Blockchain, digital workforce see increasing adoption in supply chain

Report highlights technologies driving next-generation supply chains and ways to overcome the top barriers to adoption

April 13, 2018
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MHI announces the release of the fifth in a series of MHI Annual Industry Reports developed in collaboration with Deloitte Consulting LLP. The 2018 MHI Annual Industry Report, titled Overcoming Barriers to NextGen Supply Chain Adoption provides insights into trends and technologies that are having a business impact on supply chains, their security and the people who run them.

Manufacturing and supply chain professionals are facing many challenges but, according to the report, the top ones are increasing customer demands on supply chains (73 percent) and hiring qualified workers (64 percent).

Eleven technologies are working together to create next-generation supply chains that can meet these challenges because they are digital, on-demand and always-on. Eight out of ten survey respondents believe these supply chains will be the predominant model within just 5 years.

This year’s report provides updates on the innovative technologies MHI predicted would have the most potential to transform supply chains four years ago when the MHI Annual Industry Report was launched. The 2018 report includes two new technologies (Artificial Intelligence and Blockchain) that are rapidly emerging. The report also covers the potential of these technologies to disrupt the industry as well as their adoption rates and common barriers to adoption. The eleven technologies covered in the report are:

• Blockchain
• Robotics and automation
• Predictive analytics
• Internet of Things
• Artificial Intelligence
• Driverless vehicles and drones
• Wearable and mobile technology
• Inventory and network optimization
• Sensors and automatic identification
• Cloud computing and storage
• 3D printing

The top technologies respondents say can be a source of either disruption or competitive advantage are:

• Robotics and automation (65 percent, up from 61 percent in 2017)
• Predictive analytics (62 percent, up from 57 percent in 2017)
• The Internet-of-Things (IoT) (59 percent, up from 55 percent in 2017)
• Artificial Intelligence (53 percent, new category in 2018)
• Driverless vehicles & drones (52 percent, up from 30 percent in 2015)

Adoption Rates
Cloud computing and storage has the highest current adoption rate at 57 percent. Adoption is expected to grow to 91 percent over the next five years. Inventory and Network Optimization, now at 44 percent adoption is expected to grow to 90 percent over the next five years.

Over the same time frame, Predictive Analytics is expected to reach an 82 percent adoption rate, followed by IoT at 79 percent, Robotics and Automation at 73 percent, Blockchain at 54 percent, Driverless Vehicles and Drones at 50 percent and Artificial Intelligence at 47 percent.

The top three barriers to adoption of these technologies are: making the business case for NextGen supply chain investments; tackling the supply chain skills gap and workforce shortage; and building trust and security in digital, always-on supply chains

Supply Chain Talent Gap
To implement any of these technologies, firms need access to a skilled and increasingly digital supply chain workforce. This has been a theme in all five annual reports and the talent gap is growing as the adoption of these technologies increases.

The top critical skills needed to compete in the next-generation supply chain, according to the survey are strategic problem solving (49 percent), analytics/modeling/visualization (43 percent) and general business acumen and cross-functional knowledge (38 percent).

When it comes to cybersecurity, the sophistication of hackers and “threat actors” is the biggest risk (44 percent), followed by the lack of awareness of the threat within the organization (40 percent) and poor cybersecurity practices among suppliers (37 percent).

As cybersecurity concerns grow, the demand for transparency at every level of the supply chain is skyrocketing as consumers increasingly expect full information about the origin and history of the products they consume.

Blockchain’s unparalleled ability to enable transparent yet controlled data sharing in a way that is extremely reliable, efficient, and highly-encrypted provides a powerful and robust platform to tackle some of today’s toughest supply chain challenges, while also providing an unmatched level of cybersecurity. This is where blockchain can be a huge supply chain differentiator.

This year’s report introduces the topic of Blockchain and examines how it may be the answer to many cybersecurity, trust and transparency challenges of supply chains.

The biggest barrier for blockchain adoption is that very few people understand what it is or how it can realistically be used in their operations. Only 11 percent of respondents believe they have a working understanding of blockchain technology and how it might be applicable to supply chains.

Adoption of blockchain in supply chains stands at 5 percent, but it is projected to jump to 54 percent over the next five years.

Firms across industries can benefit from using blockchain in their supply chains. Automotive manufacturers, food producers and pharmaceutical manufacturers, among others, can take advantage of the immutable and transparent nature of blockchain to track product origin and quickly and discreetly recall products that may have been produced with a defect, helping to minimize brand damage, costs, and customer inconvenience.

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