MHI Solutions Improving Supply Chain Performance
For nine years MHI has been encouraging organizations to harness the power of emerging and innovative technologies capable of generating transformative change across supply chains. While we’d like to think that the years of groundbreaking research that we’ve collaborated upon with Deloitte has turned the investment tide, it turns out that a global pandemic was the catalyst that has inspired new, widespread investment.
That revelation was among the key findings of this year’s 2022 MHI Annual Industry Report, Evolution to Revolution: Building the Supply Chains of Tomorrow. Historically relegated to an under-the-radar afterthought (if the general consumer even thought about it at all), supply chains have become a hot topic among nearly everyone outside the industry. In fact, according to The Wall Street Journal, the term “supply chain” was included in more than 2.2 million tweets in the fourth quarter of 2021 alone!
Who among us hasn’t experienced the impact of shortages and bottlenecks? Forget toilet paper (that’s so 2020). Now, the severe lack of computer chips that have become ubiquitous to everyday life is hampering production of vehicles, appliances, electronics and much more. Dramatically heightened awareness of—and negative personal experiences with—supply chain issues on the part of consumers have elevated supply chains to a position of prominent strategic importance at the uppermost levels of the global economy.
“Supply chain leaders have never been in a better position to drive impactful and lasting change for their companies,” said John Paxton, CEO of MHI. “With the white-hot media spotlight chronicling the after-effects of the pandemic, the importance of supply chain is in the focus of boardrooms around the world.”
Tech investments rising dramatically
Last year’s report saw most supply chain leaders’ technology spends dedicated toward building greater agility and resilience in the face of supply chain challenges. This year—as nearly every prominent company across every major industry has forecasted continued supply chain bottlenecks and constraints—87% of leaders say COVID-19 has elevated the strategic importance of their operations. Further, nearly 78% of supply chain leaders say their digital transformation has accelerated due to the pandemic.
“While COVID-19 definitely created global supply chain challenges, headaches and frustration, it also spurred tremendous investment, innovation, creativity and record business volumes,” Paxton continued, noting that the increased prominence is leading to revolutionary supply chain technology investments over the next 3-5 years.
Indeed, the report found that organizations are increasing expenditures in emerging technologies. Two out of three reported plans to spend more than $1 million in the next two years. Notably, over last year, the biggest jump in projected spending was in the middle range of $5 million to $10 million. Overall, 41% of respondents plan to spend between $5 million and up to $100 million, while 18% plan to spend at least $10 million.
Those findings came from 1,000-plus manufacturing and supply chain leaders who responded to a survey conducted at the end of 2021. Similar to the eight prior reports, the 2022 edition includes professionals from manufacturing, distribution and supply chain operations. Companies large and small are represented, with 59% of participants reporting annual sales in excess of $50 million, and 13% of $1 billion or more. Titles of CEO, vice president, general manager, department head, manager or engineer are held by 81% of respondents.
The intense focus on supply chains—and the rapid adoption of a variety of innovative technologies that deliver the digital transformation needed to compete successfully amid ongoing pandemic-fueled uncertainty—was echoed in the recent MODEX keynote panel discussion that reviewed the report. Available as a free download at mhi.org/publications/report, this year’s report was sponsored by 6 River Systems and Generix Group.
Paxton moderated the keynote along with Thomas Boykin, senior supply chain specialist at Deloitte. He’s also served as the lead researcher for the past nine years of the MHI Annual Industry Report. Joining the pair to share anecdotes, insights and perspectives on the report’s findings were:
- Terry Esper, Associate Professor of Logistics in the Fisher College of Business, The Ohio State University
- Adrian Kumar, Vice President and Global Head of Operations Science and Analytics, DHL Supply Chain
- Jason Minghini, Group Vice President of Operations, Kenco
- Torsten Pilz, Senior Vice President and Chief Supply Chain Officer, Honeywell
MHI produces the report as a means to provide input from the industry as it relates to both current and planned investment in technologies, as well as to identify the trends and challenges going forward, Paxton explained. He also noted that the report is intended to help supply chain leaders attain digital supply chain transformation.
“The report also includes case studies from operations who have successfully applied these technologies to real, day-to-day challenges as a means to share ideas,” he said. “We also want to help organizations—wherever they are on their digital supply chain journey—understand what steps to take in order to get there.”
Highlights from the 2022 Report
The dramatic uptick in investment has been primarily devoted to the 11 digital innovations followed by the report over the past nine years. The report continues its investigation into the anticipated and actual adoption of these transformational technologies. According to this year’s respondents, all digital solutions covered by the survey are expected to achieve an adoption rate of 66% or higher over the next five years. These include:
- 3D Printing
- Artificial Intelligence (AI)
- Blockchain
- Cloud Computing and Storage
- Driverless Vehicles and Drones
- Internet of Things (IoT)
- Inventory and Network Optimization
- Predictive Analytics
- Robotics and Automation
- Sensors and Automatic Identification
- Wearable and Mobile Technology
Cloud computing and storage—which has become the de facto standard for most supply chain software platforms—has the highest current adoption rate at 40% and is projected to grow to 86% in the next five years. Although presently used by only 28% of respondents, inventory and network optimization tools are expected to match that growth rate, hitting 87% in five years’ time.
Click here to read the full feature in the digital version of MHI Solutions.