Supply Chain Technology Challenges

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Supply Chain Technology Challenges

Key Takeaways

  • On February 4, 2022, Fingent published that labor and material shortages, surges in freight costs, port congestion, and challenges relating to demand forecasting constitute contemporary supply chain challenges for businesses. As a result, the top five technologies helping to tackle the challenges include robotics process automation (RPA), cloud computing and AI, Internet of Things (IoT), blockchain, and transportation management systems.
  • According to Tech Target, RPA is a "technology that mimics the way humans interact with software to perform high-volume, repeatable tasks. RPA technology creates software programs or bots that can log into applications, enter data, calculate and complete tasks, and copy data between applications or workflow as required."
  • Maruti Techlabs reported that in the next two years, about 72% of companies are forecast to rely on RPA to cut down costs and transaction times, with supporting findings that about 43%, 32%, and 34% reductions have been witnessed in terms of overall resources for order to cash processes, vendor and talent management, and invoicing respectively (details shown in the graphic below).
  • According to Insider Intelligence, a "recent survey by GT Nexus and Capgemini found that 70% of retail and manufacturing companies have already started a digital transformation project in their supply chain operations." Also, IoT World Today published that, "59% of respondents had partially or fully deployed IoT across their organizations, while 15% planned to invest in IoT within two years, and 22% had established pilots," according to the Gartner supply chain survey.

Introduction

We have provided four top technologies that are currently solving key challenges for supply chain companies. For each, we have described the technology, the challenge it is solving in the supply chain market, and how it is solving it, including supporting metrics. Due to data limitations on the top technologies for solving the main challenges big supply chain companies grapple with, we have provided key technologies currently solving major challenges in the supply chain industry. We have provided our findings below.

Key Technologies for Supply Chain Challenges

  • On February 4, 2022, Fingent published that labor and material shortages, surges in freight costs, port congestion, and challenges relating to demand forecasting constitute contemporary supply chain challenges for businesses.
  • As a result, the top five technologies helping to tackle the challenges include robotics process automation (RPA), cloud computing and AI, Internet of Things (IoT), blockchain, and transportation management systems.

1. Robotics Process Automation (RPA)

  • According to Tech Target, RPA is a "technology that mimics the way humans interact with software to perform high-volume, repeatable tasks. RPA technology creates software programs or bots that can log into applications, enter data, calculate and complete tasks, and copy data between applications or workflow as required."
  • Accordingly, Aaron Bultman, Director of Product at Nintex, a process management and automation software company, describes it as a "form of business process automation that allows anyone to define a set of instructions for a robot or ‘bot’ to perform."
  • Issues bordering on productivity improvements and efficiency, the incidence of reworking and risk rates, employee safety concerns, task repetition and mundane task performances, and the need to enhance delivery speed and order fulfillment are the key determinants for the growing use of RPA in the supply chain sector.
  • Tech Target adds that RPA is becoming a household technology in the supply chain industry because of its cost reduction attributes, streamlining processes, and ultimately driving better customer experiences. Additionally, business units can implement RPA without completely changing an organization's IT infrastructure, learning new tools, or asking IT experts for support.
  • Maruti Techlabs reported that in the next two years, about 72% of companies are forecast to rely on RPA to cut down costs and transaction times, with supporting findings that about 43%, 32%, and 34% reductions have been witnessed in terms of overall resources for order to cash processes, vendor and talent management, and invoicing respectively (details shown in the graphic below).

2. Cloud Computing and ArtificiaI Intelligence

  • According to Microsoft, Cloud Computing is the "delivery of computing services, including servers, storage, databases, networking, software, analytics, and intelligence over the Internet (“the cloud”) to offer faster innovation, flexible resources, and economies of scale." Additionally, AI is the "capability of a computer system to mimic human-like cognitive functions such as learning and problem-solving."
  • Fingent opines that cloud-based AI can turn big data into insights for companies in the supply chain industry as they continue to generate big data.
  • Thus, the drive toward automation process, informed supplier selection, demand for real-time information on shipments, and carrier performance analysis are some key drivers toward cloud-based AI by supply chain companies.
  • Captured in the IBM Institute for Business Value report, about 70% of supply chain professionals have resolved to rely on AI or intelligence automation to solve challenges relating to slow organizational responsiveness, outdated workflows, volatile, unpredictable demand, and limited visibility problems.

3. Internet of Things (IoT)

  • Microsoft defines IoT as "equipment, machines, products, and devices that are connected to the cloud and outfitted to collect and securely transmit data," that enhances an organization's ability to "analyze and act on data, allowing you to make smart decisions in real-time."
  • For instance, Fingent suggests that asset tracking enabled by IoT saves time and money while buttressing organizational data-driven decision-making.
  • Additionally, IoT devices like RFID chips, smart devices, mobile sensors, GPS tracking of shipments, and monitoring of parcel conditions have enhanced quality management in the supply chain sector, facilitating new fleet management solutions.
  • Thus, in the long run, IoT reduces the total cost of ownership and makes the entire supply chain industry more connected, driven by legislation and customer demand.
  • According to Digiteum, the high points influencing the use of IoT among supply chain companies are determined by the desire for higher speed, higher accuracy, improved flexibility, better segmentation, and increased efficiency.
  • According to Insider Intelligence, a "recent survey by GT Nexus and Capgemini found that 70% of retail and manufacturing companies have already started a digital transformation project in their supply chain operations."
  • Also, IoT World Today published that, "59% of respondents had partially or fully deployed IoT across their organizations, while 15% planned to invest in IoT within two years, and 22% had established pilots," according to the Gartner supply chain survey.

4. Transportation Management Systems (TMS)

  • According to SAP, TMS is a "software system that helps companies manage logistics associated with the movement of physical of goods by land, air, sea, or a combination of transportation modes, helping to "ensure timely delivery of goods by optimizing loads and delivery routes, tracking freight across local and global routes, and automating previously time-consuming tasks, such as trade compliance documentation and freight billing."
  • According to Fingent, all the above technologies require some sort of organization and management from a single point, which TMS applications cater for, connecting all separate elements within the chain to work as a single unit.
  • It caters to problems that originate from carrier delays through manual ways of doing things, ultimately reducing freight costs, increasing transparency, and tracking deliveries in real-time.
  • In March 2020, Gartner "reported that starting in 2018, the global TMS market was growing at a five-year compound annual growth rate (CAGR) of 11.1%, would reach $1.94 billion by 2022 and account for nearly a third of the SCE market."

Research Strategy

For this research on the top technologies solving the major challenges in the supply chain industry, we leveraged the most reputable sources of information available in the public domain, including Fingent, and Microsoft. Additionally, we scoured for information from third-party industry websites, including Tech Target to buttress our findings. Using Fingent as our main resource for this report, we could not provide a direct link to cited information due to content protection on the company's website. As a result, we used the main website link to reference sections and also support our findings with related sources from other websites.

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