It is predicted that by 2023, revenues generated by technology in the global supply chain will increase at a compound annual growth rate of 11%, and reach $440 billion. Suppliers, manufacturers, retailers, and logistics service providers (LSPs) will continue to adopt increasingly sophisticated and impactful digital technology strategies to deliver value along the entire logistics value chain.
According to ABI Research, a market-foresight advisory firm providing strategic guidance on the most compelling transformative technologies, this expected combination of technology and service will generate $4.6 trillion in 2023 (an increase of 29% from 2018).
“Supply chain operators must find innovative ways to deliver the three primary tenets of a successful strategy: visibility, intelligence, and efficiency,” said Nick Finill, Senior Analyst at ABI Research. “Technologies such as robotics, blockchain, IoT, augmented reality, and especially Artificial Intelligence (AI) are vital for supply chain operators wanting to remain competitive in today’s complex, global, and customer-centric market.”
AI has been more than just a buzzword — it seems to be driving the digital transformation of the of the supply chain. The technology was originally introduced in order to create machines that possessed thinking capabilities and could eventually replace human intelligence and for the past 50 years, it has been proving itself in the decision-making process, specifically in business due to its ability to recognize patterns and analyze data intelligently. An while it’s predicted to make serious strides in supply chain management, we haven’t even scratched the surface in terms of implementation.
The entire value chain will benefit from AI as it facilitates greater levels of automation and smarter decision making, enabling production, distribution, and retail to become synchronized for the benefit of operating companies and customers.
The growth of e-commerce is driving new approaches to digital technologies in the supply chain too. Warehouse automation and the digitization of last-mile delivery operations stand out as areas targeted for technology spending. E-commerce and omnichannel retailers such as Ocado, Wal-Mart, Kroger, and Amazon have been investing in robotics and AI, which are poised to transform fulfillment operations on a major scale.
“The supply chain is generally ripe for disruption, but it is also a highly intricate and crucial ecosystem. Supply chain stakeholders, therefore, face the challenge of adopting technologies in the right way and at a rapid pace, but without damaging their own supply chain operations and losing customers in the process,” Finill added.
From enhanced productivity, to machine learning for SCP and warehouse management, to predictive analytics for supplier selection and relationship, AI will touch the supply chain deeper than ever in the next five years.
These findings are from ABI Research’s report Seven Critical Technology Developments Driving Supply Chain Transformation technology analysis report. This report is part of the company’s Intelligent Supply Chain research service, which includes research, data, and Executive Foresights.