- March 13, 2019
Top 3 Trends for Digital Supply Chain Optimization in 2019
The big catch phrase for 2019 is the “digital supply chain,” an umbrella term describing the integration of supply chain data, analytics and communication into an electronic format. As retail supply chains grow in complexity and demands for real time inventory availability and customer service increase, digital tools allow companies to operate in a more customer centric and strategic way. Among other things, this means replacing legacy systems with SaaS tools to manage data analytics, forecasting, customer segmentation, planning, warehouse automation, supplier management, raw material availability, design and customization.
Part of the digital supply chain includes automation, a growing trend in both manufacturing and logistics. Manufacturers such as Apple supplier Foxconn, have replaced 40% of their workforce, or over 60,000 workers, with robots and automation. Amazon has introduced everything from delivery drones to warehouse robots to manage fulfillment and the Amazon.go store format for cashierless payment and pick-up. Alibaba, Amazon’s China equivalent has its own innovations including Cainiao an AI tool for parcel sorting and delivery and Fashion AI a digital fashion consulting tool. By 2020, over 65% of e-commerce operations are predicted to use autonomous robots in their order fulfillment process to improve productivity. Automation of this kind makes for more scalable, flexible and cost-effective fulfillment.
Artificial Intelligence (AI)
A more advanced aspect of the digital supply chain is Artificial Intelligence, where retailers are investing heavily in new hardware and software applications. Retailers are readily adopting AI for inventory management, demand forecasting, replenishment, warehouse operations and fulfillment. The big players such as Walmart, Amazon, Alibaba and others have their own tech incubators developing and acquiring innovative technology. They are quickly moving beyond algorithms for more basic tasks to more complex functions such as personalizing pricing, promotion and communication. Amazon and Alibaba are both well known for their highly automated, intelligent fulfillment centers. One study predicted that by 2024 over 60% of the largest manufacturers will use artificial intelligence platforms to drive productivity gains of more than 20%. The idea is to automate routine task and decisions, allowing people to focus on more strategic activities.
Product Lifecycle Management (PLM)
While PLM systems are not new, there is still a lot of room for adoption and integration into supply chains which are still centered on the ERP system. One study predicts that by 2022 over 40% of manufacturers will integrate data from PLM apps into their supply chain data to improve service levels. Data from PLM systems provides a more holistic view of the product lifecycle from concept to delivery. This enables companies to connect manufacturing, product development and customer demand seamlessly to deliver better performing products with improved service. Another component to PLM is supplier lifecycle management which provides greater visibility and integration between suppliers and retailers/brands, speeding up onboarding and improved visibility down the supply chain to Tier 2 and 3 suppliers.
Digital supply chains and more advanced technology will be more of a mainstream focus through the next few years, providing a competitive advantage to the early adopters. The digital supply chain should ultimately help companies reach the holy grail of retail: bringing desirable products to market faster and more profitably while maintaining a lean inventory.