Part 4 in the 4-part “Digital Supply Chain Predictions for 2019” series
Over the last three blog posts in this series, I’ve talked about some of the challenges and opportunities that lie ahead in 2019 for organizations seeking to serve customers better with digital supply chain capabilities. Let’s take a quick look at the ground we’ve covered.
The global perspective
The first blog in this series looked at global trade issues that will impact supply chains in 2019. Topping the list is the uncertainty surrounding Brexit. To prepare effectively, organizations are focusing on ways to increase safety stock to minimize the impact of potential cross-border bottlenecks as details for any end-game agreement get ironed out.
At the same time, trade issues elsewhere – like that between the US and China – will continue to put pressure on organizations to prioritize supply chain agility. The winners in 2019 may very well be those organizations that have the flexibility to respond to supply chain change.
The challenges of global climate change will also drive digital supply chain innovation in 2019. Trends include more sustainable products and manufacturing practices, logistics processes that minimize carbon footprint, and the ability to comply with environmental regulations.
As for the BRICS countries (Brazil, Russia, India, China, and South Africa), expect them to continue to rise. Despite disputes related to trade and politics, the fundamentals remain sound.
New business models and roles
Heading into 2019, giants like Amazon and Alibaba are flexing their muscles with unabetted e-commerce dominance. Amazon owns almost 50% of the e-commerce market in the US while Alibaba sets new records – like sales of 30.8 billion in one day last year.
As if it’s not yet clear, supply chain excellence is now being seen as the way forward for many companies. Some, in fact, are moving to “x-as-a-service” models in B2B scenarios. Here, the manufacturer not only makes the asset (say, an industrial pump or an HVAC machine) but installs it and manages it with techniques such as predictive maintenance and new ways of monetizing the service provided (such as charging by uptime or units of consumption).
All of this puts the chief supply chain officer (CSCO) in a new position to deliver greater value to companies seeking to move in such directions. As supply chain management and execution become a differentiator for companies, look for the CSCO – traditionally a back-office role – to come out of the shadows.
As addressed in my third blog, digital supply chains run on intelligent technologies. Increasingly, organizations are turning to these technologies for competitive advantage. Internet of Things (IoT), machine learning, and advanced analytics will see increased adoption in 2019. As for blockchain, while it will not go mainstream immediately, 2019 will see the technology moving out of the proof-of-concept stage into what may be called the proof-of-value stage. Expect advances.
Another area of uptake will include manufacturing and warehouse management automation – with some organizations moving from outsourced manufacturing to distributed manufacturing where production happens closer to the market destination, thanks to 3D printing techniques. Robotic process automation (RPA), meanwhile, will see greater adoption in 2019 as organizations use software bots that replicate the ways users navigate business systems to automate processes wherever possible.
So, for those of us focused on the digital supply chain in 2019, there’s a lot to look forward to. But there’s more coming down the pike as well. Here, quickly, are some remaining thoughts on what to keep your eyes open for in 2019:
- The transportation crunch: The ongoing shift to online retailing will result in a shortage of transportation resources. Already, the US is experiencing a shortage of about 80,000 truck drivers. Therefore, what we’re seeing is a shift from a “shipper market” to a “carrier market.”
- Competition for natural resources: With the world’s population growing and the availability of natural resources decreasing or at best remaining constant, we have the ultimate supply and demand challenge. We need to design, manufacture, deliver and consume products and assets in a much smarter way, and ultimately, “do more with less.”
- Security concerns: As digital supply chains generate more and more data from smart products, smart assets, social media sentiment analysis, and more, data security has come to the forefront. Who owns the data? This is the question for 2019.
- Diversity: Issues of diversity will dominate how organizations approach the global workforce in 2019.
Best wishes for 2019
This wraps up my prognostications for the coming year. Surely, I’ll fall short on many of the particulars. Indeed, as I quoted Danish physicist Niels Bohr at the series’ outset, “It’s difficult to make predictions, especially about the future.” In the broadest strokes, though, I think it is quite clear that technology advances will continue to help companies realize their digital supply chain objectives. This much seems obvious.
There’s much to look forward to in 2019. I wish you all the best.
Join an interactive session featuring Jeff Hojlo, Program Director of Product Innovation Strategies at IDC, and Hans Thalbauer, Senior Vice President of Digital Supply Chain and Industry 4.0 at SAP, to get inspired by how best-in-class companies are reinventing their supply chain. Register here.