CSCMP's Supply Chain Quarterly
June 26, 2019
Forward Thinking

Investment in supply chain technology and automation to rise 95 percent

MHI Annual Industry Report predicts dramatic increase in investment in supply chain technologies in 2019 as the labor market continues to tighten.

Automation in the supply chain—especially in the distribution center—has reached an inflection point, according to the 2019 MHI Annual Industry Report, which was released today at ProMat, the largest expo for manufacturing and supply chain professionals in North and South America. The report predicts a 95-percent increase in projected spending in 2019 over 2018.

MHI, a trade association for the material handling and logistics industries, conducted a survey of 1,052 supply chain professionals and found that companies are planning significant investments in technology and automation this year. For example,

  • 57 percent of respondents are planning investments in new technology that will total more than $1 million over the next two years (up 10 percent over last year's survey),
  • 34 percent are planning to spend more than $5 million, and
  • 22 percent are planning to spend more than $10 million.

Unsurprisingly, one of the major reasons for the projected spike in spending is the tight labor market. As George Prest, CEO of MHI, pointed out during Wednesday's keynote address, there are currently 7 million open jobs in the United States but only 6 million people actively looking for work. Indeed, 65 percent of the survey respondents cited hiring qualified workers as their top challenge for 2019.

With more companies feeling the need to make their supply chain more "digital," MHI has created a tool that can help companies evaluate their digital mindset and gauge where they stand on their digital adoption journey. The tool measures progress along five digital categories: leadership, innovation/technology, customer engagement, talent, and workplace environment.

Annette Danek-Akey, senior vice president of supply chain at the publishing company Penguin Random House, said the evaluation only takes about five minutes. Danek-Akey, who participated in a panel discussion about the report, said that if you take the evaluation with your team, it can lead to some valuable discussion on where your company needs to improve.

This is crucial because automation and technology may be essential to surviving a talent-constrained business environment that demands fast fulfillment times. "Solving the technology problem and getting it right will become a core competitive advantage," predicted Jim Liefer, CEO of the technology company Kindred AI, who also participated in the panel.

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