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Demand & Supply Chain Management Evolution




14 May 2019
Executives see AI, Cognitive Analytics and Cloud as the Path to Innovation and Speed to Market

Fred Baumann
JDA

According to research, executives are investing in new cloud-based AI and cognitive analytics capabilities that will provide them with end-to-end visibility and traceability across their extended supply networks, starting them on the road to autonomous supply chains. CXO executives increasingly understand that satisfying fast-changing customer demand in today’s digital marketplace won’t happen if they continue to rely on the same legacy systems and technologies that may have served them well in the past. That is the conclusion of a new survey of C-suite executives by Incisiv, sponsored by JDA and KPMG. In fact, end-to-end visibility and traceability was the top investment objective of surveyed retail, manufacturing and third-party logistics CXOs for the second year in a row.

Here are four major trends from the executives surveyed:

 

1. They have competing priorities.

Executives have competing priorities when it comes to innovation

Executives are under extreme pressure to adapt their businesses to customer demand, marketplace realities and competitive alternatives that are changing at unprecedented rates. So, it’s no surprise that speed to market jumped to a top 3 investment priority in this year’s survey.

There are some major hurdles standing in their way, however. Executives say resistance to change is the biggest inhibitor to achieving their investment goals. At the same time, executives indicate balancing short-term financial goals with long-term transformation objectives is their biggest transformation challenge.

There is also a technology aspect to the resistance to change. While executives value their current toolsets highly, and maintaining legacy systems is their number 2 investment priority, the ability to collaborate and innovate are their two lowest-rated internal capabilities.

Clearly, executives are between a rock and a hard place. They have tremendous external pressure for change and speed to market coupled with debilitating internal resistance to change and expensive, rigid legacy technology, hampering their ability to drive competitive advantage. Something has to give!

 

2. They see the Cloud as a key enabler.

Executives from all industries see Cloud as the enabler

Simply reacting to demand changes or supply disruptions isn’t fast enough to grow customer loyalty or forestall economic harm with the speed of change in today’s digital marketplace. Companies must be able to ingest real-time digital signals, constantly identify opportunities and predict supply disruptions across extended supply chains so proactive risk-mitigation actions can be taken ahead of time. On-premise legacy systems were not designed to do that.

The C-suite overwhelmingly sees the cloud as a key enabler to their need for innovation while grappling with legacy system limitations. In the survey, 64% of CXOs say it will enable the business agility they desire—two-times the rate of any other technology. This preference held true across the retail, manufacturing and 3PL segments studied.

While the cloud is the enabling platform for innovation, CXOs plan to deploy intelligent technologies to leverage the data-rich capabilities of the cloud to evolve from absorbing the blows of change and disruptions to proactively shaping demand and avoiding disruptions. The top 3 applications they intend to pilot and deploy in the next two years are Cognitive Analytics (82%), AI/Machine Learning (62%) and Control Tower/Visibility (55%).

The CXOs rated AI as having the highest potential impact on their business going forward.

 

3. They are starting the Autonomous Supply Chain™ journey.

Autonomous Supply Chain

The survey results show that C-suite executives are setting their course on the four-phase journey to autonomous supply chains. First, they’re investing in control tower applications to provide the visibility and traceability they need to understand their total supply chain operations. Next, they will use machine learning-infused cognitive analytics to predict demand changes and supply disruptions. Then they will deploy AI for prescriptive solutions that guides planners to optimized resolution paths to capitalize on short term opportunities and proactively mitigate disruptions prior to impact. Finally, supply chains will be able to self-correct within the tolerances defined. That frees human minds to focus on enhancing collaborative relationships and strategic processes to plot the next competitive advantage. This is a core value driver for moving to an autonomous supply chain.

 

4. They understand the realities.

CXOs understand innovation realities

While delighting the customer more profitably with an autonomous supply chain is the ultimate goal, CXOs understand current financial realities. As stated previously, balancing short-term financial goals with transformation objectives is one of their biggest challenges. Part of the problem is that innovation, by its very nature is something that has never been done before, is hard to put a value on. CXOs say the inability to assess the impact of new technology is their second biggest investment challenge.

So, it’s no surprise CXOs are using carefully-planned transformation strategies, supported by narrowly-defined pilot use-cases, to demonstrate the value of new technologies. For example, both retail and manufacturing executives plan to pilot AI to optimize inventory levels, an area where results are easy to tabulate. They both also plan to use AI for customer-facing initiatives, with retailers focusing on pricing and manufacturers focusing on demand forecasting. CXOs at 3PLs plan to pilot AI for predictive distribution load balancing and to optimize their distribution networks.

 

CXOs want measurable results now.

Probably the biggest take-away from the survey is that CXOs have lost patience with internally-focused projects and long transformational journeys. They want immediate, measurable results and are launching pilots and visioning workshops to make this happen. They understand that cloud-based AI and cognitive analytics offer the best chance at achieving their transformation goals of innovation and speed to market, and they are moving ahead accordingly. Will you be reaping the rewards of this transformation?

View the survey’s complete findings, here.

 

 

 

 

 









 
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