Leading organizations strive to balance a focus on foundational capabilities with the pursuit of innovation. This Hype Cycle offers chief supply chain officers and strategy leaders a snapshot of the maturity and benefits of key technologies, competencies, and frameworks to support their goals.AnalysisWhat You Need to know the defining characteristic of leading supply chain organizations is their ability to balance building a foundation to support operational excellence while simultaneously pursuing innovation to fuel long-term growth. At any point in time, they are capable of managing a portfolio of initiatives and investments in both mature and emerging capabilities. For example, a supply chain organization might be revisiting the center of excellence organization structure while articulating its digital supply chain strategy. It might be doubling down on investments in cost-to-serve analytics while crafting its vision to actively participate in a circular economy. To support CSCOs and supply chain strategy leaders, this Hype Cycle describes key capabilities that support supply chain excellence, their maturity level, adoption, and business impact. These capabilities span technologies, frameworks, and operating models. The Hype CycleThis Hype Cycle describes the level of maturity, adoption, and business benefits associated with various capabilities that support the supply chain. These capabilities can be organized into five categories:
- Technologies: These include digital supply chain twin and RPA.
- Competencies: These span machine learning, metrics and performance management, and data literacy.
- Frameworks: These include segmentation; environmental, social and governance (ESG); cost optimization; and network design.
- Operating model strategies: This span digital, modular and solution-centric supply chains and circular economy.
- Organizational models: These include centers of excellence and agile teams.
Examining the Hype Cycle, there are a healthy number of capabilities to the left of the peak, reflecting the many emerging capabilities that supply chain organizations are currently experimenting with. For the capabilities heading toward the Trough of Disillusionment, there is a realization that while essential, they don’t all result in better supply chain performance. Organizations are looking to scale their adoption of tried-and-true capabilities, on the right side of the trough. These currently include network design, descriptive analytics and cost-to-serve analysis.
This year’s Hype Cycle sees three net additions:
Agile teams: Agile teams are small, cross-functional groups with defined decision authority to deliver fast-cycle solutions for supply chain projects, innovations, or challenges. This organizational construct is critical to increasing the pace and adoption of innovations, engage in better user design for supply chain processes, or to get better outcomes from supply chain technology.
Supply chain cost optimization: Cost optimization is a top priority for supply chain organizations. It is a comprehensive approach to make design choices and operating decisions that minimize waste across the network. Success with cost optimization can result in significant improvements in logistics costs and inventory levels.
Immersive experience: Immersive experience is the combination of conversational systems (how to interact) and augmented, virtual, and mixed (AR/VR/MR) reality (how to perceive). The immersive experience focuses on blending the digital and physical worlds to create a natural and immersive digitally enhanced experience. In the supply chain, use cases include onboarding of new workers through immersive on-the-job training in a safe, realistic, virtual environment, or providing critical step-by-step instructions to remote workers. Companies utilizing immersive experience technologies are already experiencing better outcomes, such as faster repair times, improved work error rate,s, and better collaboration. You might notice a few new profile names: modular operating model, digital supply chain twin, supply chain control tower, supply chain as a service, customer experience, environmental, social and governance (ESG), and digital supply chain strategy. Each of these profiles presents a capability that replaces, subsumes, or extends capabilities on previous Hype Cycles.
The Priority Matrix helps supply chain strategy leaders identify the immediate and future opportunities to adopt technologies and build supply chain competencies, based on their potential impact and maturity. It is imperative that supply chain strategy leaders examine the trends whose benefits are transformational or high, and will reach the Plateau of Productivity in less than five years. If they haven’t done so yet, then they must dedicate resources to quickly build or expand competencies, such as a center of excellence and network design, that will soon become standard business practices. Adopting the capabilities whose benefits are categorized as transformational or high that will plateau in five to 10 years in the priority matrix is critical to future competitiveness. For example, embracing ESG or digital security can position the supply chain organization for long-term, scalable, and sustainable business growth. Although it will be more than 10 years before capabilities like artificial intelligence, digital twins and modular operating models reach the Plateau of Productivity, strategy leaders must realize their potential for business transformation and start active exploration and experimentation. This understanding will afford them an active role as key partners in crafting the organization’s long-term business direction
Off the Hype Cycle, SCaaSA is now named modular operating models, to better align with industry terminology. Modular operating models (MoM) break organization activities into composable chunks to enable plug-and-play process agility in meeting changing business and customer needs. This need has come into sharp focus this year, as companies seek to quickly align their supply chain capabilities to changing market demand, in response to COVID-19 and other major disruptive events.
