EXCLUSIVE

How far has the digital

supply chain advanced?
Supply chain experts and analysts say how far we’ve
come and how far we still have to go down the path
to complete digitalization of the supply chain.

BY BRIDGET McCREA, CONTRIBUTING EDITOR

I
n an assessment of how organizations have progressed down the digital transfor-
mation path over the last few years, Capgemini Research Institute found that
while worldwide spending on digital transformation technologies—hardware,
software, and services—will cross the $2 trillion mark by 2021, organizations are
struggling with both the digital and leadership capabilities required for success.
For example, just 35% of companies are monitoring their operations in real-time
(versus 48% in 2012, the last time Capgemini conducted this research), 29% are mod-
ifying their operational processes to adapt quickly to external changes (versus 34% in
2012), and only 38% are giving employees the tools they need to collaborate digitally
with one another (compared to 70% in 2012).
According to the research team at Capgemini, implementation challenges and
the increased complexity of technology are the primary roadblocks for organizations
that are trying to progress down the digitalization path. The same can be said for the
digital supply chain, where advancements in hardware and software can effectively
“lead the horses to water,” so to speak, but can’t always drive them to actually put
the technology to good use in their operations.
A number of our top supply chain software analysts contend that the good news

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 EXCLUSIVE: Digital Supply Chain
is that many supply chain and logis-
tics operations are experiencing posi-
tive results from their investments in
transportation management systems
(TMS), warehouse management
systems (WMS), yard management
systems (YMS), global trade manage-
ment systems (GTM) and other supply
chain solutions.
Whether they’re using these systems
on a “best of breed” basis or bundling
them under enterprise resource plan-
ning (ERP) systems, shippers are turn-
ing to software that helps them improve
their efficiency and productivity.
Closing the loop
An innovation that has driven more
companies to invest in a broader range
of technology, the Cloud continues to
gain steam in the supply chain. Calling
Cloud the “fastest-growing market seg-
ment,” Gartner says its use increased by
27.5% in 2019 reaching $38.9 billion
(up from $30.5 billion in 2018).
“At this point, Cloud has become
the de facto solution, with many provid-
“At this point, Cloud has become the de facto solution,
with many providers pushing their potential and existing
clients to upgrade in the direction of Cloud.”
ers pushing their potential and existing
clients to upgrade in the direction of
Cloud,” says Bob Hood, a Capgemini
principal and lead for the group’s Move
Domain practice. “That’s where all of
the new product development is taking
place across all of the different supply
chain solution areas.”
Leading the pack on the Cloud
front are TMS and WMS, with the
former being among the first supply
chain execution (SCE) applications
28 L OGISTICS MANA GEM ENT | MAY 2020
to move into the Cloud. Hood says
shippers’ thirst for more supply chain
transparency and visibility is driving
higher investment in Cloud TMS and
WMS in 2020, with companies like
project44, FourKites, and E2open all
working to provide higher levels of
real-time visibility across warehouses
and transportation networks.
The need for better visibility tools
also radiates out into the broader sup-
ply chain, where companies need to
know what’s happening with their
inventory and their transactions.
“Companies are trying to go beyond
being just execution-focused and effec-
tively ‘close the loop’ on the end-to-end
supply chain,” says Hood. “Getting
there requires more collaboration,
orchestration, and the integration of
planning with execution.”
The data-robot connection
In a world that will be generating 463
exabytes of data daily by 2025—or
212,765,957 DVDs per day—the need
for good data analytics and reporting
— Bob Hood, Capgemini
transcends all industries and organiza-
tions. Hood says shippers are aware of
this, and that’s led to a “heavy emphasis”
on connecting supply chain data and
analytics in recent years.
For example, with the goal of improv-
ing their logistics and supply chain oper-
ations, companies are slicing and dicing
their data, and then using it to make
good decisions. They’re also harnessing
the available transaction data that they
didn’t capitalize on previously. From
their software vendors, companies need
tools that can help them turn transac-
tional data into useable information.
By infusing advanced technologies like
artificial intelligence (AI) and machine
learning (ML) into their platforms,
vendors are helping companies further
their digital agendas. “Companies can
learn from their data and understand the
behaviors that drive higher productivity
and better efficiencies,” says Joe Vernon,
Capgemini’s practice leader of supply
chain analytics. “That also links to the
use of robots and robotics process auto-
mation [RPA], where the data-robot con-
nection feeds better problem solving.”
A mixed bag
In assessing the progress that shippers
are making on the digitalization and auto-
mation front right now, Bart De Muynck,
Gartner’s research vice president of
transportation technology, says it’s a
mixed bag. “Despite the fact that logistics
is lagging behind sectors like manufactur-
ing, which is using 3D printing to quickly
