Supply chains are not just a supporting entity to business performance, but they play a crucial role as a primary driver of enterprise value.
This means supply chain leaders are seeking continual improvement, such as maximizing data insights for rapid decision making, leveraging automation for operational efficiency, and advancing risk management for sustainable growth. To achieve this, leaders have been embracing technologies including Artificial Intelligence (AI), Internet of Things (IoT), advanced data and analytics, Robotic Process Automation (RPA), blockchain, and other cutting-edge capabilities. These have all made an impact, but there is more on the way.
The next wave of technology is both here and emerging. Generative AI (Gen AI) and Quantum Computing (QC) present immense potential to take the supply chain to the next level. The challenge is now on for supply chain leaders to work out which new capabilities will have a real impact on their organization’s supply chain agility and resilience, while also improving overall business performance.
Advances to date
In recent years, efforts to inject new technologies into the supply chain have resulted in a performance uplift for many organizations across multiple sectors. The “Industry 4.0” evolution saw leaders focus on end-to-end digitalization, integrating the data of partners far along the value chain for enhanced visibility, and connecting physical assets using IoT capabilities. The advances of big data analytics, 3D printing, industrial sensors, RPA, blockchain, digital twins, Augmented Reality (AR), and Virtual Reality (VR) have been key to this movement, making the “smart supply chain” the new normal.
As a result of these transformations, supply chain leaders have gained more informed decision-making capabilities, real-time visibility, greater supply chain transparency, and the increased ability to diagnose and test issues at various points, as well as rapidly responding to disruption. Cost savings, enhanced productivity, new business models, sustainability, and easier regulatory compliance are just some of the further benefits. However, in today’s complex environment, where new geopolitical issues, climate change, and ever-growing regulatory requirements can upturn the supply chain with little notice, there is room for even more agility and resilience.
How could the next wave of technologies take supply chain progress even further?
Generative AI
Gen AI – the ability for computing to draw on vast data sets, rapidly create content, and self-learn for future improvement – has attracted significant interest in terms of how it could supercharge the supply chain. Across many sectors, Gen AI use in the supply chain is growing beyond proof of concepts, and its value is starting to show.
A key area where Gen AI is adding real value is in procurement, where it can help team members sort through large amounts of structured and unstructured data such as contracts and spreadsheets. Another is in category management, where Gen AI can assist with spend planning and forecasting, demand and requirements analysis, supply market analysis, and category strategy development and improvement recommendations.
Executives expect Gen AI to have an enormous impact on business. According to the 2024 KPMG U.S. CEO Outlook Pulse Survey, 41% plan to increase their investment in Gen AI next year, and 95% already have ongoing AI education and training.
Other areas where Gen AI can make an impact include:
Request for X (RFX) development, response review and summaries, negotiation strategy development and support, deployment planning
Contract terms identification and analysis, contract summaries, authoring and editing
Supply chain / supplier risk / supplier performance assessments, supplier communication development, supplier collaboration
Spend planning, procurement content generation, user request ingestion and servicing, requisition creation, support and guidance, anomaly detection, order disruption identification
Supplier onboarding collaboration, non-matched invoice detection, requestor / supplier collaboration to resolve invoice matching.
Quantum Computing (QC)
While still an emerging field, QC is expected to bring extreme computational power at immense speed. It is anticipated it will transform how insights can be extracted from vast data sets, and that it will deliver a comprehensive new level of predictive analytics.
When it comes to supply chains, QC’s ability to solve complex optimization, forecasting and simulation problems faster than a classical computer will give leaders unique control. QC could support logistics by identifying near-optimal routes for shipping goods in real time, or it could improve network design by processing vast numbers of designs at once to find the fastest and most cost-effective option.
QC should lead to more optimal choices, whether it be finding a new source material amid an unplanned disruption, or diverting a last-mile route in real time to avoid delays. Significantly, the overall impact of QC’s speed, breadth, and depth could boost supply chain resilience, with leaders more informed, agile, and responsive to change.
Other key areas where QC could make a significant impact include:
Demand planning, forecasting and replenishment predictions, helping to reduce stockouts and minimize over-stocking
Multi-objective problem solving around cost, quality, delivery speed, reliability and geopolitical factors
Production line data processing for workforce scheduling, machine availability, material supply and customer demand
Cryptographic techniques for data security, transparency and immutability
Energy efficient route optimization, production methods and sourcing strategies.
As supply chain leaders embrace innovative technologies such as Gen AI and QC, it will be wise to balance a fast uptake with a responsible approach to implementation and use. A focus on data ethics – such as the sorts of data the tools are drawing on, and how that data is used – is vital, as is understanding any new risks introduced – such as the risk of AI making errors. Likewise, staying ahead of regulatory requirements aligned to the new technologies will be essential for growth and protecting the organization’s reputation.
End-to-end impact
In addition to considering ethics and risks, supply chain leaders will also benefit from thinking holistically rather than tactically to make the most of new technologies. The best results come when the business need is the starting point for technology investment, and the right new technology is sought to support that need, not the other way around.
Further, better outcomes come from applying the new technologies at an end-to-end process taxonomy level rather than at an individual task or activity level. For example, many supply chain leaders are keen to use Gen AI, yet they are just taking a low-level task and automating it with Gen AI. This may result in a useful output, but it may be small and immaterial to the overall performance of the supply chain, making the return on investment poor. Greater impact may be achieved by considering the end-to-end supply chain, encompassing physical, process, and data operations, and how Gen AI could bring improvements in a seamless, connected way.
How we can help
To date, new and emerging technologies such as automation, AI, IoT and blockchain have impacted the speed of decision making, and agility to respond to trends, risks, and variability. The tools have supported physical efficiencies, prediction and planning, and more. The next wave of technologies, including Gen AI and QC, has the potential to take this progress further.
KPMG’s deep experience in emerging technologies and the supply chain means we can help you use the right tools to uplift your operations strategically and holistically. Working together, a fully automated supply chain that responds in real time to disruption could one day be possible. It could include features such as working capital that automatically moves to the right spots; or products that are automatically sent in advance of need, giving customers what they want, when, and where. Importantly, we can help you drive supply chain resilience and overall business performance.
