The future of Supply Chain: 4 factors leaders should watch out for

Supply chain leaders must invest to keep up with societal and technological changes.
Supply Chain Management for leadersIn 10 years, fewer workers will be tasked to support a growing population of nonworkers, and labor supply will shift to undeveloped regions of the world that are less educated and less technically skilled. Planning for this talent shift is just one area on which supply chain leaders will need to focus to build a successful future supply chain.

Supply chain leaders want to make the right business decisions and invest in the right technology to prepare their organization for the future. However, there are so many factors to consider and so many unknown variables that “getting it right” seems almost impossible.

Understanding trends and impacts is a challenging task for supply chain leaders responsible for identifying and putting in place strategies to build the right set of capabilities. It is expected that the supply chain of the future will undergo a major transformation process. At the end of this process, supply chains will act “on their own” with the ability to self-regulate and take appropriate actions, and as a result, will increase and augment the capabilities of humans well beyond what is known today.

One of the most important skills of the future supply chain workforce will be digital dexterity.

Gartner predicts that four factors will converge as we move toward this transformation. Supply chain leaders must be aware and take necessary action to capitalize on the opportunities that lie ahead.

Factor No. 1: The labor supply is shrinking

The world labor supply hit an inflection point in 2012 when the proportion of non-working-age population growth became greater than the working-age population. This trend will continue and will have a major impact on supply chain talent planning. Programs to attract and bind talent are a necessity.

One of the most important skills of the future supply chain workforce will be digital dexterity. The ability to adapt to technology at a rapid pace and the readiness to use advanced analytics and artificial intelligence (AI) in decision making will be crucial in an increasingly automated environment. As a result, digital dexterity training will become an essential part of every supply chain talent program.

Factor No. 2: Machines are intelligent

The full potential of AI has not yet arrived. This will rapidly change over the next couple of years, especially when it comes to supply chain use cases such as demand planning and order-to-cash processes.

Today, supply chain leaders are using machine learning to sense daily demand down to customer lanes and handle daily tasks. In the future, AI will thrive in supply chain environments because it removes complexity, automates daily decisions, predicts orders and reduces costs.

Factor No. 3: Virtual is the new reality

The carbonated beverage industry uses image technology to understand out-of-stocks and retail store conditions in near-real time. 3D digital products, such as 3D printing, enable on-demand production and personalization. These are two examples of virtual capabilities that will continue to emerge and impact the supply chain.

Supply chain leaders should watch for digital twins, a technology that will redefine supply chain models. Digital twins create a digital representation of not just physical products or assets, but also process characteristics. As such, digital twins are perfect for experimentation and modeling to test for critical variables.

Factor No. 4: Circular is the mainstream economy

The traditional economy is linear: Take resources, make a product, use the product, dispose of the waste. The future looks different, as avoidable waste production will be considered unacceptable by society. This means that supply chain leaders have to embrace a circular economy in which a used product is returned, recycled and then reused in some way.

The goal is to deliver customer value with minimal waste. For such a system to be efficient, it must be automated, and this is where the previous factors come into play. Using technologies such as digital twins and AI in an automated fashion enables the supply chain to execute against circular-economy principles by acting on its own and ultimately becoming its own ecosystem.

Steven Steutermann, managing vice president at Gartner