April 11, 2018

ROI, worker shortage, and cybersecurity biggest barriers to adoption of next-gen supply chain technologies, Deloitte-MHI study says

New report explores the trends and technologies driving next-generation supply chains and ways to break down the top barriers to adoption.

By DC Velocity Staff

Eleven technologies are combining forces to create next-generation supply chains that are digital, on-demand, and always-on, but making the business case for next-generation supply chain investments, hiring and retaining a trained work force, and building trust and security slow down the adoption of these technologies, according to the fifth in a series of annual reports on the state of the industry. The report was released Wednesday by the material handling trade group MHI and consultancy Deloitte at the biennial Modex show in Atlanta.

As part of the survey, over 1,100 manufacturing and supply chain professionals were asked to identify the top technologies that either disrupt or create a competitive advantage to their business. The number one response was robotics and automation (65 percent), followed closely by predictive analytics (62 percent), the Internet of Things (59 percent), artificial intelligence (53 percent), and driverless vehicles and drones (52 percent).

Although eight out of 10 survey respondents believe that the digital supply chain will be the dominant business model within the next five years, they acknowledge three common barriers that are holding them back from adopting these innovative technologies. Difficulty developing a business case and tackling the work-force skill and retention gap are concerns, but the biggest impediment to innovation is trust and cybersecurity concerns.

When it comes to cybersecurity, the sophistication of hackers and "threat actors" is the biggest risk (44 percent), followed by the lack of awareness of the threat within the organization (40 percent) and poor cybersecurity practices among suppliers (37 percent). As cybersecurity concerns grow, the demand for transparency at every level of the supply chain is rising as consumers increasingly expect full information about the origin and history of the products they consume.

Blockchain's ability to allow transparent yet controlled data sharing in a way that is reliable, efficient, and highly encrypted may pave the way to solving some of today's toughest supply chain challenges. However, the biggest barrier to blockchain adoption is that very few people understand what it is or how it can realistically be used in their operations. Only 11 percent of respondents believe they have a working understanding of blockchain technology and how it might be applicable to supply chains. The good news: Respondents projected the adoption of blockchain in supply chains will jump to 54 percent over the next five years.

For more information, visit www.mhi.org.

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