Six in ten respondents are planning new technology investments of over US$1m in the next two years © Getty Images/iStockphoto
Six in ten respondents are planning new technology investments of over US$1m in the next two years © Getty Images/iStockphoto

Surge in supply chain spend on innovation

24 April 2019

A three-year trend of declining investment in supply chain innovation is set to be reversed this year, with 95% of respondents to a survey planning to increase spending in 2019, according to a new report.

More than 1,000 supply chain professionals took part in a global survey for the ‘Elevating Supply Chain Digital Consciousness’ report by US supply chain trade association MHI and Deloitte.

Companies with annual revenues ranging from less than US$10m to more than US$10bn were represented, and two thirds of those taking part in the poll were CEOs or held other senior roles.

Firms need to embrace a “digital supply chain mindset” according to the report, which was released this month. 

It stated: “The survey results suggest that investment in supply chain innovation is at a critical inflection point, with a trend of declining investment from 2015 to 2018 being more than countered by a 95% increase in projected spending for 2019.”

Around six in ten respondents are planning new technology investments of more than US$1m over the next two years, while one in three plan to spend more than US$5m.

Robotics and automation were singled out as the top technologies that would be a source of disruption or competitive advantage, cited by 64% of respondents. These were followed by predictive analytics (59%), artificial intelligence (55%), the Internet of Things (52%) and driverless vehicles & drones (51%).

Cloud computing and storage has the highest current adoption rate, with 56% using the technology, a figure which is expected to grow to 91% over the next five years. In this time, predictive analytics is expected to reach an 87% adoption rate, followed by IoT (80%), robotics and automation (72%), artificial intelligence (55%) and driverless vehicles and drones (51%).

The report said spending on these technologies appears to be at a tipping point as the negative growth of the last three years gave way to spending increases. “As the pace of investment in supply chain innovation escalates, the price of inaction will be severe,” it stated.

Tackling the supply chain skills gap and workforce shortage was seen as the biggest barrier to adopting new technologies, being cited by 65% of respondents.

The report warned of a “supply chain workforce shortage and rising need for digital skill sets,” with companies “severely hampered in their ability to implement digital technologies due to the shortage of workers with the necessary skills to run them.”

It predicted that new supply chain technologies such as automation and bots “have the potential to replace workers for monotonous and repetitive tasks” but added: “the broader goal is to enable increasingly scarce supply chain workers to focus their efforts on activities and decisions that are more valuable and complex.”

And the adoption of advanced supply chain technologies “will require a greater need for skilled workers,” it said.

“Businesses that make smart use of supply chain innovation can... position themselves to be the disrupters, rather than the disrupted,” the report stated. “But achieving the vision of a digital, always-on supply chain is neither easy nor free.”

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