Supply Chain Predictions 2020: Uncertainty Demands Resilience
It’s been an interesting decade for supply chain: just when you think things can’t get any crazier, a new extreme weather event, political drama or tech start-up pops up, disrupting entire industries. Global supply chains are particularly vulnerable to the changes triggered by these events, including increased regulation, new tariffs and radical shifts in demand patterns.
A major theme at the recent Gartner Supply Chain Planning Summit was that corporate winners accelerate through economic turns. They not only survive the ups and downs, but they anticipate them and prepare optimal responses. Against this backdrop, our 2020 predictions represent insights from across the ToolsGroup community for technology and practices that support greater supply chain resilience. I hope you enjoy the read!
Algorithmic supply chain planning will go mainstream
Deriving value from huge volumes of data depends on being able to separate signals (which have predictive value) from ‘noise’. Advanced machine learning (ML) algorithms are key to this. Based on probability (or stochastic) forecast models, these algorithms exploit the inherent uncertainty of demand and supply. Instead of ‘one number forecasts,’ they present ranges of numbers, each with a probability assigned. From this detail, predictive algorithms can identify patterns that help planners respond and course-correct before crises occur. We believe this sophisticated “algorithmic supply chain planning” as Gartner calls it, will start to enter mainstream adoption in 2020.
Robots will elevate supply chain humans
Forty-one percent of respondents in a recent digital transformation in supply chain planning study expect more productive planners, and they won’t likely be disappointed. The planner’s role is being enhanced by AI and machine learning, which automates certain tasks and self-learns over time for better results. As a result, planners can increase productivity and focus on value-add work. Machine learning will also play an increasing role in tricky supply chain planning problems such as new product introduction, as companies try to determine the impact of social media and promotions on sales.
Digital twins will help mitigate supply chain risk
The growing momentum around systems-based thinking in supply chain planning has given rise to the “digital twin”–the ultimate ‘what-if’ scenario planner. Digital twins help companies mitigate risk by accurately testing the resilience of complex, multi-echelon, global supply chains. They drive benefits such as improved business planning and improved sourcing, procurement and supplier management. Digital twins can measure the impact of events such as port shutdowns and regulatory changes on the supply chain. It’s little wonder in such an uncertain supply chain planning environment we expect to see more companies like our customer SKF building digital twins in 2020.
Blockchain will [slowly] help promote supply chain trust and transparency
Blockchain’s ability to provide transparency while protecting data’s intrinsic security, veracity and above all, value, will make it useful to supply chain infrastructure. In modern, multi-echelon, global distribution networks it’s all too easy to lose data accuracy. However, with blockchain companies can validate the provenance of raw material in the food, medicine or consumer goods supply chain. Though it will gain some traction in 2020, blockchain adoption won’t happen overnight. Similarly to broader digital transformation initiatives, many businesses lack solid use cases and internal buy-in/expertise to pilot blockchain projects. Read more about our blockchain supply chain predictions here.
This year we’ve also invited our partners from around the world to weigh in on their predictions as well. Here are just a few:
Supply chain goes from “boring to the boardroom”
We are finally seeing supply chain getting the attention it deserves from board-level stakeholders, which is a very welcome development. Historically, board members and executives have largely dismissed supply chains as cost centers, without seeing the potential upside. With supply chain digitization offering greater visibility and foundation for decision making, it has become much easier for company leaders to make smart tradeoffs and act decisively.
Anders Remneback, Product Manager, Optilon AB (Stockholm, Sweden)
Spreadsheets will start being consigned to the “supply chain museum”
As more high-profile success stories of digital transformation emerge, companies will feel growing urgency to achieve meaningful returns on their supply chain planning investments. Many still rely on manual spreadsheets in parallel with their ‘end-to-end’ legacy supply chain tools. In 2020 I expect to see senior management challenging supply chain and IT organizations to work together to improve business outcomes. Spreadsheets won’t be completely consigned to the “supply chain museum” in 2020 but as more companies modernize, I expect to see fewer companies relying on them as a failsafe.
Levent Ozsahin, Managing Director, Advancetics B.V. (Turkey and the Netherlands)
Supply chains (and their twins) will get greener
In 2020, roughly 35% of global corporations will incorporate sustainability initiatives into their digital transformation strategy that will generate a competitive advantage and create more than 200 billion dollars in incremental value. The “Green Twin” will emerge as a useful term to describe data models that are optimized to address corporate sustainability objectives in addition to profitability and service goals.
George Fowler, Group Vice President, Spinnaker Supply Chain (North America)
Data analytics will get simpler
With specialist data skills at a premium, technology providers will continue to simplify, automate and shield planners from the complexity of data science. Of course these will never be completely “off the shelf” products, however supply chain planning tools will increasingly apply machine learning to automate high-volume data analysis to support tasks like seasonality clustering, promotions planning and new product introductions.
Cem Kobaner, Co-Founder & Managing Partner, Advancetics BV (Turkey and the Netherlands)
Spotlight on 3-D printing dims
Additive manufacturing has been used since the 5th century to cast plow components and still has a bright future. However the young upstart of additive manufacturing, 3D printing, has stolen too much of the limelight. 3d printing is inherently limited: the printing medium has to flow, which limits precision, and the layers have to bond to each other, which limits strength. Generally speaking if an item has to be reproduced more than once 3D printing is unlikely to be the best way to make it.
Martin Woodward, Managing Director, ToolsGroup Brookes