As conventional warfare gives way to the era of the swarming, flexible, agile fighting force, big changes are in store for the battalions responsible for clothing, feeding and equipping the troops. Here's how the Pentagon is transforming a sluggish supply chain into a streamlined hypernetworked model for the digital age.
Virginia Williamson is the deputy director, command, control, computers, and communications systems for USTRANSCOM. As a member of the Senior Executive Service, Ms. Williamson holds a rank equivalent to that of a general officer in the military.
Steve Geary is adjunct faculty at the University of Tennessee's Haaslam College of Business and is a lecturer at The Gordon Institute at Tufts University. He is the President of the Supply Chain Visions family of companies, consultancies that work across the government sector. Steve is a contributing editor at DC Velocity, and editor-at-large for CSCMP's Supply Chain Quarterly.
It's focused on speed, flexibility and reliability. It's digital, global and collaborative. The corporate supply chain? No, it's America's defense logistics community. Or at least that's how it's shaping up. At a time when warfare is less focused on combat with foreign governments and more on fighting shadowy multinational terrorist networks, the military is re-examining its operations from end to end. "To win the global war on terror," said Secretary of Defense Donald Rumsfeld in March 2003, "the armed forces simply have to be more flexible, more agile, so that our forces can respond more quickly." And so, the push is on to complete the military's program to create a fighting force that is a lean, agile force for the digital age—an adversary that's light, fast and flexible.
That's had boundless repercussions for operations behind the scenes, particularly among the legions of logisticians charged with deploying the combat force and with keeping soldiers fed, clothed and equipped for battle. A flexible, agile fighting force, of course, requires a flexible, agile logistics capability. And building in flexibility is no small task. The U.S. Department of Defense (DOD) operates the most complex and demanding logistics chain in the world—one called upon to deliver war-fighting capability anytime, anywhere, including the most austere environments on the planet. It wouldn't be overstating the case to say that the DOD supply chain makes a typical multinational corporation's network look like a paper route (see sidebar). And there's not much room for error: For the DOD, logistics success or failure is truly a matter of life and death.
Going agile
To enhance its supply chain's agility, the U.S. military has gone high tech, adopting strategies that will sound familiar to supply chain managers everywhere. It's requiring suppliers to affix active RFID tags to every container heading to Iraq, on items as mundane as MREs (meals, ready to eat). It's begun requiring suppliers to apply passive RFID tags to shipments shipped to depots in the United States. It's overhauling its information technology (IT) networks. It's focusing on performance metrics.
Critical to this transformation is the leadership of General John W. Handy. A four-star general who is one of nine "Combatant Commanders" in the U.S. military, Handy is commander of both the U.S. Transportation Command (USTRANSCOM) and the Air Mobility Command, headquartered at Scott Air Force Base in Illinois. As its name suggests, USTRANSCOM provides air, land and sea transportation for the Department of Defense, both in times of war and peace. The Air Mobility Command is a division of USTRANSCOM that specializes in airlift and air refueling capability.
Back in September 2003, Secretary of Defense Donald Rumsfeld designated the commander, U.S. Transportation Command as the Distribution Process Owner (DPO) with responsibility for directing and supervising execution of the strategic distribution system. Specifically, the DPO was charged with improving the overall efficiency and interoperability of distribution-related activities. General Handy responded immediately and with gusto. "We have implemented dramatic organizational changes at the headquarters and component levels," he stated in the USTRANSCOM 2003 Annual Report. "USTRANSCOM will continue to provide the most effective mobility capability the world has ever seen and will carry into the future a transformed distribution network with an extensive information technology backbone."
That reference to an IT backbone is significant. One of General Handy's main objectives is to ensure that in the distribution arena, the DOD has appropriate IT capabilities to support the warfighter. To that end, General Handy is pushing to ensure that all distribution IT activities and initiatives support the following objectives:
Reliably deliver the required item to the right location in the correct quantity at the time required (but not necessarily "just in time"), from the most appropriate source.
Promote the ability of the supported Combatant Commander to exercise directive authority over logistics.
Make available tools and information for decision makers to exercise effects-based management of the distribution system.
Coordinate end-to-end capacities and available resources across the distribution system to best support the war-fighter requirements.
That's no easy job. Because of the complexity and scope of the DOD enterprise, there are hundreds of different distribution information systems in use, a considerable challenge to logistics transformation. As part of an initiative launched in September 2004, these systems are being brought together in a portfolio; reconciled with end-to-end process requirements; aligned with best-in-class operational practices; and pruned, improved or replaced in order to make today's rapidly deployable distribution capability as joint and interoperable as the combat force.
