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Supply Chain Investments to Climb 95 Percent in 2019

The bad news: planned investment in supply chain technologies dropped steadily from 2015 to 2018. The good news: investments are set to skyrocket 95 percent this year, according to new industry data.

From the digitization trend to consumer expectations of no-cost shipping and growing sustainability awareness, and to the lack of available talent, external pressures are forcing supply chain leaders to look to new and emerging technologies that can equip their networks for future success.

Average spending on supply chain innovation is expected to approach $14 million over the next years, according to the 2019 MHI Annual Industry Report released in partnership with Deloitte Consulting. That’s a notable lift from 2018 figures, when planned investments stood at less than $8 million, according to the report, which added, “investment in supply chain innovation is at a critical inflection point.”

There are a number of innovations that could enhance supply chains, but robotics and automation are expected to attract the highest funding, with companies projecting an average spend of $20 million over the coming 24 months, compared to an average of between $10 million and $14 million for other technologies.

Analytics remains a hot area of interest, as 87 percent of supply chain leaders indicated plans to deploy advanced analytics in some capacity over the next five years.

The report describes artificial intelligence (AI) as “the ultimate evolution of business intelligence and analytics” and will primarily impact supply chains in the areas of warehouse management; demand forecasting and supply chain planning; inventory management; and logistics shipping and transportation.

More than three quarters (79 percent) of surveyed companies expect AI to become a core, tablestakes business competency within three years’ time, while 88 expressed a belief that AI will be a critical tool when it comes to handling risks and cultivating predictability within their supply chains.

“As digital capability fuels customer expectations to unprecedented heights, NextGen supply chains must be proactive, predictive and prescriptive, with all of its links interconnected and synchronized to the same drum beat of consumer demand,” Scott Sopher, Deloitte’s global supply chain practice leader, said in the report.

MHI surveyed 1,052 supply chain stakeholders for the report. Fifty-nine represent companies with $100 million or more in annual sales while 10 percent reported sales above $10 billion. Retail and consumer goods companies, including apparel, comprised 10 percent of respondents.