For another year, MHI published its annual industry report that presents the major trends influencing the supply chain industry. We studied the report and have highlighted the differences compared to last year’s results.
The top three challenges in the supply chain industry for 2015 were (see also figure 1):
- Customer demand for lower delivery cost
- Customer demand for faster response time
- Rising customer service expectations
While appeasing consumer demands are listed again as top challenges for 2016, a new one emerged. According to 58% of respondents, the most important challenge facing 2016 is hiring and retaining a skilled workforce. As the material handling industry expects to create 1.4 million jobs by 2018 it makes sense that the workforce is the biggest challenge.
Similarly, there was an increase of respondents that reported customer demand for lower delivery cost and faster response times was an important and growing challenge compared to last year.
The industry recognizes that more technologies are being implemented in the supply chain. Although their benefits are well documented, respondents still face barriers to justify the required investments. On average, 20% more responders mention the on-going top three barriers to adoption (see figure 2).
It was expected that the initial investment cost would be a critical hurdle with adoption. Nevertheless, according to the report, more companies are acknowledging that, as the cost of new technologies decreases, a faster ROI is now possible. An example is the plunging cost of industrial robots, down by 27% from 2005 to 2014 (see BCG’s blog post).
Like the previous year, eight enabling technologies were investigated. The top four that were identified as sources of disruption or competitive advantage are:
- Robotics and automation
- Inventory and network optimization
- Sensors and automatic identification
- Predictive analytics
While the top four technologies are identical from 2014 to 2015, the competitive advantage has shifted from Inventory and Network Optimization to implementing Robotics and Automation. It seems those last two have a bigger and more rapid impact ont the supply chain than originally expected. This probably explains why respondents choosing Robotics and Automation for disruption or competitive advantage jumped from 39% in 2014 to 51% in 2015 (see figure 3).
Some technologies experienced a steady increase from last year results, such as cloud computing and wearables, while others took a step back, like driverless vehicles and 3D printing. We were surprised to learn that those two technologies (driverless vehicles and 3D printing) adoption rate decreased by respectively 25% and 18% from 2014 to 2015 (see figure 4).While the report does not offer any explanation for this change we believe it might be because those technologies are not yet mature enough for larger scale adoption.
As seen on the final graph, the better-known technologies have a high rate of adoption from respondents (35% or more) while emerging technologies are much less popular (25% or less). It is expected that the later category will have overall a compound annual growth rate for the next five years twice as high as the mature technologies.
In conclusion, it appears that the supply chain industry will continue to use more technologies in the coming years in order to meet the market demand. However, the remaining challenge is finding the proper talent to operate those technologies.
If you find this industry as fascinating as we do and want to work with disruptive technology, then visit our careers page to find the right opportunity to you.Tags: automated material handling, material handling, material handling institute, MHI, supply chain, supply chain challenges