Defense logistics by the numbers
Keeping America's war-fighters fed, clothed and equipped for combat requires mountains of supplies and a transport network that circles the planet. Here's a quick look at the scale of the Defense Department's logistics operations:
Scope of Supply Chain Operations:
40,000+ vendors
45,000+ requisitions generated per day
$71 billion inventory
$700 billion in assets:
300 ships
15,000 aircraft
30,000 combat vehicles
900 strategic missiles
330,000 ground vehicles
Active on all continents, including Antarctica
Annual Budget:
$11 billion in transportation
$59 billion in maintenance
$129 billion total logistics costs
And make no mistake about it: IT is central to the success of the transformation under way today. "The distribution management piece, the supply [chain] management challenge we face, is linking the IT and all the players," says General Handy. An organization that's networked from end to end will give soldiers the ability to reallocate supplies in real time, explains
Brad Berkson, the acting deputy under secretary of defense for logistics and materiel readiness and a key supporter of the DPO. "What we need to do," he adds, "is leverage the technology to ... create a logistics infrastructure and logistics culture as flexible and integrated and responsive as our combatant force."
Tough choices
For the military's logistics operations, speed, flexibility and reliability are the overarching supply chain objectives. But much like civilian companies, the military must achieve those objectives while operating under fiscal constraints, which means it must choose how best to allocate its resources. Basically, it must define its requirements, quantify the requirements, and then relate process, the underlying architecture and the supporting portfolio of IT to the anchoring objectives.
That's no easy task. As tough as it is for a commercial enterprise to define its requirements in the face of changing markets and shifting customer demands, it's that much harder for the military, which must grapple with such questions as: What is the threat? Who will we fight? Where will we fight? When will we fight? How will the enemy fight? What war-fighting capabilities need to be delivered to the war-fighter at the pointy end of the spear? What sort of combat force will have to be sustained? In a fast-changing world, where security threats from shadowy terrorist networks are as real as those posed by nation-states, legacy answers are no longer enough.
Like their civilian counterparts, military leaders have no choice but to take what they know, add to it what they think, and get to work. And they must measure performance against their stated goals of speed, flexibility and reliability. They must monitor performance, understand performance and improve performance and then get out front and lead change.
And so, defense logisticians today are hard at work refining their performance metrics. Obviously, those metrics must evolve over time as missions and objectives change, or as the context changes—leaders will naturally make different trade-offs between, say, cost and speed during combat operations than they would during times of peace. Still, some consistency is required to allow relative comparisons and ensure that trends are identifiable. At the same time, performance metrics are not an end unto themselves; they are a tool to manage the enterprise. The DPO is leading the institutional change, across the breadth of the supply chain, to be less focused on hitting precise number targets than on using metrics to gauge the health of the distribution process (good, bad, better, worse), and measuring and managing the supply chain's success in meeting the war-fighter's requirements.
Getting better all the time
In another move aimed at improving logistics support, the DPO established the first Deployed Distribution Operations Center (DDOC) for CENTCOM in Kuwait in January 2004. Just as any global business would do when entering a new market, that center, the CDDOC, assembled a team of logistics experts—each specializing in a different area, and each with knowledge of information technology, materiel and transportation management systems— and gave them power and authority to direct air and seaport operations and cross-country moves in the theater (in this case, the Central Command's Area of Responsibility, which includes Kuwait, Iraq and Afghanistan).
The CDDOC deployed with four significant objectives:
To provide total asset visibility and in-transit visibility, sustainment, and retrograde;
To refine theater distribution architecture in coordination with Joint Staff and the services;
To synchronize strategic and operational distribution;
To develop strategic and operational distribution performance measures.
One of the biggest challenges that CDDOC faced was container management. When CDDOC arrived in theater, it identified 23 sources for container data, discovered that thousands of containers were missing from the in-transit visibility system, and found that detention charges were accruing every month. CDDOC developed a partnership with Department of the Army, the Coalition Forces Land Component Command, Coalition Joint Task Force 7 and the Surface Deployment and Distribution Command to collectively determine how to return carrier-owned containers and reduce the detention charges. CDDOC helped develop and execute a plan for container management in the CENTCOM Area of Responsibility.
CDDOC provided theater logisticians with immediate access to subject matter logistics experts and their specialized reach back, and authorized the experts to make decisions on behalf of their respective commands. That way, any problems that occurred during the transitioning of forces could be quickly remedied. That structure had another plus: Locating the team members in proximity to the theater staffs allowed them to anticipate potential problems and react before the issues escalated to the level where they'd require formal response and flag-level actions.
