Efforts to digitize the supply chain are well underway by many companies in response to the pandemic-triggered supply chain disruptions. Before adopting any new technologies and greater levels of automation, many organizations have taken to heart the lessons learned from the disruptions and put stronger planning and risk management practices in place. Think enabling greater collaboration across the supply chain, finding alternate suppliers, carriers and vendors, and the sharing of data.
These efforts require shippers and their 3PL counterparts to re-examine their processes around how they manage their supply chains. They’ve turned to a number of technologies to automate manual processes, improve efficiencies, gain visibility of information and make better decisions, among other benefits.
In simple terms, “digitizing supply chain management improves the speed, accuracy and flexibility of supply risk management,” according to a McKinsey & Company 2020 report on taking action to mitigate risk and build resilience against future shocks. Digitizing ensures a single source of truth, reduces risk, and achieves greater visibility and coordination across the supply chain.
To this end, here’s a look at where current and future investments in supply chain are being made and why.
Supply chain tech investments
To support greater efficiencies, companies are putting their investments in a number of practical applications that incorporate broader technologies such as AI, machine learning, IoT, 5G and more.
Use of automation and AI in the warehouse continues to grow since the end of the pandemic, and this trend is expected to continue. In its “Powering the Future of Supply Chain” report, Gartner research found that digital economic value is a key driver of the supply chain productivity that is sought today by 3PLs and shippers.
In order to improve supply chain processes and support real-time decision execution, Gartner notes that companies are leveraging data assets, such as algorithms, analytics, AI, large language models, and even augmented reality (AR) and virtual reality (VR). These supply chain processes may include demand forecasting, order management and supply chain planning and logistics and distribution, among others—all areas where real-time decisions require data and insights.
Gartner estimates that digital supply chain investment in real-time decision execution will increase five-fold by 2028.
To enable their decisions, supply chain managers need data at the right time and place. Research by Modern Materials Handling (MMH) publication and its Peerless Research Group in its 2024 Outlook report, an annual survey on materials handling and technology to warehousing, distribution and manufacturing companies, found that managers want data insights and analytics to support more uptime from existing systems or to assist their workforces to be more productive. Managers also need to be able to asses inventory levels and shipment accuracy, among other performance factors.
Internet of Things (IoT) technology is also enabling real-time decision-making by connecting devices and equipment, and these investments are continuing. IoT solutions are commonly used to improve areas such as workforce productivity, asset tracking and customer satisfaction.
Going to 5G networks
With the aim to improve efficiency and productivity, 5G—the next generation or new standard of wireless cellular technology—is designed to provide comprehensive connectivity among people, machines and devices. The high-speed and low-latency capabilities of 5G enable faster data transfer, real-time tracking and improved automation. Combined with IoT technology, 5G supports data-driven decision-making to create efficient supply chains and cost savings.
But 5G is only in the early stages of adoption in U.S. warehouses and supply chains. 3PLs are more likely to be early adopters than their shipper counterparts though both groups reported plans to invest in 5G integrations over the next five years, according to the 2022 26th Annual 3PL study that surveys 3PLs and shippers worldwide.
Warehouse automation investments
The MMH 2024 Outlook report found that investments made on new or major upgrades of equipment and technology are more targeted than in prior years.
Top investments areas include those made in material handling equipment, automation and IT solutions, and storage equipment. As for types of equipment, leading areas planned for investment in the next 12 months include racks and shelving; mobile and wireless equipment; and lift trucks. Within mobile technology, RFID, drones and voice technology interest is high. The highest interest was in RFID tags with nearly one-third of respondents using it today, and another 40 percent having plans for RFID in the next 12 months.
Within IT, companies are looking to labor management systems, ERP and other systems like voice picking software.
Specifically, according to MMH research, 3PLs plan to make significant investments over the next three years in these material-handling and warehouse automation technologies: robotics, including high-density storage, picker and palletizer robotic systems; autonomous forklifts; and wearables.
Another large growth area is the use of robotics with IoT. Robotics are increasingly found in production centers and warehouses, among other commercial and industrial applications, netting efficiencies such as reduced errors and labor costs. In the warehouse, robots use IoT technology for both inventory management and spatial awareness.
Within robotics, the MMH Outlook report found that percentages looking to evaluate autonomous guided vehicles (AGV) and autonomous mobile robots (AMR) solutions trended higher than prior years. The applications for these types of systems include storage, order fulfillment (such as part-to-picker systems that support goods-to-person workflow), and packaging robotics.
For a look at the new warehouse automation technologies that Worley Warehousing is considering or piloting, visit our Worley Technology Park page.
All of these investments and initiatives suggest that companies are taking a more considered approach to how and what automation technologies they adopt. It’s also clear that technology is playing a larger role in how well a 3PL, warehouse provider or entire supply chain performs.