Embracing Technology in Supply Chain: Do Cutting-Edge Tools Justify Their Investment in Logistics Management?

Tech trends in supply chain management are changing all the time, reflecting the “never-sleeping” nature of markets and society. Recent occurrences, such as pandemics and war situations, have disrupted the balance between the demand for goods and their supply. And this affects supply chain technology globally. 

However, these changes have also highlighted the need for companies to power their supply chain management with new technologies. As Gartner's research says, the top three areas of capability for technology in supply chain implementation and upgrades are:

• planning (88%);
• visibility (84%);
• transportation management (69%).

Do investments in technology in supply chain help logistic companies improve these operations? Keep reading to explore how technology is shaping the future of supply chain management.

Key Challenges in Supply Chain Technology Adoption

As promising as digital technology in the supply chain may be, the road to its adoption is often filled with obstacles. The journey can be particularly challenging for companies new to digital transformation or those with longstanding operational processes.

The following “Digital uptake model,” developed by The Wolf Practice, illustrates both internal resistance and external forces at play. Let’s explore the model and its components.

According to the Digital Uptake Model, when a new technology enters the market, most potential industrial users tend to resist adoption. The focus on its opportunity is indeed inwards-looking, an internal perspective, focused on increasing efficiency and bolted on the following blockers:

1. Culture and Change Management: Resistance to Change. Introducing digital technology requires not only financial investment but also a cultural shift. Many employees, especially those accustomed to traditional processes, may view this shift as disruptive and potentially threatening job security. Adapting to new software, new workflows, and the constant demand for upskilling can lead to reluctance among staff and managers. This resistance can be a significant barrier, making it difficult for organizations to fully engage in technological transformation.
2. Approach to ROI: Lack of Historical Data. Justifying a new technology can be extremely complicated with rigid investment schemes and inflexible business case parameters. Because of its newness, indeed, there is no clarity over the return on investment and payback period. In fact, there is no guarantee over its potential return altogether, as the technology might be so new as to carry a significant degree of uncertainty, instability, and incomplete understanding of its true potential for all parties involved. Clearly, pouring resources into those initiatives might be perceived as a leap of faith and requires a much greater risk-proneness, which also connects with the following element.
3. Leadership: Lack of Managerial Vision. The direction of any digital transformation initiative depends heavily on leadership. A clear vision from management is essential to drive alignment, prioritize resources, and foster a culture that embraces technological change. Without strong leadership to champion these projects, technology initiatives risk becoming fragmented and less effective. Leaders must not only champion these projects but also communicate the strategic value of the new tools to their teams. More often than not, strong sponsorship is necessary to support initiatives where the return is very unclear and at-risk, as addressed in the former point. 
4. Integration with Legacy Systems: Legacy systems, while reliable, often lack the flexibility and integration capabilities required to support modern digital solutions. Many logistics and supply chain companies have made significant investments in legacy systems and fear the risks associated with migrating to new platforms. Integration challenges with existing technology can add complexity, prolong timelines, and inflate costs, making companies hesitant to invest in digital transformation.

These internal factors form a considerable drag on technology adoption, slowing down the implementation of systems that could otherwise enhance efficiency, improve transparency, and drive business growth.

The Promise of Cutting-Edge Tools or Why Companies Are Embracing High-Tech Solutions

76% of logistic enterprises adopt technologies to enhance visibility and agility in their workflows. This is what custom software solutions can do.

• Better planning and forecasting

Supply chain efficiency hinges on seamless planning, budgeting, and resource management. Traditional methods, which require manual data recording and tracking, are often time-consuming and prone to errors. This can disrupt accuracy and lead to issues in coordinating inventory, fleet, and operations. 

Custom software solutions can address these challenges by providing real-time tracking of warehouse stock and fleet movements. This enables supply chain owners to make data-driven decisions, predict future market needs, and improve overall performance.

As an example, Best Buy uses custom forecasting software to predict consumer demand based on historical trends, weather patterns, and promotional cycles. This system has helped the company reduce stockouts and overstock situations by allowing real-time updates on inventory levels.

• Improved warehouse operations

Custom software solutions automate stock-taking, order tracking, and warehouse organization. It enhances accuracy and reduces the time and effort needed for these tasks. 

With advanced software, managers can optimize warehouse capacity, improve service efficiency, and increase profitability.  You can also use a system that aims for safer storage, providing the structure needed to maintain a well-functioning and organized warehouse environment.