By all accounts, establishment of the CDDOC has been a resounding success. So far, for example, it has achieved the following:
Shorter lead times: Order fulfillment lead times for stocked items, shipped by air from the United States, have dropped by more than 45 percent since the peaks recorded in 2003.
Lower costs: Improved synchronization of transportation allowed the Army to cut costs by $268 million in FY04.
Better on-time performance: On-time delivery rates now hover around 92 percent.
Improved flexibility: Better information has enabled better allocation of resources, even while they're in transit. For example, 120 ocean containers have been redirected en route in response to modifications in customer requirements, and orders equal to approximately 1,700 ocean containers have been satisfied through cross-leveling of inventories belonging to various organizations in the theater.
It's safe to say, the DPO has demonstrated both focus and results in speed, flexibility and reliability.
A look ahead
The USTRANSCOM experts who participated in the first wave of CDDOC assignments have now returned, but the hard work continues. Drawing on what those experts learned by working with the customer, the combat force, the DPO is now addressing the improvement opportunities uncovered in the underlying processes and technology and mapping the future. At Scott AFB, the various experts are teaming with representatives from each of the armed forces and are now mapping the "to-be" process for the future.
Consider what these experts learned in munitions, for example. Their analysis revealed that munitions procurement procedures lacked consistency across the components and even across sub-classes within munitions. In total, there are 22 different IT systems employed for the management of this class of supply. The DPO's team is addressing this problem—mapping processes, technology and architecture, and deciding what needs to be done to fundamentally transform the way the military does business.
Munitions are just the tip of the iceberg. By the end of 2005, the DPO is committed to delivering a transition plan for distribution in all classes of supply, not just munitions. According to Gary Jones, the acting deputy under secretary of defense, logistics systems management, "The DPO is out in front on this issue, and we are all learning from his leadership. Already, we are applying lessons learned by the people out at Scott to portfolio management across the complete supply chain ... End-to-end distribution is a critical and visible challenge, and we have to extend the lessons across the supply chain."
2005 is shaping up to be a critical time for distribution transformation at the DOD. But as they move forward, leaders must remain mindful of the risks. It is all too easy to configure logistics to support the last war, not the next one. War-fighting capabilities evolve, and logistics must evolve with them. To illustrate how much things can change, consider that during the combat phase of Operation Iraqi Freedom, the combat force advanced a distance equivalent to the distance from Normandy to Berlin in three short weeks. In World War II, it took a year.
We do not yet know what new challenges future conflicts may bring, but we do know that transformation is an imperative. The DPO effort and the underlying IT objectives will help create the new logistics capability. It will also require a lot of people to work together. Says Lt. Gen. Robert Dail, the USTRANSCOM's deputy commander, "This is about partnership, across all of DOD. There isn't any ëLogistics Command,' so we all need to work together to give those brave sailors, airmen, soldiers and marines what they need. We owe it to them."
Editor's note: This article was prepared with the full knowledge, cooperation and approval of the Department of Defense.
Economic activity in the logistics industry expanded in January, growing at its fastest clip in more than two years, according to the latest Logistics Managers’ Index (LMI) report, released this week.
The LMI jumped nearly five points from December to a reading of 62, reflecting continued steady growth in the U.S. economy along with faster-than-expected inventory growth across the sector as retailers, wholesalers, and manufacturers attempted to manage the uncertainty of tariffs and a changing regulatory environment. The January reading represented the fastest rate of expansion since June 2022, the LMI researchers said.
An LMI reading above 50 indicates growth across warehousing and transportation markets, and a reading below 50 indicates contraction. The LMI has remained in the mid- to high 50s range for most of the past year, indicating moderate, consistent growth in logistics markets.
Inventory levels rose 8.5 points from December, driven by downstream retailers stocking up ahead of the Trump administration’s potential tariffs on imports from Mexico, Canada, and China. Those increases led to higher costs throughout the industry: inventory costs, warehousing prices, and transportation prices all expanded to readings above 70, indicating strong growth. This occurred alongside slowing growth in warehousing and transportation capacity, suggesting that prices are up due to demand rather than other factors, such as inflation, according to the LMI researchers.
The LMI is a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
As commodities go, furniture presents its share of manufacturing and distribution challenges. For one thing, it's bulky. Second, its main components—wood and cloth—are easily damaged in transit. Third, much of it is manufactured overseas, making for some very long supply chains with all the associated risks. And finally, completed pieces can sit on the showroom floor for weeks or months, tying up inventory dollars and valuable retail space.
