IDC: Digital Transformation Will Change The Supply Chain

David Bolton
By David Bolton on November 27, 2019

The ongoing digitization of society has made emerging technology the chief driver of change within existing work practices.  This development can result in the idea that any technology that might turn a business optimization tool into a competitive differentiator is worth the investment.

Nowhere is this more apparent than in the supply chain. There is an expectation that the critical functionality of existing supply chains will not be immune from emerging technology and the expectations of the digital economy, but the next few years will see companies increase investment in advanced and effective supply chain quality processes.

Increased investment in the supply chain shows a commitment to continuous improvement. On the flip side, there is an argument that any companies that are currently struggling with both supply chain and supplier quality management should be looking to update their working practices sooner rather than later. And the dawning of a new year is the perfect time to make this a business resolution.

Improving the supply chain 

A contributed article authored by Simon Ellis, program vice president, IDC Manufacturing Insights, recently published by Material Handling and Logistics magazine said that 2020 will build on the existing drivers for change in the supply chain and provide companies with the blueprint for the future. According to IDC, the supply chain is ripe for innovation and emerging technology is the key to making ecosystems both effective and efficient.

“Each year, IDC Manufacturing Insights provides manufacturers and retailers with the top 10 predictions and underlying drivers that we expect to impact IT investments in the supply chain in 2020 and beyond,” Ellis said. “For the second consecutive year, digital transformation was the key overriding theme in our annual 10 predictions.”

Over the next few weeks, the ETQ Blog will be taking a deeper dive into how supply chain quality will benefit from the integration of both emerging and existing technologies. With that in mind, here are IDC Manufacturing Insights’ supply chain predictions for 2020 and beyond:

Prediction 1: By the end of 2021, half of all manufacturing supply chains will have invested in supply chain resiliency and artificial intelligence (AI), resulting in productivity improvements of 15 percent.

Prediction 2 By 2022, firms will dedicate 35 percent of their logistics business process outsourcing services budget to process automation, focusing on order, inventory and shipment tracking.

Prediction 3: By the end of 2020, half of all large manufacturers will have automated supplier and spend data analysis, resulting in a 15 percent procurement productivity gain.

Prediction 4: By 2023, supply chain micro-application extensions will account for one-third of all new technology investments in manufacturing and retail.

Prediction 5: By 2023, 65 percent of warehousing activities will use robots and situational data analytics to enable storage optimization, increasing capacity by over 20 percent and cutting work order processing time in half.

Prediction 6: To lessen stress on the service supply chain, by 2023, 25 percent of OEMs will leverage blockchain to source spare parts, improving accuracy of usable parts by 60 percent and lowering expedite costs by 45 percent.

Prediction 7: By 2023, 60 percent of G2000 manufacturers will invest in AI-infused robotic process automation to automate tasks through increased productivity and address supply chain skills deficit.

Prediction 8: By 2024, 75 percent of all consumer-facing companies will have developed the ability to customize at scale within their supply chains, resulting in, on average, a two to three percentage point increase in market share.

Prediction 9: By 2022, the number of companies offering flexible warehousing options will have increased by 50 percent, which can help address seasonal demand challenges and lower fixed overhead costs by over 20 percent.

Prediction 10: By 2024, for transparency and efficiency, 40 percent of customs agencies will join private blockchain and API-powered trade platform ecosystems to achieve a 50 percent increase in cross-border compliance.

The coming years will greatly alter the technology landscape for business functions in the manufacturing and retail industries,” said Ellis. “While the predictions offered here largely focus on the near term to midterm (2020–2022), the impact of many of these predictions will be felt for years to come.”

The future of quality is always now

Forecasts and predictions are often bread and butter for industry analysts, but setting a roadmap for the future should be at the top of the list for any company that wants to take a proactive attitude to its supply chain and, by association, the suppliers. The daily news cycle is filled with stories of brands that have been essentially let down by supply chain quality, and there is little doubt that technology-based solutions will play a significant role in fixing or closing quality pain points.

The caveat is that emerging or existing technology solutions are only one part of the overall quality and supply chain puzzle.

Quality drives excellence and companies must be looking to invest in technologies that add value to their business optimization strategies. A quality management system should be a minimum requirement. In addition, there must be an acknowledgment that digitization is not intended to replace the human factor but is instead about replacing repetitive tasks and freeing up the workforce to focus on other higher-value elements of the production process.

Integrating technology without actually understanding what that solution offers is often not the answer, Ellis said. Companies need to undertake a full supply chain audit, especially if suppliers further down the food chain do not have either the same commitment to quality or the capacity to integrate required tech capabilities. In addition, there must be an evaluation of where a company is in terms of technological maturity. To put it simply, there may be some solutions that provide an instant return on investment and others that might need time to bed in.

“Manufacturers and retailers are rethinking and reimagining products, services and processes because of the new capabilities that a digitally enabled thinking supply chain can offer,” Ellis concluded. “But it isn’t enough just to have technology for technology’s sake. Manufacturers must continue to innovate and create value from their investments in solving business problems or enabling new offerings.”

ETQ’s long held mantra that quality creates endless possibilities is one of the many reasons why over 550 global companies trust us to secure brand reputation and customer loyalty. With that belief as our North Star, our Reliance 2019 SaaS software delivers built-in best practices and powerful flexibility to drive excellence through quality.

To find out more about how ETQ can help you on your quality journey, contact us today for a demo.