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SC Crisis Fuels Tech Spending

The Coronavirus pandemic and supply chain crisis have spurred greater investments in high tech solutions, finds a recent survey of logistics leaders by MHI, the material handling, logistics and supply chain association.

Because of this, investment in supply innovation over the next two years also is predicted to rise dramatically, according to the 2022 MHI Annual Industry Report, which was unveiled at the MODEX trade show held at the end of March.

Of the 64% of respondents increasing investments, two out of three say they will spend more than $1 million over the next two years, found the survey, which was conducted by MHI and the Deloitte research and consulting company.

In particular, investments are growing in the middle ranges from $5 million up to $100 million – where 41% say they spend more than $5 million and 18% say they will spend more than $10 million.

“Supply chain leaders have never been in a better position to drive impactful and lasting change for the industry,” said John Paxton, chief executive officer of MHI. “With the white-hot media spotlight chronicling the after-effects of the pandemic, the importance of supply chain is finally coming into focus in boardrooms across the world.”

The survey respondents say all technologies covered by the questionnaire are expected to achieve an adoption rate of 66% or higher over the next five years.

Cloud computing, which is now the standard platform for most supply chain software, continues to enjoy the highest current adoption rate at 40%, MHI reported.

Inventory and network optimization are seen rising to the top over the next five years, with an expected adoption rate of 87% (in a statistical tie with cloud computing at 86%). However, artificial intelligence is predicted by respondents to see the most accelerated growth – rising from 15% to 73% over the next five years, a nearly five-fold increase.

Also, Predictive Analytics, currently at 22%, is expected to grow to 82% over the next five years. In addition, the industrial Internet of Things, now measured at 21%, is seen growing to 80%. and robotics and automation, now at 28%, is expected to reach 79%.

Robotics and automation continue to top the list of innovations that survey respondents believe have either the potential to disrupt the industry (17%) or to create a competitive advantage (39%).

However, MHI found that a handful of other technologies are very close behind, including predictive and prescriptive analytics; sensors and automatic identification; autonomous vehicles and drones; and AI technologies.

“Supply chains are becoming more and more a technology-driven industry,” observes Thomas Boykin, Deloitte’s supply chain specialist leader,

“While firms have not adopted some technologies as quickly as they thought they would back in 2014 or 2015, what we are seeing now is a big jump in these investments. Where we used to say evolve or die, what we now say is transform or die.”

Disruption now tops the list of supply chain challenges, with the talent shortage a close second “For the past nine years of the survey, hiring and retaining qualified workers was consistently the top supply chain challenge,” MHI reports.

Supply chain disruptions and shortages rose to the top of the list at 57%. and this spurs companies to invest in technologies that not only improve agility and efficiency but also reduce the need for repetitive, manual labor, the researchers contend.

“These investments create the kind of advanced technology environment that results in more rewarding supply chain jobs that appeal to today’s top talent,” MHI concluded.

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