In other words, the furniture market is ripe for disruption. And John "Jay" Rogers wants to be the catalyst. In 2022, he cofounded a company that takes a whole new approach to furniture manufacturing—one that leverages the power of 3D printing and robotics. Rogers serves as CEO of that company, Haddy, which essentially aims to transform how furniture—and all elements of the "built environment"—are designed, manufactured, distributed, and, ultimately, recycled.
Rogers graduated from Princeton University and went to work for a medical device startup in China before moving to a hedge fund company, where he became a Chartered Financial Analyst (CFA). After that, he joined the U.S. Marine Corps, serving eight years in the infantry. Following two combat tours, he earned an MBA from the Harvard Business School and became a consultant for McKinsey & Co.
During this time, he founded Local Motors, a next-generation vehicle manufacturer that launched the world's first 3D-printed car, the Strati, in 2014. In 2021, he brought the technology to the furniture industry to launch Haddy. The father of four boys, Rogers is also a director of the RBR Foundation, a philanthropic organization focused on education and health care.
Rogers spoke recently with DC Velocity Group Editorial Director David Maloney on an episode of the "Logistics Matters" podcast.
Q: Could you tell us about Haddy and how this unique company came to be?
A: Absolutely. We have believed in the future of distributed digital manufacturing for a long time. The world has gone from being heavily globalized to one where lengthy supply chains are a liability—thanks to factors like the growing risk of terrorist attacks and the threat of tariffs. At the same time, there are more capabilities to produce things locally. Haddy is an outgrowth of those general trends.
Adoption of the technologies used in 3D printing has been decidedly uneven, although we do hear about applications like tissue bioprinting and food printing as well as the printing of trays for dental aligners. At Haddy, we saw an opportunity to take advantage of large-scale structural printing to approach the furniture and furnishings industry. The technology and software that make this possible are already here.
Q: Furniture is a very mature market. Why did you see this as a market that was ripe for disruption?
A:The furniture market has actually been disrupted many times in the last 200 years. The manufacturing of furniture for U.S. consumption originally took place in England. It then moved to Boston and from there to New Amsterdam, the Midwest, and North Carolina. Eventually, it went to Taiwan, then China, and now Vietnam, Indonesia, and Thailand. And each of those moves brought some type of disruption.
Other disruptions have been based on design. You can look at things like the advent of glue-laminated wood with Herman Miller, MillerKnoll, and the Eames [furniture design and manufacturing] movement. And you can look at changes in the way manufacturing is powered—the move from manual operations to machine-driven operations powered by steam and electricity. So the furniture industry has been continuously disrupted, sometimes by labor markets and sometimes by machines and methods.
What's happening now is that we're seeing changes in the way that labor is applied in furniture manufacturing. Furniture has traditionally been put together by human hands. But today, we have an opportunity to reassign those hands to processes that take place around the edges of furniture production. The hands are now directing robotics through programming and design; they're not actually making the furniture.
And so, we see this mature market as being one that's been continuously disrupted during the last 200 years. And this disruption now has a lot to do with changing the way that labor interacts with the making of furniture.
Q: How do your 3D printers actually create the furniture?
A:All 3D printing is not the same. The 3D printers we use are so-called "hybrid" systems. When we say hybrid, what we mean is that they're not just printers—they are holders, printers, polishers, and cutters, and they also do milling and things like that. We measure things and then print things, which is the additive portion. Then we can do subtractive and polishing work—re-measuring, moving, and printing parts again. And so, these hybrid systems are the actual makers of the furniture.
Q: What types of products are you making?
A: We've started with hardline or case goods, as they're sometimes known, for both residential and commercial use—cabinets, wall bookshelves, freestanding bookshelves, tables, rigid chairs, planters, and the like. Basically, we've been concentrating on products that don't have upholstery.
It's not that upholstery isn't necessary in furniture, as it is used in many pieces. But right now, we have found that digital furniture manufacturing becomes analog again when you have to factor in the sewing process. And so, to move quickly and fully leverage the advantages of digital manufacturing, we're sticking to the hardline groups, except for a couple of pieces that we have debuted that have 3D-printed cushions, which are super cool.
Q: Of course, 3D printers create objects in layers. What types of materials are you running through your 3D printers to create this furniture?
