7 Supply Chain Predictions For 2017

Richard Howells

Technology trends never proceed the way you expect them to – unless your expectations are tempered by experience. New technologies get the most press before they reach maturity, part of a phenomenon Gartner calls the hype cycle. When people stop talking about new innovations – cloud computing, mobility, Big Data, whatever – is just about the time they get deployed in a meaningful way.

With that truth in mind, here are seven developments we can expect in 2017:

1. IoT will begin to disrupt the extended supply chain

The Internet of Things (IoT) is already part of our daily lives: the average new car sports hundreds of sensors. But most companies haven’t deployed IoT devices widely. That will change in 2017, when manufacturers and logistics providers across industries will begin leveraging IoT.

There are 6 billion IoT devices in use today, and there will be 21 billion within the next three years. What’s driving the uptick is the rapidly falling price of sensors and their integration into supply chain processes.

The result will be major disruption, because there will be an enormous Big Data explosion. If you’re not ready, that will be a disaster, because too much data can cause more confusion than too little data. But if you have the means to identify, gather, harmonize, analyze, and deliver that data in the right context, you stand to gain significant new speed and insights.

2. 3D printing will begin to revolutionize R&D and manufacturing

Already, 3D printing has attracted a lot of attention. But 2017 is the year it will enter the mainstream. Worldwide sales of 3D printers doubled in 2016, and 6.7 million will ship in 2020. While only seven percent of companies use additive manufacturing to produce end products today, 31% use it for prototyping, and 42% will rely on 3D printing for mass manufacturing in the next few years.

But 3D printing won’t just revolutionize prototyping and production. It will also transform inventory and logistics. First, manufacturers – especially makers of spare parts – will “store” parts and components in software rather than on shelves. In other words, inventory will become digitized.

Second, logistics providers will use additive manufacturing to reimagine their business. Companies like UPS are looking to the technology to become more relevant in the “last mile” of shipping and even to offer 3D printing as a service.

3. Robotics and augmented reality will infuse manufacturing

Robotics use will grow by 10% a year over the next 10 years. In some industries, robots will soon handle 40% of manufacturing. Augmented reality, delivered through technologies such as smart glasses, will also transform training and field service. The result will be a boon to manufacturers, accelerating production and field service, lowering the cost of labor, and reducing errors in the factory, the warehouse, and the field.

In some industries, the rise of robots could make low-cost labor markets less attractive and bring manufacturing back to the United States. That wouldn’t necessarily bring back traditional manufacturing jobs. Yet the history of automation doesn’t suggest that robots will eliminate jobs, but merely change them. Expect robots to drive a re-skilling of the manufacturing workforce.

4. Autonomous vehicles and drones will become proof of concept

Autonomous vehicles and drones are really an extension of robotics. What is a self-driving car but a long-distance robot on wheels? In October 2016, Uber’s self-driving truck made its first autonomous delivery, 50,000 cans of Budweiser beer. There are still details to work out, from regulations to insurance to fatal accidents. But in 2017, forward-thinking companies will begin to move beyond PR stunts to limited use in real-world scenarios.

Drones may actually reach maturity before autonomous vehicles, assuming aviation regulations can get worked out. Amazon, for one, is actively pursuing 30-minute delivery, and companies from Google to Walmart are also investigating drones. It will be interesting to see how shippers like UPS and FedEx respond. But any potential player will have to get serious in 2017.

5. Cybersecurity needs will drive new technologies such as blockchain

Cybersecurity will continue to be an issue for all businesses, especially with the rise of IoT. A distributed denial-of-service (DDoS) attack that slowed popular sites such as Twitter and Reddit in late October 2016 wasn’t the first to leverage burgeoning IoT devices. More and more companies will discover the hard way that IoT devices can be hacked in minutes.

That will drive interest in new security technologies, especially blockchain. Blockchain is a decentralized database that maintains a constantly growing list of records, or blocks, each of which includes a timestamp and a link to a previous block. A core component of bitcoin, blockchain serves as an electronic ledger that’s duplicated on thousands of servers and can’t be retroactively altered. In 2017, the cybersecurity industry will begin to extend blockchain to IoT.

6. New Big Data tools will drive predictive analytics

Many industry observers grew tired of the hype around Big Data and stopped using the term. But with the emergence of IoT, Big Data is just getting started. That will drive a critical need for predictive analytics in 2017.

Supply chains will deploy “digital operations centers” that deliver real-time information based on function and individual role. The centers will combine structured data from business systems and IoT with unstructured data such as weather, traffic, and customer sentiment. The goal is to not only measure what’s happening in the supply chain but also to predict it.

The key is that the analysis and forecasting must be role-based to make it relevant and actionable. Look for participants up and down the supply chain to invest in the technology to enable these digital operations centers.

7. Focus on customer centricity and product individualization will only increase.

Primarily in business-to-consumer (B2C) industries, but also in business-to-business (B2B) situations, manufacturers have been increasingly focused on customers. And the ultimate in customer centricity comes through the delivery of individualized products.

This trend is far from over, and in fact will continue to drive IT investment in 2017. Fully 90% of companies believe their customers value or strongly value individualized products. But three-quarters say it’s hard to get a clear understanding of what customers are willing to pay for.

So manufacturers will have to get better about analyzing disparate data, sensing demand, actually predicting market drivers, and responding quickly and precisely. They won’t finish this job next year. But they’ll have to take action in 2017 if they want to remain competitive in 2018.

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About Richard Howells

Richard Howells is a Vice President at SAP responsible for the positioning, messaging, AR , PR and go-to market activities for the SAP Supply Chain solutions.