Founder and CEO of PLANERGY, with decades of international experience in Procurement, Spend Management and Technology.
As companies move to center procurement as a major source of strategic insights, continuous improvement and value creation, the technologies that are redefining core procurement functions such as supply chain management are increasing in both disruptive power and importance. The technologies that initially defined digital transformation — artificial intelligence, process automation and deep analytics powered by machine learning — are continuing to evolve, even as new technologies rise to augment and complement their capabilities. Looking ahead, it’s clear that companies who want to compete effectively in the digital marketplace of tomorrow will need to give serious consideration to — and make significant investments in — these new technologies today.
Effective Supply Chain Management Is More Important Than Ever
Operating both efficiently and effectively requires a flexible and resilient supply chain. Reliable access to (and optimal use of) the goods and services that keep a company growing, innovating and competing successfully into the future will soon require:
• Total supply chain visibility, including ancillary sourcing data for materials related to such aspects as sustainability and ethical sourcing.
• Understanding of and capacity to meet changing customer expectations.
• Robust data management tools used to transform procurement data into actionable insights for areas such as demand forecasting, product development and process optimization.
• Intelligent technologies integrating virtual and physical environments.
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Key Supply Chain Technologies
Supply chain optimization has been tied to technology since the invention of the wheel. Not every tech has true transformative power, but those on the digital horizon — along with a few already in use and ready for new applications — have the potential to separate supply chain success from struggles in the years ahead.
1. Artificial Intelligence And Advanced Analytics
In various forms, AI already powers important digital transformation technologies such as robotic process automation, and it’s commonly paired with another existing (and evolving) technology — advanced data analytics. A truly transparent supply chain requires mastery of all relevant data. As its pattern-recognition abilities far exceed those of humans, AI is ideal for and essential to both basic automation (e.g., approval chains and invoice matching) and, increasingly, advanced tasks such as demand forecasting, preventative maintenance and disruption mitigation/prevention.
Drawing information from a broad range of sources, AI can now analyze vast oceans of data (including data on climate and weather conditions, geopolitical activity and cybersecurity threats) to trace demand curves, provide real-time data on materials and goods moving through the supply chain and monitor inventory levels across all locations to identify potential disruptions. It can also incorporate information about a supplier’s ethical and environmental performance — two major concerns in an era in which more companies are selling directly to consumers, and consumers are increasingly vocal about sustainability, ethical practices and social responsibility.
More importantly, it can suggest solutions to those problems when integrated with advanced analytics, including rerouting shipments, activating alternative suppliers and making real-time data security adjustments. And with improvements to natural language processing, AI-powered systems can make their suggestions in human-friendly terms. Cognitive agents combine the user-friendliness of a chatbot with the capacity to:
• Develop a deep understanding of specific content.
• Learn from their human co-workers.
• Extrapolate from context as well as examples.
• Provide useful feedback and perform tasks accurately based on dialogue.
In the very near future, procurement teams could conceivably have a discussion with the cognitive agent(s) in their system and work together as they would with other humans to adjust their sourcing strategies.
2. The Internet Of Things (IoT), Smart Objects And Augmented Reality (AR)
With all the talk surrounding the importance of digital technology to procurement success, it’s sometimes easy to forget that all those ones and zeros are connected to objects, people and processes in the real world. But artificial intelligence is growing smarter as it expands its reach.
Smart objects such as autonomous vehicles, delivery drones and mobile robots will take on the same role in the physical world that robotic process automation did in the digital one: improving speed, accuracy and efficiency while freeing staff to focus their time and talents on higher-value tasks that require human expertise and creativity.
Amazon, for example, already has 200,000 robots working side-by-side with humans in its warehouse facilities. Ride-sharing titan Uber launched its own AI-powered logistics platform to match supply and demand to provide fast, flexible and transparent deliveries. And Aurora, the company that purchased Uber’s self-driving business, is working to produce autonomous trucks that reduce risk to human drivers while improving speed, capacity and performance.
Similarly, the Internet of Things will continue to enrich the data streams used to drive process improvement, opportunity capture and risk mitigation. From real-time inventory management to controlling in-plant machinery and systems to tracking disruptions and malfunctions and automatically scheduling repairs or replacements, the IoT is at the heart of tomorrow’s supply chain.
Augmented reality, along with its cousin, virtual reality (VR), are already making headway in supply chain management. AR can be used to provide remote viewing and networking for real-time responses to problems or opportunities and to improve operational efficiency and staff training with heads-up displays full of context-specific information, among other applications.
Discussions involving blockchain usually focus on finance. But for procurement, its powerful data security and authentication capabilities make it possible to track goods and materials, secure all transaction data and speed transactions without sacrificing accuracy or increasing risk exposure.
Companies like Walmart are already putting the blockchain to use. The retail giant created and tested a blockchain-based system that traced produce in the U.S. and Mexico (paywall) in order to monitor quality while combating costly spoilage and contamination. And mining firm BHP used blockchain technology to improve accountability and reduce the amount of paperwork required to complete massive transactions like the $14 million iron ore deal it conducted with China Baoshan Iron & Steel Co. in 2020.
Tomorrow’s success isn’t built on technology alone. But supply chains will continue to grow longer, more data-driven and infinitely more complex. Without taking advantage of emerging tech tools, companies will have a hard time competing against — or catching up to — those who’ve put them to effective use.