Technology Adoption Rates Rising

April 6, 2016 — A host of potentially disruptive technologies are creating digital “Always-On” Supply Chains that will provide better efficiency, visibility and customer service across a variety of industries, while challenging companies to find the talent to manage them, according to a new study by MHI and Deloitte that is now in its third year..

The report explores:
--Eight Key Emerging Technologies, including updates on their adoption rates, their ability to create competitive advantage and case study examples on how companies are using them;
--Barriers to Implementing These Supply Chain Innovations; and
--Levels of Investment in These Technologies.

The report also provides recommendations for supply chain leaders to help them manage through this period of exponential change.

Key Findings Include:
--Lack of Skilled Talent Remains the Industry’s Biggest Challenge – For the third year, supply chain leaders identified “hiring and retaining a skilled supply chain workforce” as the biggest challenge facing supply chain professionals, with 58 percent of respondents citing this as an industry challenge. “Customer demand for faster response times” (cited by 56 percent) and “customer demand for lower delivery costs” (cited by 56 percent) also continued to rank as key challenges for the industry.
--Eight Technologies Enable “Always-On” Supply Chains – A full 83 percent of survey respondents (up from 75 percent last year) believe at least one of the eight technologies in the report could be a source of competitive advantage or disruption for supply chains in the next 10 years.
--Barriers to Innovation Remain the Same – Again this year, industry leaders identified “lack of a clear business case,” as the major barrier to investments in new technologies, with 43 percent citing it (up from 36 percent last year). This was followed closely by “lack of adequate talent to use technologies effectively” (cited by 38 percent) and “cultural aversion to risk” (cited by 35 percent of respondents).
--Companies Are Investing Heavily in New Technologies – Despite these barriers, more manufacturing and supply chain companies are increasing investments in these technologies. New technology investments over $1 million have increased from last year’s survey; 52 percent of this year’s respondents said they planned investments in excess of that amount (versus 49 percent in the 2015 study). Three percent of respondents said their companies would spend at least $100 million on new technologies over the next two years.

Eight Technologies Are Creating the “Always-On” Supply Chain
The industry leaders surveyed viewed the eight technologies studied as an even greater source of competitive advantage and disruption than they were just one year ago. The technologies are:

--Predictive analytics
--Robotics and automation
--Sensors and automatic identification
--Wearables and mobile technology
--Driverless vehicles and drones
--Inventory and network optimization tools
--Cloud computing and storage
--3D printing

Four Top Technologies Provide a Competitive Advantage
Industry leaders surveyed identified four top technologies that provide a competitive advantage for “Always-On” Supply Chains:
--Robotics and Automation (51 percent of respondents cited, up from 39 percent last year)
--Inventory and Network Optimization Tools (cited by 48 percent of respondents, up from 45 percent last year)
--Sensors and Automatic Identification (cited by 47 percent of respondents, up from 42 percent last year)
--Predictive Analytics (cited by 44 percent of respondents, up from 38 percent last year)

Fastest Growing Technologies
The survey uncovered shifts in the growth of some technologies. Namely, “Robotics and Automation” and “Driverless Vehicles and Drones” are making bigger impacts on the supply chain sooner than previously predicted, with both technologies seeing a 12 percent growth spike over last year’s report.
--This year, 51 percent of survey respondents said that Robotics and Automation has the potential to either create competitive advantage or be a disruptive force in their industry, and 77 percent said it will have some impact. Adoption is currently 35 percent. It is expected to rise to 74 percent over the next 6-10 years.
--While “Driverless Vehicles and Drones” are still emerging technologies, 59 percent of survey respondents said they are having some impact on supply chains, and 37 percent said they have the potential to provide competitive advantage or disruption. Adoption rates are expected to grow to 50 percent over the next 6-10 years.

Predicted Adoption Rates Are Dramatic
“Cloud Computing and Storage” and “Sensors and Automatic Identification” are leading technologies in terms of current adoption rate—with 45 percent and 44 percent, respectively. But looking at the next 6-10 years, six of the eight technologies covered in this report have predicted adoption rates of 74 percent or higher. Only “Driverless Vehicles and Drones” and “3D Printing” have lower predicted adoption rates over the 6-10 year time horizon, but they are still 50 percent and 48 percent, respectively. This accelerated pace of change will dramatically alter the way supply chains work and how they are managed in the future.

Impacts Go Beyond Retail and Consumer Goods Companies
The report concludes that while retail and consumer companies get the most publicity in discussions about disruptive technologies, they will impact all industries including manufacturers and business-to-business enterprises. The report identifies potential benefits of these technologies across a wide range of industries.

Recommendations for Today’s Supply Chain Leaders
The study makes several recommendations for companies looking to remain competitive in the manufacturing and supply chain space, including:
--Invest, test and learn in these technologies
--Partner with solution suppliers, universities and trade groups
--Determine where to start generating data
--Determine how current your data needs to be
--Make sense of the data so you can act on it
--Nothing is more important than talent management

About the Study
This third annual study was conducted by MHI and Deloitte and is based on interviews with 900 supply chain executives nationally, from a wide range of industries. The study explores the current state of the supply chain and identifies key trends and technologies that will have a profound impact on the future of the supply chain over the next 10 years.

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