The Global Supply Chain Technology Outlook 2021
If you were at a party, did you know that the supply chain would be the life and soul of it? The drink, the food, your clothes, shoes, the furnishings, the music ─ each and every part of the experience has, at one time or another, travelled along a web of sophisticated supply chains to be there.
One thing should be clear: since the dawn of trade, supply chains have been crucial not just to the party but to the survival of humankind, and we need them now, more than ever before.
In times of crises, as we have experienced in 2020, courtesy of the COVID-19 pandemic, the traditionally robust and stalwart supply chains of yesteryear struggled ─ that stark reality pushed forth a new agenda. The endorsement that industry-leaders and multinational corporations invest in technology to digitally-transform and enhance their global networks, creating more agile and resilient systems.
Companies all over the globe heard this call and have, as a result, got to work on innovating new solutions, strategies and systems to alleviate the strains of a modern, highly volatile world, on our supply chains.
With that in mind, we’re going to take a look at the outlook for 2021, to see which technologies will be transforming the old, and building new supply chains of tomorrow.
Analytics and Analysis
Where would the modern world be without analytics and the detailed analysis of them? In a ditch, I imagine. So, it’s unsurprising that “big data”, “data harvesting”, and “predictive analytics” are all set to continue their exponential growth through 2021.
The information that your company acquires during day-to-day operations of your supply chain network will, undoubtedly, hold a myriad of hidden secrets ─ if only you’d take the time to look for them. Through the collation and analysis of data, both internal and external, you’ll quickly be able to identify money-sinks and pain-points where your overall organisational effectiveness and efficiency suffer.
It seems that supply chain and artificial intelligence (AI) are almost synonymous, these days, with the enhanced technological capabilities of our computer-colleagues outshining, and often outworking human resources in the workplace. AI-enhanced technologies are allowing industry-leading companies to optimise and automate processes and procedures all along their supply chains. Why is this a crucial development? Because unfortunately for us, humans are prone to error ─ it’s in our nature, and nothing to be ashamed of. Computers, however, are not; binary coding and machine learning systems mitigate the risk of human error, whilst simultaneously streamlining and making processes more efficient.
As AI can continuously analyse and calculate without pause, the technology is surefire to find patterns, better predict purchasing demands, eliminate redundancies, and optimise inventory levels across your entire supply chain. It saves a lot of time, resources, and to be frank, a headache for your employees.
Blockchain technology has been on the tip of the tongue of every industry-seasoned professional in tech for years, now. Its original ambassador, Bitcoin, was only a cryptocurrency but over the years, with the rise of blockchain-powered, decentralised platforms like EOS and Ethereum, blockchain has evolved into an industry-disrupting behemoth.
With that evolution, a system that is wholly unique and incredibly powerful has risen ─ blockchain is, arguably, the very best way to protect companies and their supply chains from cyberattacks, hackers, and corporate espionage, courtesy of its decentralised, immutable, 256-bit encryption. The cryptology that only blockchain creators and few others fully understand has resulted in a system that is both ridiculously confusing to crack, yet easily accessible to all, and secretive in nature, yet wholly transparent.
Internet of Things
The ‘Internet of Things’ or IoT, for short, is an innovative technology that, for the most part, has infiltrated every aspect of our lives. It’s in everything from smart devices to heating systems, and, currently, while it has broken into the supply chain network, it hasn’t yet reached the point of being an “end-to-end” solution. It’s likely to become one in 2021, though.
Currently, IoT is already in use in some manufacturing processes, with smart factories and enhanced machines that communicate with the hubs hivemind, and it’s particularly potent in the logistics industry, where aeroplanes, freighters, and vehicles are fitted with sensors and live-tracking capabilities. In the coming year, we should see IoT grasp demand management, preventative maintenance and sourcing applications in the near future, as well.
Internet of Behaviours
As an addition to IoT, 2020 has seen a desperate need for ‘Internet of Behaviours’, or IoB. IoB is a lesser-known variant that focuses on using data to change behaviour. This is possible now, courtesy of what Gartner calls “digital dust” ─ the data footprint that we all leave behind us from our everyday use of technology ─ which can be harvested, analysed, and used to influence or manipulate end-user behaviour through feedback loops.
As we move into 2021, it’s likely that we’ll see organisations working with not only IoT but also IoB, as our methods of purchasing, as well as the supply and demand for certain products changes.
Robotic Process Automation
Robotic Process Automation, more commonly referred to as “RPA”, is a system that, generally-speaking, creates value across the entire supply chain. RPA is software that takes traditionally manual processes, completed by human resources, and automates them ─ the clue is in the name, really.
Naturally, as I alluded to earlier, we are prone to error; RPA implementation results in fewer mistakes, more efficient processing times, and costs a lot less than its human counterparts. It’s important to remember that the implementation of RPA is for the automation of tasks and processes, not the automation of jobs. The machines aren’t replacing humans. They’re just freeing us up for higher-value activities, and taking the monotonous tasks off our plate.
Quite kind, really.
These are just some of the impending developments of 2021. There are so many more, and you could probably add to this list, yourself. I like to think of major technological developments that I have listed act as an umbrella ─ I believe that these five factors have hundreds of subsidiary advancements within them and that each represents a core pillar of the modern supply chain networks that our societies desperately rely on. Each will have its own part to play in the successful creation of a more agile, adaptable, and innovative supply chain system, in our bid to establish resiliency against future adversity that will no doubt come, like COVID-19, when we least expect it.
For more information on procurement, supply chain and logistics topics - please take a look at the latest edition of Supply Chain Digital.
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”