ramp up face mask and nose swab pro-
duction,” says De Muynck, “I think we’re
on a good path right now.”
Pointing to increased TMS adop-
tion as an example, De Muynck says
more companies are ditching paper,
spreadsheets and phone calls in lieu
of more automated transportation
management processes. He credits the
emergence of Cloud TMS platforms—
many of which are being offered up
on a subscription basis—and therefore
require little or no upfront capital
investment—with driving some of that
interest in TMS.
Other key drivers include the need
for real-time transportation visibility
and the new batch of digitized freight
networks that entered the market over
the last few years. “Instead of calling a
broker, and then that broker calling a
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 EXCLUSIVE: Digital Supply Chain
carrier,” says De Muynck, describing the
new digital freight model, “the entire
process is digitized from end-to-end.”
Reimagining the warehouse
If Modex 2020 was any indication, the
push to add more robots and automa-
tion to the warehouse setting is big right
now. Challenged by high labor costs,
high order velocities, and fast delivery
times, companies are infusing more
automation into their warehouse opera-
tions. This is yet one more example of
how far supply chain organizations have
come in the reimagination of their ware-
houses and DCs.
“The number of business use cases
involving robotics has gone up pretty
dramatically versus anything we’ve
seen before,” says De Muynck. He’s
seeing similar momentum on the soft-
ware side, where vendors continue
to push the envelope on digital sup-
ply chain transformation. Pointing to
JDA’s rebranding as “Blue Yonder,” (an
AI/LM company that it acquired) as
one example of this, De Muynck says
the former’s adoption of that name
reveals its commitment to infusing
more AI into its solutions.
“Although the company is still selling
a supply chain management suite appli-
cation,” explains De Muynck, “it’s now
layering AI on top of its JDA Luminate,
with the goal of becoming known as
more of a ‘digital platform.’”
Rip and replace?
As a supply chain expert who tours
hundreds of different warehouses dur-
ing any given year, Ian Hobkirk, founder
and president at Commonwealth Sup-
ply Chain Advisors, says SCE software
adoption varies according to the applica-
tion itself and the industry in question.
Where DCs with 50+ employees usually
have a WMS in place, for example,
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some smaller operations continue to
rely on manual systems.
Of the WMS currently in use, some
of the older systems are now in need of
upgrade or replacement. “Some early
adopters of WMS over-customized their
“The number of business use cases involving robotics has gone
up pretty dramatically versus anything we’ve seen before.”
systems, so now they have a decision
to make,” says Hobkirk. For example,
a current Oracle, SAP, or Microsoft
ERP user may now want to fold WMS,
TMS, or even YMS under the same
umbrella with their enterprise plat-
forms. Others are looking at best-of-
breed or Cloud-based options.
“There are other companies that
implemented systems 10 years ago
and realize that the solutions aren’t
really working very well, but they just
decided to live with it,” says Hobkirk,
who sees no immediate end in sight
for that trend. “Companies just don’t
want to take the risk of putting the
organization through a big IT project
that might not be successful.”
Outside of the warehouse
Looking outside of the warehouse’s four
walls, Hobkirk says many companies are
still managing their transportation spend
manually. “They just don’t realize how
much money they’re leaving on the table
by doing that,” he points out.
As for YMS, Hobkirk says that
while large companies with big yards
and a high volume of trailers appre-
ciate its orchestration capabilities,
adoption rates for YMS remain rela-
tively low across the board. “Some
companies can’t quite connect the
dots on what the YMS-related savings
are going to be,” he adds, noting that
MAY 2020 | L O G I ST I C S MAN AG E ME N T
the software provides “pretty good pay-
back” for larger operations.
In pinpointing other underutilized
software applications, Hobkirk says
he’s surprised that more companies
aren’t using labor management sys-
— Bart De Muynck, Gartner
tems (LMS), slotting, and inventory
optimization solutions. “These solu-
tions are all underrated,” he says, “and
not very well adopted.”
For instance, he says on-demand/
subscription-based LMS offers a viable
business case for operations that can’t
justify an investment in automation, but
that want to eke more productivity out
of their workforces. “LMS is a safe soft-
ware to implement; it’s not risky,” says
Hobkirk. “You don’t shut the warehouse
down if LMS fails and it almost always
delivers some degree of savings.”
Ramping up
As companies continue to shake off the
impacts of the COVID-19 crisis and
look to the future, more of them will
surely continue to make headway with
their digital supply chain initiatives.
From the crisis, many learned the
true value of end-to-end supply chain
visibility—something that De Muynck
says could drive higher SCE adoption in
the near future. “Companies are going
to continue to invest in the technolo-
gies that support good supply chain vis-
ibility,” says De Muynck. “Even in the
midst of the crisis we saw companies
investing in these solutions. That’s not
going to let up anytime soon.” •
—Bridget McCrea is a contributing
editor for Logistics Management
29
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