It helps a company control costs, alleviate risks, see what’s going on in their supply chains and get more done with less. Long considered a vital aspect of any supply chain, transportation management systems (TMS), warehouse management systems (WMS), enterprise resource planning solutions (ERP) and other platforms work either independently or together to help shepherd goods from the point of origin to their final destinations.
Along the way, software also supports accurate forecasting, good decision making, high levels of visibility and better control over the world’s increasingly complex, intertwined supply chains. As we move further into 2023, here are seven important supply chain software trends that are either already taking shape or currently standing by on deck for the remainder of the year.
1We’ve entered the era of “digital intelligence.”
End-to-end visibility has long been the Holy Grail for supply chain and logistics managers who now want tools that leverage that visibility into better decision making. Analysts have begun referring to this as “digital intelligence,” and Laurent Lefouet, chief customer and strategy officer at Aera Technology, sees it as a key trend that will only accelerate in 2023. “It’s about moving from visibility to execution,” he explains, “and thinking beyond ‘knowing what’s going on’ to actually executing on those decisions.”
To meet the challenge, vendors are switching up their software algorithms, introducing new models and folding more advanced technology like artificial intelligence (AI) into their platforms. These advancements are helping shippers move away from making “manual” decisions as they work to respond to fast-changing supply chain situations. Instead, they’re using dashboards, data analytics, control towers and automation to quickly address emerging issues or take advantage of new opportunities.
2The Cloud continues to reign.
The fact that more companies are investing in Cloud-based software isn’t exactly news, but it’s a trend that’s expected to continue—and even accelerate—in 2023 and beyond.
“Cloud is almost a deal breaker at this point for companies investing in new supply chain software,” says Michael McCullough, vice president, NA and supply chain lead at Capgemini. “On-premises solutions are more the exception than the norm.”
For example, McCullough still encounters some companies that are using legacy, on-premises WMS, but says Cloud as a whole is in “very high demand” right now. One of these applications’ biggest selling points is the fact that they can be updated in the background and on a regular basis without the need for disruptive upgrades.
“Companies are much less accepting of only getting a software update every couple of years,” says McCullough, who also sees more shippers playing an active role in helping to “shape” any new upgrades, features and capabilities that their vendors are working on. “Customers expect to have a seat at the table in terms of the software’s roadmap,” he adds, “and want more collaborative relationships with their vendors.”
3Supply chain platforms are being enhanced and improved.
For its most recent WMS market study, ARC Advisory Group pinpointed one major new trend: nearly all large WMS providers were putting money into their platforms, and at a higher degree than usual. Much of the emphasis is on the Cloud at this point, says Clint Reiser, ARC’s director of supply chain, but vendors are also looking for new ways to enhance and improve their platforms in order to meet the needs of the modern customer.
“There’s more development money going into the actual platforms and into making them Cloud-native,” says Reiser. Software developers are also using more microservices, which allow them to use “contained building blocks” within their applications. These microservices support simpler adaptation, change, updates and development without having to take down an entire system to make those alterations. “That way,” says Reiser, “customers are always on the latest version of the software.”
4Everyone wants more digitization and automation.
According to Koray Köse, senior director and analyst for Supply Chain Research and Advisory at Gartner, 99% of organizations plan to invest in emerging technologies over the next five years.
Citing a recent Gartner “Supply Chain Technology User Wants and Needs Survey,” Köse says that the key drivers behind these initiatives include the need to support new business/operating models (for 36% of companies), improve resiliency and agility (35%), and enhance decision making (35%).
Other companies are investing in digitization and automation because they want to drive efficiency improvements (31%) and manage the labor shortage (26%). To address their labor constraints, Köse says 92% of companies that Gartner surveyed are exploring new use cases for advanced robotics. “Those robots rely on software for both orchestration and enablement,” he adds. “Without software, they wouldn’t work.”
5Software platforms are converging.