For instance, Amazon has implemented custom warehouse management systems (WMS) to automate everything from stock-taking to order fulfillment. The company uses AI robots that work alongside human employees. They move products throughout the warehouse, reducing the time spent searching for and picking items by up to 50%.

• Greater production efficiency

To understand the positive impact of custom software on your productivity, picture this. The fleet and inventory departments will sync, removing delays and simplifying the entire process from booking and storage to transportation. This way, you'll get insights into supply and logistics.

Another example - a warehouse management integrated with IoT devices. The automated system processes, stores, and dispatches items with minimal human involvement. It reduces the pressure and workload on the warehouse staff, resulting in time and cost savings.

Ford Motor Company uses custom software to integrate their production lines with real-time supply chain data. This reduces inventory costs and eliminates production downtime.

• More structured data

Setting up a system that offers quick and accurate data helps you organize your operations more effectively. This way, analyzing the data becomes easier, making it simple to spot patterns in the information gathered.

You can also keep track of your inventory and business operations easily with custom software. These systems provide cloud storage, letting you review data from different times to help with business decisions.

The benefits of custom logic solutions seem promising, but what about the unique needs and nuances of different companies? 

Larger enterprises are burdened with managing multiple distribution centers, navigating international regulations, and handling large volumes of shipments. Custom solutions allow them to centralize data from various touchpoints, enabling them to analyze trends, anticipate demand, and make informed decisions across their entire network.

Small logistics companies can start with essential modules — like inventory management, route optimization, or basic tracking — and then expand as needed. The main goal here is to identify the area where optimization will bring the most value to the organization.

Strategies to Justify Technology Investment

The problem with the aforementioned Digital Uptake Model is that the Technology Profitability Opportunity on the Y-axis represents the overall opportunity in the market, not at a single-company level. This clearly means that, as time goes by (X-axis) and an increasing number of players adopt the technology till the point of mass adoption and beyond, the overall profitability shrinks for the growing number of adopters. It is a classic risk-reward profile: higher uncertainty at the beginning means a significantly higher economic opportunity for the pioneers, coupled, however, with a substantial degree of loss likelihood should things not work out as expected.

The problem is that not all companies have the resources required to absorb the potential shock of an investment in technology not paying back as expected, and this is why it is so important to understand which arena a company plays in to seize the affordable level of risk. Justifying an investment in supply chain technology and making it very contextual to the company in object is essential for securing buy-in from key stakeholders and project sponsors. Managers can approach this by focusing on both immediate and long-term benefits, as well as exploring flexible investment strategies:

1. Highlighting Labour and Operational Cost Savings: Automation and Digitisation can significantly reduce labor hours by taking over repetitive tasks like inventory management, order tracking, and scheduling. In the long run, these efficiencies translate into cost savings, making it easier to justify the initial investment. However, it’s crucial to handle this aspect carefully – and gradually – from a change management perspective.  
2. Better Decision-Making through Analytics: As the old adage goes, you can only manage what you can measure. Investing in tailored solutions with embedded analytics can provide insights that allow leaders to make data-driven decisions. This enhances operational agility and reduces the risk of costly errors due to guesswork, while at the same time igniting a process of continuous improvement in the search for ongoing, progressive efficiency gains.
3. Considering Cloud-Based Solutions for Cost-Efficiency: Cloud-based technologies offer a budget-friendly alternative to on-premise infrastructure, providing scalability and reducing the need for significant upfront capital investment. By utilizing modular software design, companies can adopt essential modules and scale up over time-based on operational needs. Cloud computing also carries the added benefit of virtually unlimited scalability, increased visibility and access, and forces companies to a higher rigor in securing master data consistency, which is fundamental to driving future innovation.
4. Transitioning When Conditions Align with Growth Needs: Custom solutions become essential under certain conditions, such as scaling operations beyond current software capacity, managing complex workflows with unique requirements (e.g., regulatory compliance, temperature-controlled goods), and when the need for real-time data becomes critical. Identifying these indicators can help companies time their transition to maximize ROI.

By emphasizing these factors, companies can build a stronger case for technology investment, addressing both immediate operational needs and strategic growth objectives. As previously mentioned, depending on the stage of technology maturity, some of these areas may be difficult to quantify. This is where working with specialized strategic advisors can help make the business case more tangible and meaningful.

