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Biggest ways that technologies like AI and Blockchain will overhaul global supply chains and enable them to keep pace with shifting market dynamics
By Pragati Verma, Contributing Editor, Straight Talk
As businesses look for new markets and sources for their products and services, supply chain leaders are realizing that their legacy networks might not cut it anymore. According to leading IT research companies, such as Gartner, IDC and Frost & Sullivan, several organizations are investing in technologies to reinvent their logistics, procurement and distribution.
Analysts expect a big infusion of new and emerging technologies that will integrate data and information across supply chains and result in business model innovation. “The idea of technology-driven transformation is a big deal in supply chain,” says Simon Ellis, Program VP, IDC in a webinar. New technology was identified by supply chain people as the biggest driver of change in their surveys, he adds.
Gartner’s research reveals similar trends. They expect at least half of large global companies to use artificial intelligence, advanced analytics and Internet of Things in supply chain operations by 2023. Analysts at Frost & Sullivan seem to agree as they predict next-generation technologies such as AI, machine learning, blockchain, and robotics to drive multiple growth opportunities in the supply chain management market. “Current supply chains will be reinvented as IoT-enabled systems allow unprecedented end-to-end visibility, remote tracking, and control,” says Deepali Sathe, Senior Industry Analyst at Frost & Sullivan. “The increase in automation will significantly improve accuracy of predictions and speed of execution.”
Reinvent with AI
AI is likely to play an important role in supply chain re-invention. In a blog post Forrester Principal Analyst and VP George Lawrie advises his clients, “Embed AI In your digital supply chain to win, serve, and retain customers.” According to him, there is a strong interest in the possible use cases of AI in supply chain. “The most common question we hear is about the role of AI in supply chains. The major applications of AI in supply chains are in demand management, warehouse execution, and chatbots serving procurement professionals,” he says.
Lawrie delves into details to explain how AI can reinvent demand management. “For decades, forecasts have adapted to changing patterns of consumption. But B2B and B2C purchasers and shoppers now have more choice than ever. Research chemists scour the web for innovative new ingredients for their formulation trials. Grocery shoppers substitute fresh for frozen or packaged food,” he says. He believes that AI will enable business to use data to gain valuable insights about future events and accordingly adapt their operations. “Companies have to reinvent demand management,” he explains,” Sophisticated machine-learning solutions help retailers include variables such as weather in better forecasts that reduce waste in fresh food.”
Lawrie goes on to explain how computer-vision powered autonomous robots support warehouse staff with picking, moving, and loading goods in a way that’s automated and more efficient. Visual Computing, he says, “has enabled companies to deploy three AI applications with significant impact for digital operations: load analytics, pick to light, and goods to person.”
He also recommends AI-powered chatbots that can integrate with other business applications of the supply chain. “There are chatbots that can help in tracking orders and deliveries. UPS bots, for example, can talk to customers via Google Assistant using devices like Google Home,” he says. He discusses another example, where bot platform enable procurement to “generate purchase orders based on AI-enabled chat with enterprise systems such as configure price quote or service management.
Embed Blockchain, but Prepare for Fatigue
Blockchain is another popular technology promising resolution to long-term supply chain challenges such as end-to-end visibility, transparency, intelligent fulfillment and security.
Lawrie argues that new challenges are emerging, as businesses search for new markets and new sources of supply around the world. “In contrast with rigid legacy supply chains that bind known and trusted vendors, an agile network of temporary suppliers might damage customer experience by concealing the origin and characteristics of components or ingredients. Blockchain and distributed ledger technologies can help by increasing visibility of supply chain documentation. They can reduce inspections, boost trade credit, and build trust, even with new or temporary suppliers,” he explains.
Gartner seems to agree that blockchain has the potential to fulfill long-standing challenges presented across complex global supply chains. “Organizations might use blockchain to track global shipments with tamper-evident labels, allowing a reduction in the time needed to send paperwork back and forth with port authorities and improved counterfeit identification,” says Titze.
However, Gartner warns that Blockchain might not be ready for primetime yet and predicts that 90 percent of the initiatives will suffer “blockchain fatigue” by 2023 due to a lack of strong use cases. Alex Pradhan, senior principal research analyst at Gartner explains why, “Supply chain blockchain projects have mostly focused on verifying authenticity, improving traceability and visibility, and improving transactional trust. However, most have remained pilot projects due to a combination of technology immaturity, lack of standards, overly ambitious scope and a misunderstanding of how blockchain could, or should, actually help the supply chain. Inevitably, this is causing the market to experience blockchain fatigue.”
Supply Chain of the Future
Meanwhile, supply chain leaders’ experiments with new technologies and business models could reshape supply chains. “Understanding trends and impacts is a challenging task for supply chain leaders responsible for identifying and putting in place strategies to build the right set of capabilities,” says Steven Steutermann, Managing Vice President at Gartner in a blog post. “We expect that the supply chain of the future will undergo a major transformation process. At the end of this process, supply chains will act ‘on their own’ with the ability to self-regulate and take appropriate actions, and as a result, will increase and augment the capabilities of humans well beyond what is known today.”
Pragati Verma is a writer, editor, and storyteller exploring new and emerging technologies. She has been a business journalist and managed technology sections at India’s The Economic Times and The Financial Express. Today, she brings the same editorial thinking to thought leadership content designed to engage, entertain, and enlighten readers.