A: We use recycled materials, primarily polymer composites—a bio-compostable polymer or a synthetic polymer. We look for either recycled or bio-compostable [materials], which we then reinforce with fibers and fillers, and that's what makes them composites. To create the bio-compostables, we marry them with bio-fibers, such as hemp or bamboo. For synthetic materials, we marry them with things like glass or carbon fibers.
Q: Does producing goods via 3D printing allow you to customize products easily?
A: Absolutely. The real problem in the furniture and furnishings industries is that when you tool up to make something with a jig, a fixture, or a mold, you tend to be less creative because you now feel you have to make and sell a lot of that item to justify the investment.
One of the great promises of 3D printing is that it doesn't have a mold and doesn't require tooling. It exists in the digital realm before it becomes physical, and so customization is part and parcel of the process.
I would also add that people aren't necessarily looking for one-off furniture. Just because we can customize doesn't mean we're telling customers that once we've delivered a product, we break the digital mold, so to speak. We still feel that people like styles and trends created by designers, but the customization really allows enterprise clients—like businesses, retailers, and architects—to think more freely.
Customization is most useful in allowing people to "iterate" quickly. Our designers can do something digitally first without having to build a tool, which frees them to be more creative. Plus, because our material is fully recyclable, if we print something for the first time and find it doesn't work, we can just recycle it. So there's really no penalty for a failed first printing—in fact, those failures bring their own rewards in the form of lessons we can apply in future digital and physical iterations.
Q: You currently produce your furniture in an automated microfactory in Florida, with plans to set up several more. Could you talk a little about what your microfactory looks like and how you distribute the finished goods?
A: Our microfactory is a 30,000-square-foot box that mainly contains the robots that make our furniture along with shipping docks. But we don't intend for our microfactories to be storage warehouses and trans-shipment facilities like the kind you'd typically see in the furniture industry—all of the trappings of a global supply chain. Instead, a microfactory is meant to be a site where you print the product, put it on a dock, and then ship it out. So a microfactory is essentially an enabler of regional manufacturing and distribution.
Q: Do you manufacture your products on a print-to-order basis as opposed to a print-to-stock model?
A: No. We may someday get to the point where we receive an order digitally, print it, and then send it out on a truck the next day. But right now, we aren't set up to do a mini-delivery to one customer out of a microfactory.
We are an enterprise company that partners with architects, designers, builders, and retailers, who then distribute our furnishings to their customers. We are not trying to go direct-to-consumer at this stage. It's not the way a microfactory is set up to distribute goods.
Q: You've mentioned your company's use of recycled materials. Could you talk a little bit about other ways you're looking to reduce waste and help support a circular economy?
A: Yes. Sustainability and a circular economy are really something that you have to plan for. In our case, our plans call for moving toward a distributed digital manufacturing model, where we establish microfactories in various regions around the world to serve customers within a 10-hour driving radius of the factory. That is a pretty large area, so we could cover the United States with just four or five microfactories.
That also means that we can credibly build our recycling network as part of our microfactory setup. As I mentioned, we use recycled polymer stock in our production, so we're keeping that material out of a landfill. And then we tell our enterprise customers that while the furniture they're buying is extremely durable, when they're ready to run a special and offer customers a credit for turning in their used furniture, we'll buy back the material. Buying back that material actually reduces our costs because it's already been composited and created and recaptured. So our microfactory network is well designed for circularity in concert with our enterprise customers.
Generative AI (GenAI) is being deployed by 72% of supply chain organizations, but most are experiencing just middling results for productivity and ROI, according to a survey by Gartner, Inc.
That’s because productivity gains from the use of GenAI for individual, desk-based workers are not translating to greater team-level productivity. Additionally, the deployment of GenAI tools is increasing anxiety among many employees, providing a dampening effect on their productivity, Gartner found.
To solve those problems, chief supply chain officers (CSCOs) deploying GenAI need to shift from a sole focus on efficiency to a strategy that incorporates full organizational productivity. This strategy must better incorporate frontline workers, assuage growing employee anxieties from the use of GenAI tools, and focus on use-cases that promote creativity and innovation, rather than only on saving time.
"Early GenAI deployments within supply chain reveal a productivity paradox," Sam Berndt, Senior Director in Gartner’s Supply Chain practice, said in the report. "While its use has enhanced individual productivity for desk-based roles, these gains are not cascading through the rest of the function and are actually making the overall working environment worse for many employees. CSCOs need to retool their deployment strategies to address these negative outcomes.”
