Recent interactions with customers and potential clients have left me in no doubt that investment in automation is being brought forward due to COVID-19. The pandemic has revealed the vulnerability of supply chains and forced companies to re-evaluate their level of operational resilience, in order to be better prepared for any disruption in the future. Companies that were looking to adopt automation in 10-15 years' time are now aiming for 3-5 years or even 1-2 years. The latest annual industry report from MHI, the largest material handling trade association in the US, shows that there is a similar picture over the pond.
Entitled 'Innovation Driven Resilience' and produced in collaboration with Deloitte, the recently published 2021 MHI report surveyed more than 1,000 supply chain and manufacturing leaders to understand if and how they intend to adopt of a range of eleven digital technologies including the IoT, cloud computing, blockchain, robotics & automation, predictive analytics and AI.
The survey found that technology adoption is increasing dramatically in response to the disruption caused by COVID, with 49% of respondents having accelerated their spending on digital technologies. The vast majority (83%) believe digital supply chains will be the predominant model within five years, while 22% believe they are already. Respondents expected nearly all of the digital technologies covered by the report to achieve widespread adoption within the next few years. Cloud computing has the highest adoption rate currently at 57%, with adoption expected to grow to 88% over the next 3-5 years. Over the same period, the adoption rate of robotics & automation is expected to rise from 38% to 76%, predictive analytics from 31% to 79%, the IoT from 27% to 73%, and AI from 17% to 62%.
The research indicates that organisations that have embraced digital technologies have been able to respond more quickly and effectively to the challenges of supply chain disruption, recover more quickly than their competitors and create sustainable competitive advantage. The report's authors make a striking point about the need to learn the lessons of COVID-19 and build resilience for the future, saying: "Moving forward, applying the 'unprecedented' tag to events will no longer be an adequate excuse for being unprepared."
As an intralogistics supplier that helps a number of SMEs as well as blue-chip brand owners, the MHI report highlights an interesting 'trickle down' effect from the trend towards digital adoption. Larger organisations are creating efficient supplier networks that leverage digitalisation to connect data and operations seamlessly along their supply chains and shed light on any areas of risk. In this process, they need to look not only at their larger tier 1 suppliers but also at the SMEs in tiers 2 and 3 of their supplier network. These lower-tier firms also need to adopt digitalisation in order to keep pace with the digital ambitions of their customers. In a post-Brexit, post-COVID business landscape, this is a wake-up call for SMEs. Those daunted by the prospect of digital adoption can turn to members of the Automated Material Handling Systems Association (AMHSA), who are ready with expertise and solutions to support them as they embark on their digital journey.
One of the major challenges to investment in digital technologies for US companies cited in the report is the recruitment and retention of trained employees. Of course, labour availability in the supply chain has been a big issue in the UK too, especially in the wake of Brexit. However, it is very pleasing to see the MHI report's finding that diversity in the logistics labour force is on the rise in the US. Whereas only 15% of the supply chain workforce aged over 55 are women, the survey finds that an impressive 56% of staff aged 18-24 are female.
To sum up, in order to remain profitable while meeting ever-increasing customer demands for value and convenience, companies must invest in their supply chains in order to achieve a finely tuned balance of efficiency and resilience.
To download the 2021 MHI Annual Industry Report, please visit https://www.mhi.org/publications/report
As the UK’s leading authority on automated material handling with over 60 members, AMHSA seeks to accelerate the adoption of world-class intralogistics automation across the UK supply chain. Visit www.amhsa.co.uk, call 07517 610514 or email [email protected]