On June 13th, we have invited our customers and partners to Bordeaux (France) to share their vision and plans to take their supply chain to the next level.
Today there are trends we can’t ignore. According to Analysts such as IDC, “by 2024 over 60% of manufacturers will rely on AI (Artificial Intelligence) to drive digital transformation across the supply chain, leading to productivity gains of 20%” and according to Gartner “by 2023 at least 50% of large companies will be using AI, advanced analytics and IoT in their supply chain operation”.
Our partners Oliver Wight and Deloitte confirmed these trends. According to Oliver Wight, a key factor for these trends is the availability of data in almost real-time. As well as the capabilities to use them through adequate systems, and with skilled people. Data is now available but the way to use it as a true pillar for decision making is still not fully implemented. The reasons are diverse: it could be the system’s features that are not friendly enough or take too much time or it could be the education and behavior of people that do not trust the systems or fear to lose their decision making power. Companies now have functions called data analysts. These people spend time studying the data and present them to the leadership team for use.
According to a recent annual industry report published by Deloitte in collaboration with MHI involving 1,116 supply chain professionals from a wide range of company types and industries. They found 8 out of 10 survey respondents believed that the digital supply chain will become the predominant model within the next five years. The expected impact of these digital innovations on the future of supply chain is very high. The top technologies expected to be a source of either disruption or competitive advantage are robotics and automation, predictive analytics, Internet-of-Things (IoT), Artificial Intelligence and Driverless vehicles and drones.
Another important aspect is the barriers to greater adoption of NextGen supply chain innovations. According to this report, there are three main barriers:
1. Business Case and ROI: Difficulty estimating the full benefits and costs of disruptive technologies, leading to underinvestment and limited action.
2. Skills and Workforce: A shortage of leaders and workers with the vision and technical skills to drive and execute NextGen supply chain innovations.
3. Trust and Cybersecurity: Perceived lack of a mechanism for efficiently and reliably establishing trust when conducting transactions and sharing information across the supply chain. Also, rising risks from cyber threats, as supply chains become more digital and the IoT becomes more prevalent.
From the customer side, according to Solvay, these innovations will definitely help them build competitive advantages. However, before implementing them, based on their internal assessment Solvay highlighted a big maturity gap between GBU’S (Global Business Units) and even between zones inside a GBU. The first target was to build the common strong baseline identified as a Gartner Level 3 maturity. Gartner has built a 5 stage maturity model to help supply chain and logistics leaders set strategic goals that are appropriate to their organization’s maturity level. This prerequisite keystone allows Solvay to build their roadmap for the next 5 years including AI, machine learning and big data-analytic.
Cloud is not a Hype, it’s a Reality
According to Gartner, “by 2022, 75% of enterprise-generated data will be created and processed outside the traditional, centralized data center, up from 10% in 2018” and according to IDC “half of IT spending has been cloud-based in 2018, reaching 60% of all IT infrastructure and 60–70% of all software, services and technology spending by 2020”.
For our Cloud customers, Cloud is not a hype, it’s a reality. Ales Groupe explains it’s motivation based on 4 key points:
- Cost: from a financial point of view, it’s better to have a monthly cash rate and also to avoid hidden costs. The business is able to see the total cost of the solutions, including the technical part
- Team capabilities: Ales Groupe has a small IT team, that is to say with limited competence to install and maintain a Demand & Supply Chain Planning solution. A Cloud-based solution allows them to be more focused on their business rather than on security and upgrades
- All included project: having one single provider for software and hardware makes life easier
- Daily use: with an organization of 12 subsidiaries worldwide and the size of the IT department, it’s impossible for Ales Group to be responsive 24/7. Everything becomes easier with a SaaS solution such as upgrades for example.
What is the Risk of not Taking your Supply Chain to the Next Level?
Deloitte and Oliver Wight confirm that effective business cases must evaluate and prioritize innovations against a baseline of inaction. When facing potential disruption, it is not safe to assume that the status quo will continue unabated. That’s why it is very important to always consider the “do nothing” scenario, with realistic estimates for the consequences of inaction. Potential costs and consequences of inaction will include un-scalable operations, increased risks, compliance slippage and loss of competitiveness and market share.
Inside Solvay, they have developed a program called “Customer intimacy”. This program consists of reinforcing collaboration and integration with their customers and to go deeper into their networks to understand their needs and even anticipate them. The quality of the product is a prerequisite and services will make the difference. It’s important to go deeper, quicker and stronger to the next level to make this happen.
The digital supply chain will become the predominant model within the next 3-5 years and the impact of digital innovations are high on future supply chains. To keep up, companies need to innovate and integrate new technologies, in other words, you need to keep your supply chain up to date if you want to survive. Did you measure the Risk of None Investment? Go and embrace these new technologies better today than tomorrow.