Supply chain virtualization has been replaced with a digital supply chain twin. SC virtualization is the framework of engaging and disengaging supply chain entities and trading partners to represent the supply chain, in order to orchestrate and respond dynamically. A prerequisite capability for virtualization is an end-to-end supply chain, digital twin. And while the concept of supply chain virtualization is valid, it remains an aspiration to most companies, only achievable by the most mature organizations. It is also more relevant for the heavily outsourced supply chains. So, for now, we will focus on its enabling prerequisite, the digital twin. The framework of a supply chain digital twin is better understood and can be applied regardless of industry, supply chain characteristics or maturity level.
This year we move beyond supply chain visibility to describe supply chain control tower. A control tower is a broad capability that spans people, processes, analytics, and technology. It relies on cross-functional supply chain organization and bases decisions on an understanding of end-to-end supply chain trade-offs. This underpins the control tower's ability to sense the supply chain and respond to changing conditions. While requiring supply chain visibility as an enabler, the control tower goes farther beyond sensing supply chain conditions to executing actions to optimize supply chain performance. Migrating to control towers reflects an organization’s need beyond passive — and somewhat commoditized — supply chain visibility.
Supply chain as a service subsumes SCM BPO, digital supply chain services and SCM BPaaS. We define supply chain as a service (SCaaS) as the externally focused commercial digital service that delivers ongoing management of one or more supply chain functions to other enterprises. Given that definition, SCaaS spans the SC business process as a service (BPaaS) and supply chain management business process outsourcing (SCM BPO): services that are offered by external providers. It also spans digital supply chain services — data, process, or analytic services that an enterprise generates or consumes to enable digital business models.
This year, 3D printing, the additive technique that uses a device to create physical objects from digital models, was dropped. As it mostly pertains to the manufacturing function, this technology will be tracked only in manufacturing-specific Hype Cycles. Customer intimacy has been expanded and is now a customer experience. This new term focuses specifically on the supply chain’s ability to understand the customer, set, and adapt the strategic direction to turn the customer insight into action and coordinate across the enterprise to create and deliver a customer experience.
Corporate social responsibility (CSR) is now ESG to reflect evolving terminology. ESG refers to a collection of corporate performance criteria that assess the robustness of a company’s governance and its ability to effectively manage environmental and social impacts. Digital business is now a digital supply chain strategy. With this change, we refocus on the supply-chain-specific priority of defining a strategy to support an enterprise-wide digital strategy. A digital supply chain strategy prepares the supply chain to create a short- and long-term vision that aligns stakeholders behind an integrated set of principles, digital-enabled capabilities, and investments.
Position and Adoption Speed Justification: Although still in the early stages of adoption, NLG can be used effectively to reduce the time and cost of interacting with supply chain analytics technologies. Use cases for interacting with supply chain users through NLG range from quickly identifying supplier risk exposure and sharing trends in supply chain performance to recommending inventory repositioning.The combination of NLG with advanced analytics and machine learning is one of the most promising applications to support data-driven decision making. This is because, while advanced analytics and machine learning can enable better decisions and automate actions, many users have yet to develop their technical and analytical skills to interpret and act upon generated insights. With NLG, users can interact with these technologies in more intuitive ways.With the addition of NLG, analytics solutions can automatically generate a written or spoken context-based narrative of findings in the data. Integration of NLG with analytics and BI solutions and virtual personal assistants — such as Amazon’s Alexa, Apple’s Siri, or Google Assistant for conversational analytics — will further drive adoption.The adoption of NLG in the supply chain is in its infancy. As supply chain organizations continue to rely on advanced analytics and machine learning, the demand for NLG will grow. The need for supply chain users to synthesize data, seek recommendations, and make decisions in dynamic environments quickly will drive further adoption. The ability of the user to pose their queries and receive insights in spoken or written natural language promises an easier, more intuitive approach to rely on advanced analytics in decision making.
User Advice: Supply chain leaders should:
- Investigate the use of NLG as part of new supply chain analytics and ML initiatives.
- Monitor NLG capabilities for different supply chain use cases to account for their ability to be trained and perform in a supply-chain-specific context with the appropriate jargon and tone.
- Monitor the NLG capabilities and roadmaps from vendors that offer embedded analytics as part of their supply chain management suites.
- Be aware of a solution’s maturity, particularly in terms of data integration and preparation requirements.
- Understand the platform’s self-learning capabilities, upfront setup and configuration required, the range of languages supported, the extent and accuracy of narration.
- Understand potential drawbacks relating to multilingual user scenarios, as NLG requires specific libraries for each language in use.
- Recognize that NLG could be attractive to organizations to comply with the Americans with Disabilities Act (in the U.S.) and similar mandates in other countries.
Business Impact: NLG offers analytics-generated insights to the business users in a more intuitive way, without the need for technical or analytics background. As such, it expands the adoption of analytics-based solutions, which in turn allows organizations to achieve a higher return on their investments in analytics. NLG provides the user with context-specific insights that can be readily used in their decision making.
What do you think of the Hype Cycle for Supply Chain Management?