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As we learned from our 2023 Digital Trends in Supply Chain Survey, the top priorities of operations leaders when making tech investments are driving growth (53% of respondents) and optimizing costs (51%). But according to our August 2023 Pulse Survey, 88% of business leaders said they still struggle to capture value from their technology investments.
From the tools you use to what reinvention means for the people who power your business, here are three ways technology is reshaping supply chains — and five things leaders are prioritizing to sustain growth.
How is emerging tech reshaping supply chains?
Generative AI (GenAI), along with traditional machine learning, offers a wealth of possibilities, from creating and analyzing requests for proposal (RFPs) to automating communications with customers and even business partners. These technologies might replace out-of-the-box software solutions, allowing every company to build its own bespoke software solutions, custom tailored by self-learning AI. Streamlining software solutions could leave more bandwidth and resources for businesses to put data and analytics front and center in their supply chain operations.
Non-generative AI and deep learning algorithms have been used in the market for years to comb through ever-expanding data sets, linking once-siloed business functions and enabling more accurate and detailed reporting and dashboards.
At the same time, it might be beneficial to redefine what constitutes the supply chain. The edge data centers that retain this glut of information and enable always-on cloud integration represent a $13.5 billion expected market in 2024. They also consume an enormous amount of energy. Companies should also consider latency, extreme weather, local regulation and any potential incentives or tax credits when choosing new data center locations, in addition to initial costs of construction and upkeep.
How workforce issues are affecting supply chains
GenAI is poised to change the very ways work is performed, but it’s humans who will ultimately decide which processes will be automated to free up capacity for higher-level tasks. This will likely have a direct impact on the people who work in supply chains and which skills they need to succeed. In our most recent Digital Trends in Supply Chain Survey, more than two-thirds of respondents said they expect digitizing their supply chain to require some upskilling of their employees.
At the same time they have to manage training employees on new tools, companies are still contending with basic workforce priorities. Hiring is down, while retraining and upskilling are on the rise as business leaders strive to control costs but maintain a future-ready workforce. We’ve identified eight essential technologies where business leaders are focusing their attentions to expand, evaluate and experiment as they drive growth. Hiring, upskilling and retaining workers with skill sets in these areas will be critical to creating sustained outcomes in the years to come.
Supply chains in the circular economy
The traditional model of supply chains is linear: Raw materials are harvested by one group of companies, transported by others, assembled into finished products by yet more companies, shipped out to retailers or distributors, and finally sold to end users. But in a circular economy — where old industries implement new sustainability practices and new industries emerge to repair and recover existing products — supply chains also become circular.
In the circular economy, companies and consumers each become caretakers of products and materials, until they move into the next stage of their lifecycle: rare earth metals (REMs) used to only be bought in small quantities for electronics and then disposed of, but with a booming electric vehicle (EV) industry, automakers are purchasing these minerals in considerable volume. As a result, REM recovery from e-waste has become an expanding industry and a critical capability.
While companies respond to changing consumer behaviors, 51% of Digital Trends in Supply Chain Survey respondents also said staying aware of evolving legislative and regulatory frameworks is a major or minor challenge to their supply chains. More stringent local reporting and repairability requirements like those in Europe and California will likely also continue to change the way large businesses operate and report sustainability progress by incentivizing end-to-end transparency.
5 smart moves you can make right now
1. Obsess over the outcomes that matter to you most. What are your chief near- and long-term goals when it comes to implementing new technologies? Focus on the business results and objectives you want to prioritize when considering how new technologies can help you achieve them.
2. Experiment with how GenAI and other developing technologies can help you deliver sustained outcomes throughout transformations, reduce costs and improve efficiency while generating new revenue.
3. Reexamine how your supply chain handles products and materials throughout the product life cycle. Can you re-use and recover materials from end-of-life products? What is the cost compared to purchasing new raw materials? Reframing yourself as a custodian of these materials can change how consumers think of your brand, as well as how you think about yourself and how you act in the marketplace.
4. Collaborate closely with CHROs so new technologies roll out with transparency and employee buy-in. Operations leaders can focus on the critical components of change management as they work with impacted supply chain functions.
5. Revisit your global footprint. Consider labor and logistics costs, access to talent, climate risks and local regulation when deciding where you source, ship and produce materials.
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