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AI Set to Drive Global Supply Chain Technology Market to $440 Billion by 2023
January 29, 2019 | ABI ResearchEstimated reading time: 2 minutes
Over the next 5 years, revenues generated by technology in the global supply chain will increase at a compound annual growth rate (CAGR) of 11%, reaching $440 billion by 2023. Suppliers, manufacturers, retailers, and logistics service providers (LSPs) will continue to adopt increasingly sophisticated and impactful digital technology strategies to deliver value along the entire logistics value chain. Combining both technologies and services, the supply chain will generate US$4.6 trillion in 2023, an increase of 29% from 2018, according to ABI Research, a market-foresight advisory firm providing strategic guidance on the most compelling transformative technologies.
“Supply chain operators must find innovative ways to deliver the three primary tenets of a successful strategy: visibility, intelligence, and efficiency,” said Nick Finill, Senior Analyst at ABI Research. “Technologies such as robotics, blockchain, IoT, augmented reality, and especially artificial intelligence (AI) are vital for supply chain operators wanting to remain competitive in today’s complex, global, and customer-centric market.”
AI has emerged as a major driving force behind the digital transformation of the supply chain. It offers suppliers, manufacturers, retailers, and Logistics Service Providers (LSPs) the ability to improve the way they forecast demand, optimize planning, mitigate risks, transport goods, serve customers, and much more. The entire value chain will benefit from AI as it facilitates greater levels of automation and smarter decision making, enabling production, distribution, and retail to become synchronized for the benefit of operating companies and customers.
The growth of e-commerce is driving new approaches to digital technologies in the supply chain too. Warehouse automation and the digitization of last-mile delivery operations stand out as areas targeted for technology spending. E-commerce and omnichannel retailers such as Ocado, Wal-Mart, Kroger, and Amazon have been investing in robotics and AI, which are set to transform fulfillment operations on a major scale. Investments in robotics and drones for last-mile delivery are starting to bear fruit as pilot projects attain impressive results.
The sharing economy is also making a mark on the supply chain, with transportation and storage both key sectors which face potential disruption. Companies such as Convoy, Uber Freight, and Deliv are providing digital freight matching and crowd-sourced delivery models. Supply chain operators are also being able to integrate flexible storage capabilities into agile logistics strategies thanks to on-demand warehousing providers such as Flexe, Stowga, and Ware2Go.
“The supply chain is generally ripe for disruption, but it is also a highly intricate and crucial ecosystem. Supply chain stakeholders, therefore, face the challenge of adopting technologies in the right way and at a rapid pace, but without damaging their own supply chain operations and losing customers in the process,” Finill concluded.
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