The Supply Chain Matters blog continues  a series of blogs that provide added detail and perspective for each of our ten 2020 Predictions for Industry and Global Supply Chains which we unveiled on December 17.

In our Part One posting in this predictions series, we explored for our readers 2020 Prediction One, what industry and global supply chain teams should anticipate in terms of global and regional economic outlooks.

In Part Two of this predictions series, we explored the detail of 2020 Prediction Two, what we expect to occur in global supply management challenges and trends.

In Part Three of this series we detailed what to expect in the area of supply chain talent management, retention and skills development.

Part Four in this prediction series highlighted what to expect in the area of supply chain management related cyberThe Ferrari Consulting and Research Groupsecurity and information security threats in the coming year.

In this Part Five posting , we will highlight what we predict will occur regarding supply chain digital transformation efforts in the coming year.

 

Background and Introduction

On an annual basis, and since our inception in 2008, The Ferrari Consulting and Research Group and our associated Supply Chain Matters blog publishes a series of supply chain management focused annual predictions which are both described, monitored and scored for actual occurrence at the conclusion of the year.

Such predictions are provided to clients, technology providers and blog readers in the spirit of advising senior and line-of-business executives, multi-industry cross-functional supply chain management and supporting information technology teams a sensing of what to expect in the coming year, Our goal is to depict how likely global, regional, economic, business and industry trends will impact and likely influence required supply chain management actions in the coming year.

The context of these predictions include a broad cross-functional umbrella of what is today considered supply chain management, and includes areas of leadership and strategy, product management, strategic sourcing and procurement, supply chain planning and customer fulfillment, manufacturing, logistics, transportation and customer service management.

Now to our specific prediction:

 

2020 Prediction Five: Supply Chain Digital Transformation Initiatives in 2020 will Focus More on Near-Term Line-of-Business or Tactical Financial Objectives.

 

Prediction Summary

Our belief is that supply chain digital transformation initiatives, will decidedly focus more on near-term objectives in the coming year, specifically due to the high levels of business uncertainty currently prevalent across multi-industry settings. We anticipate that senior management support will focus more towards either achieving line-of-business tactical or business-wide functional financial objectives. At the same time, it will be important that companies do not sideline supply chain digital transformation efforts since they remain critical to support required new digital business growth models. A focus toward near-term tactical should be viewed as an interim step toward longer-term business process and decision-making requirements.

Specific needs in 2020 would likely relate to improving efficiency and productivity as well as clearly defined opportunities for either transforming existing business processes or improving customer fulfillment streams among key customers.

In either of these cases, the LOB or senior management sponsorship and success outcome criteria will in many cases be predicated on delivering measurable and meaningful savings and outcomes in shorter-term tactical timeframes. Such savings will likely provide the added budget resources and sponsorship to move on to subsequent transformation phases in the years 2021 and beyond.

 

Line of Business Prioritization Areas

The digital transformation roadmap has to address both short and longer-term business outcome and process transformation needs while addressing action planning to augment organizational talent, data and process alignment requirements. In the year 2020, the realities of budgets will be a more definitive factor, especially if long-term business outlooks, added tariff or currency fluctuation or geo-political risks continue to escalate across the global economy.

Organizations with predominant direct-to-consumer business models will likely continue to prioritize omni-channel customer fulfillment transformation in areas of customer data mining, increased automation of pick and pack processes and overall logistics and transportation transformative processes. Likewise, logistics and transportation services businesses directly supporting online customer fulfillment will focus on similar investments including elements of artificial intelligence and machine-learning support for early warning and resolution of logistics network bottlenecks.

Manufacturing-intensive business will likely focus on edge operational systems transformation leveraging Industrial Internet, Internet-of-Things and Additive Manufacturing based technologies and processes. The business case will not be solely investing in the advanced technology but rather the compelling need to shore-up cyber and data-security defenses with more updated advanced technology including AI/ML autonomous systems that detect data breeches or vulnerabilities.

Equipment and capital equipment industries may prioritize Internet-of-Things enabled operational systems embedded in equipment to further drive operational management and maintenance business models that provide added revenue streams. This is an area requiring more robust data management and analytics capabilities tied to backbone operational and business systems.

 

Business Wide Cross-Functional Prioritization

From our perspective, the two most prevalent forms of digital transformation that are addressing cross functional supply chain or edge operational systems landscapes are either planning and materials management, or logistics and customer fulfillment focused digital transformation. Each represents a fundamental leg of business process and decision-making, digital process characteristics, as well as important change management considerations. They can each address needs for increased productivity, overall efficiencies, mor agile decision-making and significant cost savings.

They further represent two fundamental aspects of business performance, one related to overall business, manufacturing and supply chain operations, the other being service and responsiveness to particular customer needs, especially in a highly uncertain business environment subject to constant changes in customer needs.

Other cross-functional teams will continue to focus on the need to step-up the synchronization of supply chain management business process and decision-making across either product value-chains, B2B supplier and trading networks and external B2B supplier and key customer networks. An area of likely obvious opportunity will be concurrency and synchronization of planning among multiple functional and line-of-business areas.

 

Technology and Services Provider Landscape Implications

Among enterprise and digital transformation technology landscapes, the realities of highly uncertain business outlooks and consequent needs for more tactically focused supply chain digital transformation will require toning-down the enterprise-wide transformation messaging.

Instead, assisting various customers in continuing to develop both long-term vision, in the context of meaningful and definitive interim tactical steps that can address LOB as well as business wide functional productivity and most prominent cost savings opportunities will be essential.

Larger enterprise technology providers would be wise to lean more on specialized boutique supply chain management consulting and systems integration firms for such needs, and for maintaining closer customer relationships.

 

We once again encourage clients and readers to take the time to review what to anticipate in the coming year and how your organization can be best prepared.

As we continue our highlighting of each of our predictions in added detail, please continue to provide your individual feedback along with what specific area that most concerns you in the coming year.

 

Bob Ferrari

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