Given the customer-focused nature of initial digital transformation efforts, it is not surprising that there is a lag in investment on operations to support these efforts. That is changing, and will continue in the future. In a recent survey of leading companies conducted by Infosys Consulting, production/operational efforts were seen as an area of high benefit for current operations, with the potential to be 25 percent higher in the future. Key areas for these efforts include:

Building Digital Capabilities

Companies historically invest in capabilities that provide them greater flexibility and understanding of the complexity of their supply chain. Supply-chain visibility and network optimization are two capability examples. Currently many companies are focusing on efforts around distributed order management to manage the complexity of omnichannel order fulfillment. Looking forward, elements of predictive capabilities will be explored in areas such as fleet management and asset management functions. These capabilities will enable greater speed and return for operational initiatives.

Advanced Analytics

Increasingly, the digital capabilities mentioned above are dependent on strong data structures and advanced analysis capabilities enabled by cloud-based architectures. These analytics allow optimization efforts (network, logistics, fleet, inventory, etc.) to be done in a more robust and real-time manner. Additionally, asset management capabilities are advancing through the increased data provided by sensor technology and Internet of Things (IoT) networks. This enables more advanced predictive maintenance, asset investment planning, and asset capacity planning capabilities. Of leading companies surveyed by Infosys Consulting, 86 percent expect to have data transformation initiatives underway and achieving benefits within the next three years.

New Supply Chain Models

Traditional supply-chain models are being radically redefined with the need for companies to quickly react and develop new capabilities to satisfy customer demands. With this, companies are more reliant on external entities (3PLs, suppliers, etc.) across geographies. This enables the movement from “proprietary” supply-chain models to shared models driving greater asset utilization, high service, and lower cost. Dynamic warehousing, where warehouse services are purchased on demand, is an example of this. This trend will continue to develop as increased digital capabilities and data analysis provide greater visibility and optimization — further increasing flexibility, responsiveness, and cost effectiveness in supply chains. 

With this, these factors will enable the servitization of supply-chain functions. Performance and service levels will increasingly become the “products” which are purchased rather than container and truckload space.

The Outlook

By 2020, supply chain operations will be dramatically different than they are today.  Supply-chain models will increasingly utilize digital capabilities to provide optimized performance and predictive asset management.  These digital capabilities will be supported by advanced data analytics that will draw information from a rapidly expanding set of sensors and connected devices. Companies will control less of their supply-chain assets as they leverage the capabilities of networked assets.  These factors will all lead to an increased servitization of supply-chain operations.