As he looks around at the supply chain software ecosystem, Köse is seeing more “integrated” supply chain management (SCM) solutions on the market. Larger providers are buying best-of-breed, entrepreneurial-type companies that specialize in specific applications. This helps the larger software developers address a bigger market.
In the meantime, private equity and venture capital firms are acquiring companies in a space that’s really come up onto their radar screens as a result of the global pandemic and subsequent supply chain challenges. “Last year, we saw a lot of new startups and smaller companies enter the market, but now that’s beginning to show signs of converging,” Köse says. “As a result, the solutions themselves are more integrated—not necessarily fully ‘one stop shops,’ but definitely applications that target more than one specific area.”
6Removing the latency between “planning” and what happens in real-life.
As they continue down the road to recovery and begin planning for what’s coming around the next corner, organizations are turning to software to help them reduce the time it takes to respond to real-world events.
In other words, they want to remove the latency between their planning and what actually happens in real-life—a need that became more important than ever during the pandemic. When they can reduce that latency, companies can better manage their inventory, suppliers, labor and other resources in a way that meets their own customers’ demand.
To get there, they have to be able to identify those areas of latency and then address those issues with alternate sourcing, production or shipping options. “When markets shift, companies have to be able to react quickly,” says Lisa Henriott, senior vice president of product marketing at Logility. “Using today’s advanced software platforms, they can more effectively optimize their supply plans, realign production, explore different contract manufacturing options and work with alternate suppliers.”
7Driving down risk is a key concern.
Companies have come to realize that what was once thought of as a “constant state of disruption” has simply become the new normal. Instead of addressing issues as they arise, for example, organizations are learning how to deal with—and constantly preparing for—disruption and risk.
“Reducing risk is a key concern for companies right now,” says Philip Vervloesem, senior vice president at OMP USA. In response, he says that more of those organizations are using an approach he calls “boundary-less planning.”
This is the process of building up network resiliency across logistics, sourcing, supply, production or other areas, and then using a tactical execution approach to identifying and effectively reducing risk. This, in turn, helps companies respond to risk in a more reality-based manner—versus only making predictions about what “might” happen and reacting as they do happen.
Vervloesem says automation plays a key role in boundary-less planning, which requires the right balance of human intervention and automation. And due to the number of players in any network, he says collaboration and connectivity have also become extremely important for organizations across most industry sectors.
“Being able to have a closed loop with your co-workers, customers and suppliers is extremely important,” Vervloesem adds, “because it enables you to shift gears a lot faster, versus having everyone working in silos, which can result in delayed decision making and greater risk.”
Replace or upgrade? How to make the choice
"Being able to have a closed loop with your co-workers, customers
and suppliers is extremely important, because it enables you to
shift gears a lot faster, versus having everyone working in silos,
which can result in delayed decision making and greater risk."
— Philip Vervloesem, senior vice president, OMP USA
If your company is part of the 99% of firms that will be investing in emerging technologies over the new few years—and we’re going to guess that it is—there are some key considerations to think about before making those investments. In most cases, you’ll be picking between upgrading an existing piece of supply chain software or completely replacing it with a new solution.
Lefouet says a good starting point is to ask yourself this question: What will really make the biggest difference in how efficiently we operate as a supply chain organization? In some cases, the answer may be to enhance an existing solution, but in other cases the better choice may be to rip-and-replace that platform with something new.
“Some companies may not want to do a replacement because their existing solutions still work, while others may be replacing because their platform is being sunsetted in a couple of years,” Lefouet points out. “While others may upgrade in order to gain access to a more modern tool that features new capabilities.”
For best results during this process, also consider where the investment and effort is going, and then whether that will pay off for your organization in the form of a positive return on investment (ROI).
“No matter how you look at it, this is a big decision, and especially if you can only make one major software investment during any given year,” says Lefouet. “If you have two projects in mind and aren’t able to do both at the same time, you should look carefully at which one will make the biggest difference.”