PHOENIX – End-to-end supply chain visibility continues to be the number one priority for executives, driven by artificial intelligence (AI), machine learning (ML) and cognitive analytics.
The second annual joint survey of supply chain executives from JDA Software, Inc. and KPMG LLP (KPMG) details the key innovation investments across retail, manufacturing and logistics in 2019.
The new survey reveals that supply chain traceability and visibility continues to be the highest investment area for supply chain executives (77 percent). To achieve this level of visibility, supply chain executives plan to deploy or test cognitive analytics (82 percent), AI/ML (62 percent) or digital control tower (55 percent) technology in the next 24 months.
Together, AI/ML technologies are viewed as the most impactful technology this year (80 percent) given its wide applicability and promise of addressing complex business problems across the value chain. Cognitive/predictive analytics was also ranked highly, as 75 percent of respondents believe it will have a disruptive impact in the year ahead. Overall, since last year, AI has shifted into the high impact/high planned adoption quadrant for surveyed executives, confirming the importance of the impact this technology will have on supply chains in the year ahead.
“A truly autonomous supply chain requires predictive end-to-end visibility and these survey results echo our vision to make this a reality for our customers,” said Fred Baumann, group vice-president, Industry Strategies, JDA.
“Supply chain executives must invest in the critical technology elements such as AI/ML that will simultaneously unlock the value from customer data while shedding light on disruptions before they occur, recommending prescriptive actions for a smarter, more agile supply chain.”
Drilling down even further into how impactful AI/ML technologies are, survey respondents found the highest value use case to be the ability to optimize inventory (51 percent) followed by predictive distribution (45 percent) and optimizing distribution networks (42 percent) because companies need the ability to fulfil from anywhere, profitably.
Cross-industry, the highest value use cases for AI were identified by respondents to be:
Increasing inventory and pricing accuracy for retail
Improving demand forecasting for manufacturing
Optimizing distribution network for logistics
“As the study found, supply chain visibility continues to be the highest priority for executives, and in just a year, plans to invest in cognitive and predictive analytics have skyrocketed,” said Brian Higgins, KPMG U.S. Advisory principal and the firm’s Procurement and Product Operations leader.
“Investments in these technologies, as well as AI and ML and digital control tower technology, over the next couple of years will offer the most impact for gleaning and leveraging data insights. This holds the potential to truly change the game for enterprise supply chain execs as they can track conditions in real-time, detecting issues and addressing them proactively for optimization.”
Investment Challenges and Innovation Roadblocks
Though speed-to-market was ranked as a top investment driver for 69 percent of respondents, resistance to change is the number one challenge to driving innovation for 42 percent of respondents. The inability to assess the potential of new technology has risen over the last year, indicating a disconnect between technology hype and technology value.
Executives struggle to visualize and quantify the measurable impact that a technology will have on their business. To address this, executives must underscore the measurable impact that AI/ML and cognitive analytics will have, as a true step change towards the performance of global supply chains. Providers that have a proven value delivery track record in the AI/ML space will hold a competitive advantage overcoming this challenge.
Another way executives are driving innovation is through cloud technologies. Cloud adoption is viewed as enabling speed-to-market by respondents. Sixty-four percent believe cloud helps them quickly adapt to business needs and drive business agility 2X faster than any other technology.
“Competing in a world of infinite customer choice and increasing distribution complexity will be impossible for firms that don’t upgrade their supply chain innovation and agility quotient. It isn’t easy, executives are facing technology hype-cycle fatigue because the inability to map technologies to specific, practical and impactful use-cases continues to be an innovation impediment,” said Gaurav Pant, chief insights officer at Incisiv.
“Leveraging advanced analytics to focus on specific use-cases, using cloud-based software to improve business agility and investing in the right talent are core ingredients to what will move the needle on innovation.”