The Next Big Steps in Supply Chain Digitalization

Supply chain digitalization has advanced rapidly in the last several years. Driven by both market changes and technology advances, digitalization projects have led to significant gains in productivity, resiliency and visibility.

Despite this progress, the supply chain digitalization journey is far from complete. Technology continues to advance and new developments are building on the foundation that is now in place in many supply chains. Here are five of the most significant advances shaping the next wave of digitalization.

1. Analytics take center stage

Data analytics have already established a foothold in supply chain management thanks largely to 3PLs who have integrated systems across the supply chain while also employing powerful business intelligence and visualization tools in their supply chain solutions.

DHL Supply Chain, for example, is improving peak demand management by using machine learning to analyze historical order patterns, including the flagging of external factors that influence customer behaviors such as weather and economics. The result is more accurate forecasts by workstream that enable the company to better prepare for demand fluctuation and efficiently manage extreme peaks without compromising service levels.

This is, however, still something of an isolated example as data remains siloed in many supply chains and even where it is being aggregated and analyzed there are opportunities to expand the scope of these programs. Capitalizing on those opportunities will enable the transformation from reactive to proactive and predictive supply chain management.

2. The cloud creates opportunity

Leading WMS providers have already introduced, or announced their plans to introduce, cloud-based software-as-a-service (SaaS) models for their systems.

This shift to the cloud has the potential to remove barriers to technology modernization for organizations operating with outdated legacy systems that can’t deliver the visibility or productivity required today. Instead of making large capital investments to upgrade their management platforms, these organizations will now have the opportunity to convert system costs from capital to operating expenses while ensuring they are always operating on the latest generation of their chosen systems.

Equally important, the SaaS model will enable easier integration of data- and processing-intensive applications into supply chain systems, such as generative AI.

3. AI expands its role

While machine learning and predictive analytics are already delivering value in supply chain operations, other forms of AI have similar potential. According to a 2023 IBM survey, 46% of supply chain executives anticipate that AI/cognitive computing and cloud applications will be their greatest areas of investment in digital operations over the next three years.

Cognitive computing - the use of computerized models to simulate the human thought process in ambiguous situations forecasting, inventory management, and route optimization

Generative AI, which has advanced rapidly and garnered massive media attention since the release of tools like ChatGPT, has similar potential. Due to data security concerns with publicly accessible tools, organizations are likely to build their own tools to help inform planning, forecasting and risk management.

4. Robots take human form

The next generation of robots to appear in the warehouse may look more like the humans they are working alongside than the systems in use today.

Most people by now have seen videos of humanoid robots dancing or demonstrating their mobility on a parkour course. These are truly impressive, but it’s important to remember the robots are programmed to perform these activities and are doing so in a carefully controlled environment.

The typical warehouse presents a much more dynamic and unpredictable environment and the challenge of these robots operating in those conditions should not be underestimated. Nevertheless, as AI and robotic technologies continue to advance and converge, it is possible that the next generation of humanoid robots could have the intelligence to work within the warehouse. If so, they may prove to be the answer to some of the more difficult-to-automate processes, such as mobile carton picking.

5. Orchestration is on the horizon

Orchestration creates opportunities to amplify the value of previous digitalization initiatives. For example, many DHL Supply Chain operations utilize multiple robotic and automation solutions—and the number of these operations is growing. So, the challenge today isn’t just implementing and optimizing automation to address specific use cases but orchestrating the operation of multiple automation systems and the people that support them to unlock new levels of speed, efficiency and productivity.

That’s being accomplished by integrating automation technologies at the system level in ways that enable continuous and harmonized data flow and visibility. As this platform evolves and expands, it will enable real-time visibility into prioritized tasks within the warehouse, inventory and locations, and the availability and productivity of operational resources.

With this level of visibility, managers will be able to dynamically re-allocate resources across picking, packing and outbound delivery to eliminate bottlenecks at any stage of the material flow process.

Continuing the Journey

As we move into the next phase of supply chain digitalization, continuous performance improvements will be driven by both the maturation of technologies that have already proven their value on a limited scale and the emergence of new technologies that build on the foundation that has been established.

Leveraging both of these trends requires dedicated resources that bring together supply chain and technology expertise as well as established practices for evaluating, testing and implementing emerging technologies.

For more information on DHL Supply Chain’s approach to accelerating supply chain digitalization, visit dhl.com/allin.