We keep being told that the digital supply chain is going to be a game-changer, but I suspect that most organisations are still working out how to make the most of the various technologies involved.
Now a report from the World Economic Forum has started the work of quantifying the impact of digital technologies such as robotics, mobile and social media, the internet of things, artificial intelligence and big data analytics.
And it is clear that investment in a combination of cognitive technologies (such as artificial intelligence and big data analytics), the internet of things, robotics and mobile/social media leads on average to an increase in productivity three times higher than investments in any of these technologies individually.
The report, Maximising return on digital investments, is based on a survey of more than 16,000 companies on their investment decision in these technologies between 2015 and 2016.
It is also clear that gains are not evenly distributed. The growth associated with these investments is currently driven by the top 20 per cent of companies (by productivity) within each industry sector.
The report argues that without broader implementation, an “industry inequality” could emerge, creating a small group of highly productive industry leaders and leaving the rest of the economy behind. SMEs in particular, often the driver of national economies, could suffer from competitive disadvantages.
Of the technologies analysed, the highest return came from cognitive technologies which generated $1.90 per employee for every dollar invested. It is expected that the largest investment in these technologies between 2016 and 2020 will be in the internet of things as IoT build-out will generate the huge amounts of data needed for artificial intelligence and big data analytics to flourish.
Many years ago now, professor Martin Christopher of Cranfield University famously said: “Competition in the future will not be between individual organisations but between competing supply chains”.
And the concept is even more important the age of supply chain digitisation. The report is clear: “Only organisations that can look beyond their own walls and navigate digital ecosystems will ride the next wave of strategic growth. Operating in isolation, they may find it impossible or expensive to capitalise on digital opportunities.
The study highlights Accenture’s Technology Vision 2017 which suggested that 75 per cent of C-level executives believe their competitive advantages will not be determined by their own organisation, but by the strength of the partners and ecosystems they choose.
“These leaders foresee the importance of business networks growing exponentially in the next five years with 74 per cent even believing that ecosystems will be the basis for new partnership models, and suggest that platforms have shared responsibility for a brand by 2021.”
It’s a timely reminder: it might seem that supply chain digitalisation is just about jaw-dropping technology, but the reality is that collaboration is critical to getting the best out of it.