As part of the research, Gartner surveyed 265 global respondents in August 2024 to assess the impact of GenAI in supply chain organizations. In addition to the survey, Gartner conducted 75 qualitative interviews with supply chain leaders to gain deeper insights into the deployment and impact of GenAI on productivity, ROI, and employee experience, focusing on both desk-based and frontline workers.
Gartner’s data showed an increase in productivity from GenAI for desk-based workers, with GenAI tools saving 4.11 hours of time weekly for these employees. The time saved also correlated to increased output and higher quality work. However, these gains decreased when assessing team-level productivity. The amount of time saved declined to 1.5 hours per team member weekly, and there was no correlation to either improved output or higher quality of work.
Additional negative organizational impacts of GenAI deployments include:
Frontline workers have failed to make similar productivity gains as their desk-based counterparts, despite recording a similar amount of time savings from the use of GenAI tools.
Employees report higher levels of anxiety as they are exposed to a growing number of GenAI tools at work, with the average supply chain employee now utilizing 3.6 GenAI tools on average.
Higher anxiety among employees correlates to lower levels of overall productivity.
“In their pursuit of efficiency and time savings, CSCOs may be inadvertently creating a productivity ‘doom loop,’ whereby they continuously pilot new GenAI tools, increasing employee anxiety, which leads to lower levels of productivity,” said Berndt. “Rather than introducing even more GenAI tools into the work environment, CSCOs need to reexamine their overall strategy.”
According to Gartner, three ways to better boost organizational productivity through GenAI are: find creativity-based GenAI use cases to unlock benefits beyond mere time savings; train employees how to make use of the time they are saving from the use GenAI tools; and shift the focus from measuring automation to measuring innovation.
According to Arvato, it made the move in order to better serve the U.S. e-commerce sector, which has experienced high growth rates in recent years and is expected to grow year-on-year by 5% within the next five years.
The two acquisitions follow Arvato’s purchase three months ago of ATC Computer Transport & Logistics, an Irish firm that specializes in high-security transport and technical services in the data center industry. Following the latest deals, Arvato will have a total U.S. network of 16 warehouses with about seven million square feet of space.
Terms of the deal were not disclosed.
Carbel is a Florida-based 3PL with a strong focus on fashion and retail. It offers custom warehousing, distribution, storage, and transportation services, operating out of six facilities in the U.S., with a footprint of 1.6 million square feet of warehouse space in Florida (2), Pennsylvania (2), California, and New York.
Florida-based United Customs Services offers import and export solutions, specializing in remote location filing across the U.S., customs clearance, and trade compliance. CTPAT-certified since 2007, United Customs Services says it is known for simplifying global trade processes that help streamline operations for clients in international markets.
“With deep expertise in retail and apparel logistics services, Carbel and United Customs Services are the perfect partners to strengthen our ability to provide even more tailored solutions to our clients. Our combined knowledge and our joint commitment to excellence will drive our growth within the US and open new opportunities,” Arvato CEO Frank Schirrmeister said in a release.
And many of them will have a budget to do it, since 51% of supply chain professionals with existing innovation budgets saw an increase earmarked for 2025, suggesting an even greater emphasis on investing in new technologies to meet rising demand, Kenco said in its “2025 Supply Chain Innovation” survey.
One of the biggest targets for innovation spending will artificial intelligence, as supply chain leaders look to use AI to automate time-consuming tasks. The survey showed that 41% are making AI a key part of their innovation strategy, with a third already leveraging it for data visibility, 29% for quality control, and 26% for labor optimization.
Still, lingering concerns around how to effectively and securely implement AI are leading some companies to sidestep the technology altogether. More than a third – 35% – said they’re largely prevented from using AI because of company policy, leaving an opportunity to streamline operations on the table.
“Avoiding AI entirely is no longer an option. Implementing it strategically can give supply chain-focused companies a serious competitive advantage,” Kristi Montgomery, Vice President, Innovation, Research & Development at Kenco, said in a release. “Now’s the time for organizations to explore and experiment with the tech, especially for automating data-heavy operations such as demand planning, shipping, and receiving to optimize your operations and unlock true efficiency.”
Among the survey’s other top findings:
there was essentially three-way tie for which physical automation tools professionals are looking to adopt in the coming year: robotics (43%), sensors and automatic identification (40%), and 3D printing (40%).
professionals tend to select a proven developer for providing supply chain innovation, but many also pick start-ups. Forty-five percent said they work with a mix of new and established developers, compared to 39% who work with established technologies only.
there’s room to grow in partnering with 3PLs for innovation: only 13% said their 3PL identified a need for innovation, and just 8% partnered with a 3PL to bring a technology to life.