Table of Contents 3 Introduction 5 Survey Highlights 7 NextGen Supply Chains 12 Key Innovations Driving NextGen Supply Chains13 Robotics and Automation 16 Big Data and Predictive Analytics18 Internet of Things (IoT)/Sensors21 Artificial Intelligence23 Driverless Vehicles/Drones 25 Overcoming Barriers to Adoption27 Barrier #1: Making the Business Case for NextGen Supply Chain Investments30 Barrier #2: Tackling the Supply Chain Skills Gap and Workforce Shortage34 Barrier #3: Building Trust and Security in Digital, Always-On Supply Chains 40 Following Up on Smart City Logistics 44 Conclusion 45 References 46 Appendix46 About the Report 49 Acknowledgements73 % Robotics and Automation 65% TOP SUPPLY CHAIN INNOVATIONS Top 7 of 11 Potential to distrupt or create competitive advantage. 64 % BARRIERS TO ADOPTION Robotics and Automation Internet of Things Driverless Vehicles and Drones Artificial Intelligence (T op 3 of 8 Barriers for Each Technology) Predictive Analytics 36 % 36 % 26 % 27 % 26 % 25 %y Lack of understanding of technology landscape Lack of access to capital to make investments Lack of clear business case Lack of adequate talent 28 % 19 % 17 % 29 % 26 % 17 % 25 % 24 % 15 % Customer demands on the supply chain Hiring qualied workers PREPARATIONS Actions being taken to prepare for next generation supply chain. 48 % 46 % 46 % 44 % Partnering with vendors to understand benets Increased investment/budget for emerging technologies Recruiting for different skillsets to align with future needs. Training workforce to use new technologies Overcoming Barriers to NextGen Supply Chain Innovation 2018 MHI Annual Industry Report Key Survey Findings TOP CHALLENGES Wearable and Mobile Technology 45% Predictive Analytics 62% Internet of Things (IoT) 59% Articial Intelligence 53% Inventory and Network Optimization 53% Driverless Vehicles and Drones 52% SUPPLY CHAIN CYBERSECURITY RISKS 40 % 44 % 37 % Top 3 Sophistication of hackers and “threat actors” Lack of awareness within organization Poor cybersecurity practices among suppliers Cybersecurity technology capital business case talent cybersecurity business case business case business case business case talent technology technology technology technology capital ADOPTION RATE 50% 40% 30% 20% 10% Sensors in fact, back- ward-looking analytics are now table stakes. NextGen sup- ply chains will leverage forward-looking analytics to explore new possibilities, produce data-driven insights and bold deci- sion-making, harness the power of disrupters, and generate breakthrough outcomes. Transparent Companies that have the deepest two-way relationships with customers will thrive in tomorrows economy. Transparency is a necessary element for such intimacy, and it involves more than simply gaining visibility into the extended supply chain. Broadly speaking, transparency is the process by which a company acts on the insights gained through visibility in or- der to manage risks more effectively. NextGen supply chains will integrate real-time, macroeconomic risk indicators, sup- ply chain visualization tools, and predictive analytics capabili- ties to create transparency for all stakeholders. Figure 5: 2018 Survey Results - Top Supply Chain Challenges 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Food safety, spoilage and contamination Visibility of inbound and outbound shipments Implementing sustainability programs Out-of-stock situations Omni-channel fulfillment Insight into supply and demand Synchronization of the supply chain Insight into customer behavior and product usage Increasing competitive intensity, rising customer expectations Forecasting Hiring qualified workers Customer demands on the supply chain Extremely Challenging Very Challenging Somewhat Challenging Not Challenging