By understanding the dynamics outlined in this model, companies can navigate the internal and external pressures that impact technology adoption. Early on, companies face a set of internal obstacles that make digital transformation appear challenging and costly. However, As market-wide adoption progresses and technology matures, external forces often lead to broader acceptance and implementation.

Overcoming Resistance to Technology Adoption

Following the Digital Uptake Model, as time passes, more companies begin to embrace the technology and integrate it into their operations.

The external perspective in the model showcases how broader market forces, once mass adoption has occurred, can help companies overcome internal hesitations. Here’s how these external drivers influence the adoption process:

1. Success Stories from Others: Real-world examples of successful digital transformation can demonstrate the tangible benefits of advanced technology, reassuring hesitant stakeholders. Case studies and industry benchmarks can act as persuasive tools, showcasing how other companies have enhanced efficiency, customer satisfaction, and overall resilience. They can also act as a quantitative staple to strengthen the relevance of the business case, thus heightening the ability of managers to build internally approvable and approved technology investments.
2. Enhanced Reliability with Maturity: Over time, technology evolves, and early-stage bugs or integration issues are resolved. As solutions mature, they become more dependable, which makes adoption easier for companies wary of initial stability concerns. Stability is no longer a question mark but rather an ongoing assumption. This reliability improvement encourages companies to adopt digital solutions after initial kinks have been ironed out.
3. Competitive Pressure: The need to remain competitive drives companies to adopt advanced technology, even if they are initially resistant. Once competitors leverage digital tools to enhance customer service, streamline processes, or reduce costs, others must follow to stay relevant. Falling behind technologically can impact market share and erode competitive advantage. Cases like Motorola’s missed opportunity with the smartphone and Kodak’s reluctance to embrace digital photography show how a competitive environment may force players into new technological investments.
4. Stakeholder Expectations: External stakeholders, including customers, suppliers, investors, and regulatory bodies, increasingly expect transparency, accountability, and agility. Cloud-based and digital solutions enable real-time data and visibility, making it possible to meet these expectations. This external pressure can be a powerful motivator, pushing companies to prioritize technology adoption. What might also happen at times is that the pressure starts to feel not just on a single entity but a whole ecosystem of different organizations operating within the same supply chain, with an increasing need for communication, transparency, and end-to-end visibility. 

This is when the perception of the opportunity offered by the technology adoption has shifted from a pure internal, efficiency-driven, to a more outward-looking one, which prioritizes greater proximity to customers as the key lever for the uptake itself.

The Future of Technology in Supply Chain

Supply chain management is undergoing a transformation driven by the integration of intelligent technologies. Purpose-built applications are likely to improve supply chain operations such as maintenance, repair, and overhaul (MRO) and indirect materials management. These systems are replacing outdated, monolithic approaches by connecting disparate data sources such as ERP, EAM, and P2P systems to create streamlined, collaborative processes.

One key development in this shift is the use of AI – GenAI, deep learning, and natural language processing (NLP). The perk is that AI-powered systems can work with existing, often incomplete, MRO data. This shift helps organizations optimize operations and enhance collaboration across teams and supplier networks.

Historically, the supply chain industry has struggled with siloed systems, limiting the ability to fully leverage available data. Yet new custom-built applications can integrate business data across platforms. This improves visibility and operational performance. 

Procurement managers, for instance, can gain real-time insights into lead times, costs, and delivery schedules. Line managers, in turn, identify performance gaps and take corrective actions better when using bespoke software systems. 

For those companies that are not ready to overhaul existing systems, providers offer a balanced approach. It's when you use ready-made tools but customize selective parts or features of it. 

But no matter which strategy you opt for – a combined approach or developing your system from scratch – you’ll boost the resilience and agility of your workflows. You will better manage risk and avoid production disruptions caused by inventory discrepancies or supply shortages.

Conclusion

At the beginning of this post, we mentioned the big question: Do cutting-edge tools justify their investment in modern logistics management?

The answer: They can, but it’ll take strategic planning, careful investment, and a willingness to adapt.

Custom supply chain solutions may not be the single answer to all challenges, but they serve long-term benefits like greater visibility and scalability. If you're thinking of streamlining operations and bettering the line of vision, investing in the right technology is definitely worth considering. 

So, balance is key — and when the software implementation is done right, the return on investment will speak for itself.