The last several years have seen a massive influx of emerging digital technologies in the supply chain. Driven by dramatic changes in consumer needs and persistent labor shortages, these technologies have enabled increased productivity, resiliency and visibility.
Yet, the supply chain digitalization journey is far from complete. As we look ahead to 2024 and beyond, continuing technological advances have the potential to drive further improvements in all aspects of supply chain management. Here are five developments to keep an eye on in the coming years.
1. Analytics Take Center Stage
Advanced data analytics have already established a foothold in supply chain management thanks largely to third-party logistics providers (3PLs) who have integrated systems across the supply chain while also employing business intelligence and visualization tools in their solutions.
DHL Supply Chain, for example, is improving peak demand management by using machine learning to analyze historical order patterns, which includes the flagging of external factors that influence customer behaviors, such as weather and economics. The result is more accurate forecasts by workstream that enable the company to better prepare for demand fluctuation and efficiently manage extreme peaks without compromising service levels.
This is, however, still something of an isolated example as data remains siloed in many supply chains, and even where it is being aggregated and analyzed there are opportunities to expand the scope of these programs. Capitalizing on those opportunities will enable the transformation from reactive to proactive and predictive supply chain management.
2. The Cloud Creates Opportunity
Warehouse management system (WMS) providers have already introduced, or announced their plans to introduce, cloud-based software-as-a-service (SaaS) models for their systems.
This shift to the cloud has the potential to remove barriers to technology modernization for organizations operating with outdated legacy systems that can’t deliver the visibility or productivity required today. Instead of making large capital investments to upgrade their management platforms, these organizations will now have the opportunity to convert system costs from capital to operating expenses while ensuring they are always operating on the latest generation of their chosen systems.
Equally important, the SaaS model will enable easier integration of data- and processing-intensive applications into supply chain systems, such as generative AI.
3. AI Expands its Role
While machine learning and predictive analytics are already delivering value in supply chain operations, other forms of AI have similar potential. According to a 2023 IBM survey, 46% of supply chain executives anticipate that AI/cognitive computing and cloud applications will be their greatest areas of investment in digital operations over the next three years.
Cognitive computing—the use of computerized models to simulate the human thought process in ambiguous situations where the right answer can’t be programmed into the system—has the potential to automate inherently dynamic processes, such as forecasting, inventory management and route optimization.
Generative AI, which has advanced rapidly this year and garnered massive media attention through the release of tools like ChatGPT, has similar potential. Due to data security concerns with publicly accessible tools, organizations are more likely to build their own tools to help inform planning, forecasting and risk management.
4. Robots Take Human Form
The next generation of robots to appear in the warehouse may look more like the humans they are working alongside than the systems in use today.
Most people by now have seen videos of humanoid robots dancing or demonstrating their mobility on a parkour course. These are truly impressive, but it’s important to remember the robots are programmed to perform these activities and are doing so in a carefully controlled environment.
The typical warehouse presents a much more dynamic and unpredictable environment and the challenge of these robots operating in those conditions should not be underestimated. Nevertheless, as AI and robotic technologies continue to advance and converge, it is possible that the next generation of humanoid robots could have the intelligence to work within the warehouse. If so, they may prove to be the answer to some of the more difficult-to-automate processes in the warehouse, such as mobile carton picking.
5. Orchestration Is On the Horizon
Expect to hear more about orchestration in the supply chain in the coming years as it represents the final frontier in supply chain digitalization.
A fully orchestrated supply chain would rely on a range of digitalization technologies to create near-100% accurate inbound forecasts and then develop and execute a plan to ensure all supply chain resources—people, systems and automation—are balanced and used optimally to execute on that plan.
It’s a daunting challenge but like digitalization in general, orchestration will advance in stages, with each stage delivering value until the ultimate goal is realized. Initial efforts are being focused on orchestrating the activities of multiple automation systems within a certain environment to ensure systems are working together to achieve their common objectives in the most efficient way. The following stages will integrate other resources into the orchestration model.
Continuing the Journey
As we move into the next phase of supply chain digitalization, continuous performance improvements will be driven by both the maturation of technologies that have already proven their value on a limited scale and the emergence of new technologies that build on the foundation that has been established.
Leveraging both of these trends will require dedicated resources that bring together supply chain and technology expertise as well-established practices for evaluating, testing and implementing emerging technologies.
Omer Rashid is vice president of operations development with contract logistics provider DHL Supply Chain.
