchain could be used to better track quality control and chain of custody in the cold chain, improve lineage/track-and-trace to ensure brand integrity, and redefine multiparty financing. Executives can now start thinking about how to add real value to suppliers instead of focusing on payment issues such as
The need to change thinking!
However, these changes can only happen if we can learn from the past, rethink the future and “unlearn” old ways of thinking about the supply chain. However, many companies are hampered by “legacy thinking” that focuses on functional optimization rather than driving improvements across the supply chain network. The challenge lies in “unlearning” outdated approaches.
It won’t be easy for companies to change the way they think about supply chain technology, but here are some early insights and observations that I think will be helpful.
A separate innovation team will achieve the best results
Embedding the digital innovation team in the information technology (IT) organization is like drilling a hole in bedrock. It just doesn’t work. Most IT departments are loyal to their enterprise resource planning (ERP) vendors and existing consulting relationships.
Their fear of change slows the adoption of innovative technologies and business processes. In order to develop new business models with new technologies, tests and learning processes must be carried out by small, motley teams.
It is not sustainable for system integrators/consultants to create software
When it comes to cutting-edge technologies, many consultants are catching up. In some cases, the innovations on the technology front are challenging their traditional business models, so consultants may not fully embrace them.
Innovation will never come from application consolidation
History has shown that software aggregation reduces the market value of software. Over the decades in the supply chain market, the acquisition of software products by technology vendors only offers value to the venture capitalists or the owners of the companies. There are few acquisitions that add value to the end user or lead to innovation.
Supply chain executives who think they have all the answers need to be fired
we Not have the answers, and we don’t have best practices for now and in the future. What we have are historical practices and deadlocked advances in metrics. Supply Chain Insights found that 90 percent of companies are not making progress on key supply chain metrics such as cost, inventory, growth and return on investment (ROIC).
We see innovation, but it happens on the sidelines. The question is how to move it to the heart of the business. We must question the foundations of the past and redefine the processes of the future. This requires executive leadership. It cannot happen at the functional level.