A 30-fold increase in Internet-connected physical devices by 2020 will significantly alter supply chain leader information access and cyber-risk exposure as the future explosion in the number of intelligent devices creates a network rich with information that allows supply chains to assemble and communicate in new ways, according to a report from IT research firm Gartner.
Digital marketing budgets are expected to continue to increase in 2014. A rapid move to digital marketing has direct implications for the supply chain, particularly for consumer product industries with rapid cycles of go-to-market and promotional activity.
The report projects that a double-digit increase in digital marketing investment will provide supply chain leaders with deeper market insight, as well as fulfillment challenges in industries where more granular market segments are targeted.
Meanwhile, the Internet of things (IoT) is forecast to reach 26 billion installed units by 2020, up from 0.9 billion just five years ago, and will impact the information available to supply chain leaders and how the supply chain operates, depending on industry.
The IoT refers to a network of physical objects containing embedded technology to communicate with their internal states or the external environment. The term encompasses hardware (the things themselves), embedded software, communications services and information services associated with the things.
"It's important to put IoT maturity into perspective, because of the fast pace at which it is emerging, so supply chain strategists need to be looking at its potential now," Michael Burkett, managing vice president at Gartner, said in a statement. "Some IoT devices are more mature, such as commercial telematics now used in trucking fleets to improve logistics efficiency. Some, such as smart fabrics that use sensors within clothing and industrial fabrics to monitor human health or manufacturing processes, are just emerging."
Digital businesses are also expected to disrupt the design and manufacturing of products during the next five years. First will be the use of digital product models for use in 3D printing and for simulating hybrid digital-physical software-embedded products.
However, the report noted that supply chain strategists should recognize that 3D printing is still in its very early stages and is currently applicable to only select materials and manufacturing process technologies.
"As the number of software-embedded digital-physical products grows, the methods of product development and life cycle management across the supply chain will change," Burkett said. "Supply chain teams will have to take ownership for coordinating the delivery of quality-perfect orders of these digital-physical products. This extends beyond developing and ensuring quality of a single device to managing the larger complexity of these connected systems."
Using digital channels for product launches, seasonal promotions and other initiatives, marketers are conducting campaigns and communications across multiple channels, and adjusting promotions depending on results.
"Supply chain leaders must design their processes to operate in this digital business world," Burkett continued. "This includes fulfilling the new expectations of customers and the volatile demands that digital marketing will create. A future supply chain will meet those expectations by converging people, business and things in a digital value network, and incorporating fast-emerging capabilities such as IoT and smart machines into this design strategy."