Digital solutions for supply chains: what's really working?
Which digital solutions really work for supply chain management? What criteria do leading companies from the automotive, mechanical engineering, high-tech and consumer goods industries use to decide for or against digital technologies such as AI or blockchain? A joint study by KLU and SAP took a close look at precisely these questions. The result: companies are taking a much more pragmatic approach to the topic today than they did ten years ago. Only technologies that are relatively easy to implement and quickly deliver effective benefits stand a chance. The biggest problems: immature technologies, increased complexity and a shortage of skilled workers.
Pragmatism instead of enthusiasm for new technologies
"If you compare the current status with the forecasts from 2014, our results show that the introduction of digital technologies in supply chain management is not happening anywhere near as quickly as many experts originally expected," says Kai Hoberg, Professor of Supply Chain and Operations Strategy at KLU.
Immature technologies and a shortage of skilled workers are slowing down enthusiasm, and some companies are also underestimating the complexity of the applications. This is often compounded by poor data quality as a starting point, instable IT systems from the start and a lack of change management during implementation.
“It was really interesting to compare the results of the 2014 and 2023 studies”, says Dr. Jörg Wilke, head of SCM Business Consulting at SAP. “Our interviewees confirmed that digital technologies like AI, IoT, digital twin and others might have a big impact on future supply chain management. But the preferred way to success in terms of technology focus and the management approach has changed a lot given the lessons learned that companies gained during the first wave of implementation projects – less hype, more pragmatism, and a clear business case are key factors.”
The end of the AI hype?
"It is interesting to compare what we found in the study to the current hype surrounding generative AI and its perceived impact on industry”, says Co-Author Rod Frankling, Professor of Logistics at KLU. “I think we can assume that the noise surrounding generative AI will decrease and businesses will once more focus on pragmatically implementing the technology where it makes economic sense."
The results of the study underline the fact that new technologies must quickly make a positive impact and solve a specific operational problem. "Introducing technologies purely as a top-down initiative, on the other hand, has little chance of success," says Hoberg. Applications using artificial intelligence, robot-assisted process automation (RPA) and solutions relating to the Internet of Things were the most successful.
Successfully implementing digital tools
How can new digital tools be implemented successfully? Ideally, it starts with a clearly defined problem that is discovered by the grassroots. The cost-benefit ratio is clear and the company has a stable IT infrastructure. "If management and partners are then clearly committed to the new technology and good change management accompanies the introduction, the chances of success are best," says Hoberg.
The study participants see the greatest potential in the following areas: Analytics for planning and operations, integrated planning with digital platforms, technologies that improve the customer experience and the automation of digital processes. "This is where digital tools can already unleash their full potential today and make companies more agile or more attractive to customers, for example," explains Hoberg.
About the study: Back in 2014, SAP asked supply chain managers about their experiences and expectations of digital technologies in supply chain management. Ten years later, where possible, the same people or people in similar positions were surveyed again.
Full Publication: „What Really Works in Digital Supply Chain?" A joint research report by SAP and Kühne Logistics University on companies’ practical experience of implementing digital supply chain solutions between 2014 and 2023. Whitepaper, 2024.