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Supply chain technology deficit – Do new solutions solve yesterday’s problems?
February 3, 2020
By Hannah Kain, ALOM President and CEO
The race is on! Will technology innovation and implementation outpace the needs caused by increased complexity in the supply chain?
I was pondering this issue as we started a new decade. Supply chain pros will find it an interesting race, yet likely the winner will not be announced for many years to come. However, a strong case can be made for a perpetual technology deficit in virtually all businesses, and especially in supply chain.
Admittedly, we see heavy technology investments. Legacy systems providers try to keep pace and new technologies are coming online. Block chain, machine learning, AI, and sophisticated connectivity tools are being touted as the panacea to fill the deficit gap. Each of these technologies provide interesting opportunities.
In the meantime, any technology tool goes through its own life cycle for development and testing by the provider, adoption by the general community, and finally implementation by practitioners. Those of us who deploy technology in the supply chain space know this process is rife with obstacles and challenges and is prone to delays. The inherent implementation time lag may be significant enough to create the perpetual deficit. Supply chain challenges being addressed at the time of new technology development are simply replaced by new and bigger challenges during the deployment period. Once deployed, the solution solves yesterday’s problem. Add in cyber-risk and privacy requirements, and the deployment cycle becomes even longer. Add a hodgepodge of different solutions for each problem, and deployment additionally became more fraught with risks.
The underlying issue is that supply chain requirements are far from static. In fact, it is arguably the fastest changing business environment, adding complexity day by day. Because complexity arrives from so many areas, the compounded complexity is daunting. Further, some aspects of complexity arrive unannounced or with short notice. Let’s consider some challenges from the last year of the prior decade: Trade wars and tariffs had significant impact on sourcing, landed cost, transportation/timing decisions and so forth. Manufacturing patterns shifted, causing changed infrastructure and compliance issues. New regulations and requirements were issued in each region, country, county, municipality, and new corporate social responsibility factors were added into the mix, creating transparency requirements into processes.
At the same time, the demand side adds complexity as customer expectations for speed and customization of delivery continues to increase (“Amazon-factor”). Channels are changing rapidly. Price pressure is strong.
Before selecting technology solutions, supply chain pros must consider whether they are solving today’s problem or meeting future challenges. They should also consider whether it is beneficial to outsource part of their supply chain to companies that make significant future-oriented technology investments, such as ALOM. By outsourcing, their companies can leverage others’ technology investments.
Supply chain can be a drag on a company – or a significant competitive advantage. While I still believe in the inherent technology deficit over the upcoming decade, I am convinced that making great technology choices to minimize the gap will determine the supply chain winners.