Technology Adoption Rates Rise as Companies Adapt to Digital “Always-On” Supply Chains, Finds Third MHI Industry Annual Report

ATLANTA, GA –April 07, 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 2016 MHI Annual Industry Report titled Accelerating Change: How Innovation is Driving Digital “Always-On” Supply Chains provides new insights into trends and technologies that are having a dramatic impact on supply chains and the people who run them.

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.

“The ‘Always-On’ Supply Chain has the potential to deliver massive economic and environmental rewards for our industry and society,” said George Prest, CEO of MHI, an international trade association that represents the material handling, logistics and supply chain industry. “It can boost productivity and sustainability, drive new markets, encourage innovation and create new, high-paying jobs. As with all change, the devil is in the details. That is why MHI provides this annual report as a resource and guide for our industry as it manages this unprecedented level of change.”

This year’s report will be launched during an April 6 keynote at MHI’s MODEX 2016 show, April 4-7, at the Georgia World Congress Center in Atlanta. The study is based, in part, on responses from 900 supply chain industry leaders.

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

“The innovations driving ‘Always-On’ Supply Chains are initially disruptive, but they can empower firms to optimize processes and improve efficiency, creating a more flexible experience for workers and driving measurable business outcomes,” said Scott Sopher, principal at Deloitte Consulting LLP. “According to the survey findings, adoption of the technologies covered in this report will grow dramatically over the next 6-10 years.”

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.

Industry

Enabling Technologies

Potential Benefits

Agriculture

Drones

Predictive Analytics

Smarter irrigation and deliberate application of chemicals

Cold Chain

Sensors and Automatic Identification Manage and monitor quality remotely

Pharmaceuticals/ Life Sciences

Sensors and Automatic Identification Product traceability and batch control

R&D Lab Management

Predictive Analytics Clinical trial patient enrollment forecasting and management
Health Care Predictive Analytics Enhanced ER diagnostics to drive variable
wait times
Cloud Computing and Storage Customer portals to access doctors, test
results and schedule

Media

Cloud Computing and Storage Better management for media distribution channels and revenue generation

Oil & Gas

Robotics and Automation

Sensors and Automatic Identification

Remote sensing, underground visualization, and automated safety controls for drilling and fracking

Mining & Construction

3D Printing

Cloud Computing and Storage

On-demand replacement parts built with 3D printers at remote sites to increase asset efficiency

Direct to Consumer

Inventory and Network Optimization Tools Anticipatory shipping based on predicted demand

Alternate shipping modes and ship-to locations with drones and drop-boxes

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

“Of all the recommendations we offer leaders in the supply chain industry, the most important is the need to proactively manage talent,” Prest said. “The growth in digital, ‘Always-On’ Supply Chains will only widen the talent gap that already exists in our industry. We need to train a new breed of supply chain professional who has technical, analytical and problem-solving skills. Much of MHI’s work is focused on providing resources to help the industry close the talent gap through education and training programs and industry collaborations.”

Access the full report here

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.

About MHI

MHI is an international trade association that has represented the material handling, logistics and supply chain industry since 1945. MHI members include material handling and logistics equipment and systems manufacturers, integrators, consultants, publishers and third-party logistics providers. MHI offers education, networking and solution sourcing for their members, their customers and the industry as a whole through programming and events. The association sponsors the ProMat and MODEX expos to showcase the products and services of its member companies and to educate manufacturing and supply chain professionals. MODEX 2016 will be held April 4-7 in the Georgia World Congress Center in Atlanta.

About Deloitte

Deloitte’s leading Supply Chain and Manufacturing Operations practice helps clients address their most complex business problems and achieve tangible, measurable and sustainable results. According to Kennedy, Deloitte is a Vanguard Leader, based on capabilities, in Supply Chain Risk Management Consulting.

As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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