How Future Supply Chain Management Works

More and more companies have recognized the critical power of supply chain management for business success – without viable supply chains, there are no satisfied customers, no successful product launches, and no stable value creation. Supply chains need to continuously evolve to meet these needs. Today, digital technologies open up numerous opportunities, which you could only dream of a few years ago: more accurate forecasts, fully connected partner networks, and near-autonomous operations.

At the same time, the economic environment is changing at a rapid pace: geopolitical tensions, changing customer needs, and climate change pose additional challenges for companies. In ten years’ time, supply chain management will look different than today – more connected, data-driven, and more adaptable than ever before. But what exactly will change, and how can companies prepare for it today? To answer these questions, SAP Business Consulting and Kühne Logistics University conducted a comprehensive study last year, the results of which we present in today’s and the next five issues.

We are building on a previous study in which we analyzed the visions of the future of companies in the middle of the “Digital SC Hypes” ten years ago. The mood was euphoric: From numerous conversations with supply chain managers, over 120 potential use cases arose – from 3D printed Lego stones to the use of social media data in sales forecasting to mini factories, ultra-fast BOM resolution, and last mile drone delivery. Companies were ready to invest and experiment with new technologies. Much was visionary, some sounded like science fiction – and yet the digital revolution in supply chains seemed tangibly close.

Our follow-up study shows a significantly changed picture. Pragmatic realism has given way to the great euphoria. Over the last 10 years, many technologies have been introduced slower and to a lesser extent than expected. The reasons for this include underestimated complexity and misconceptions about the performance of digital solutions (e.g. augmented reality, 3D printing or IoT), as well as an often inadequate technological state of development in the companies. Often, immature technologies, talent shortages, and inconsistent data quality slowed down execution.

Of course, there were also some pioneers – often from industries with high pressure to innovate – who secure an advantage with targeted investments and know-how. Success often correlated with a focus on clearly outlined use cases with rapid return on investment: better delivery reliability, fewer disruptions, quickly tangible value for the user.

This has been further reinforced by the recent years of pandemic, geopolitical tensions and economic weaknesses. Digital solutions for increasing automation, building integrated planning platforms, or tools to improve the customer experience are now only introduced if their value is clearly demonstrated. Successful projects usually start small and are not scaled until they have a proven effect. Lack of data quality, talent shortages, and lack of system integration are some of the biggest hurdles. Consistent data and change management is indispensable.

Between 2015 and 2025, the view of digital technologies has changed significantly: away from technology-driven euphoria, towards a use-oriented deployment. The potential to achieve true competitive advantage with new technologies in supply chain management is enormous. However, many companies are still lagging behind technology leaders today.

As part of our study, several surveys were conducted with a total of approximately 660 supply chain experts to understand today’s situation and expectations for 2035. In a multitude of in-depth discussions on Plan, Source, Make, Deliver, and People, we identified measures that companies should implement immediately, regardless of the scenario.

There are some exciting insights for the 2035 supply chains. First, the foundation of any successful digital transformation is a significant improvement in data quality. Companies also need appropriate tools to leverage this data and not remain “data-rich but insights poor.” People will continue to be important in the future, but their roles are changing. When AI takes on most of the operational work, and employees primarily monitor and develop, they are responsible for tasks that they have never practically performed themselves. Value chain silos will disappear, and technology-driven planning enables seamless end-to-end control.

Few innovation leaders like Amazon, Apple or Procter & Gamble will be able to set new standards on their own. Most organizations do not have comparable budgets, skills, or talents. They will make technological leaps, especially if they can use market-based standard solutions and thus participate in developments.

Regardless of the individual level of maturity, it is possible to record: If you want to play at the front in 2035, you must already start implementing “no-regret moves”: for example, establish robust data governance, standardize processes, and introduce employees specifically to AI tools. Companies that lay these foundations today will not only use technologies in 2035, but will use them strategically. Or, to say it with the words of Wayne Gretzky, “Good players skate to the puck. Great players skate to where the puck is going to be.“

In the second part of the series, we will show in the next issue why supply chain planning is becoming the decisive success factor, what gaps exist here today between ambition and reality, and how companies can prepare for 2035 with data, AI, and agents. In the subsequent expenditures, we will examine the key findings of our research in the areas of purchasing, production, distribution, and employees.

This article was written in collaboration with Prof. Kai Hoberg (Kühne Logistics University) and Florian Diehlmann (SAP) in the context of the SAP-KLU study "The Supply Chain of the Future”.