How supply chain management will work in the future

Digital supply chain technologies have raised high expectations over the past ten years – many of which have only been partially fulfilled. Instead of euphoria, today there is a pragmatic view of benefits and feasibility.

More and more companies have recognised how crucial effective supply chain management is to business success. Without functioning supply chains, there can be no satisfied customers, no successful product launches and no stable value creation. Supply chain management must be continuously developed to meet these requirements. Today, digital technologies offer numerous opportunities that were only dreamt of a few years ago: more accurate forecasts, fully networked partner networks, and virtually autonomous processes.

At the same time, the economic environment is changing at a rapid pace: geopolitical tensions, changing customer needs, and climate change are presenting companies with additional challenges. In ten years' time, supply chain management will therefore look different than it does today – more networked, data-driven and adaptable than ever before. But what exactly will change? And how can companies prepare for this today? To answer these questions, Kühne Logistics University and SAP Business Consulting have conducted a comprehensive study. The results will be presented in the DVZ in the coming weeks.

The creators are building on an earlier study in which they analysed the visions of companies ten years ago, amid the digital supply chain hype. The mood was euphoric: numerous discussions with supply chain managers yielded more than 120 potential use cases – from 3D-printed building blocks to the use of social media data in sales forecasting, mini-factories, ultra-fast bill of materials resolution and drone delivery for the last mile. Companies were willing to invest and experiment with new technologies. Much of it was visionary, some of it sounded like science fiction – and yet the digital revolution in supply chain management seemed within reach. The follow-up study now paints a very different picture. The great euphoria has given way to pragmatic realism. Over the past ten years, many technologies have been introduced more slowly and on a smaller scale than expected. Reasons for this include underestimated complexity, misconceptions about the capabilities of digital solutions – such as augmented reality, 3D printing or the Internet of Things – and often insufficient technological development within companies. Immature technologies, a shortage of skilled workers and inconsistent data quality frequently slowed down implementation.

Of course, there were also some pioneers – often from industries with high pressure to innovate – who secured an advantage for themselves with targeted investments and expertise. Success often correlated with a focus on clearly defined use cases with a fast return on investment: better delivery reliability, fewer disruptions, and quickly noticeable added value for the user.

User-oriented approach

This has been further exacerbated by the past few years, which have been marked by the coronavirus pandemic, geopolitical tensions and economic weakness. Digital solutions for increased automation, integrated planning platforms or tools for improving the customer experience are now only being introduced if their benefits are clearly proven. Successful projects usually start small and are only scaled up once they have proven their effectiveness. Poor data quality, a shortage of skilled workers and inadequate system integration are among the biggest hurdles. Consistent data and change management is essential.

Between 2015 and 2025, the view of digital technologies has thus changed significantly: away from technology-driven euphoria towards benefit-oriented use. The potential for achieving real competitive advantages with new technologies in supply chain management is enormous. Many companies are lagging significantly behind the technology leaders.

As part of the study, around 660 supply chain experts took part in several surveys. The aim was to understand the current situation and expectations for 2035. In a series of in-depth discussions on the main topics of ‘Plan’ (planning), ‘Source’ (procurement), ‘Make’ (production), “Deliver” (distribution) and ‘People’ (employees), the study authors identified measures that companies should implement immediately, regardless of the scenario.

This has yielded some exciting insights for supply chains in 2035. First, the basis of any successful digital transformation is a significant improvement in data quality. Companies also need the right tools to use this data and avoid remaining data-rich but insight-poor. People will continue to be important in the future, but their roles will change. While they will primarily monitor and develop, artificial intelligence (AI) will take over a large part of the operational work. Silos in the value chain will disappear, and technology-supported planning will enable seamless end-to-end control.

Only a few innovation leaders such as Amazon, Apple and Procter & Gamble will be able to set new standards on their own. Most companies do not have comparable budgets, capabilities or the appropriate personnel. They will make technological leaps primarily when they can use marketable standard solutions and thus participate in developments.

Regardless of individual maturity levels, one thing is certain: anyone who wants to be among the leaders in 2035 must start now, for example by establishing robust data governance, standardising processes and introducing employees to AI tools in a targeted manner. Companies that lay these foundations today will not only be using technologies in 2035, but will also be using them strategically. Or, in the words of former Canadian ice hockey player Wayne Gretzky: ‘Good players skate to where the puck is. Great players skate to where the puck will be.’