The Rise of the Intelligent Supply Chain: Driving efficiency with data and automation

Supply chain management (SCM) software helps bring product to life—starting at the raw material stage and extending right out to the customer’s doorstep, and all points in between.

Applications like enterprise resource planning (ERP), warehouse management systems (WMS), transportation management systems (TMS) and labor management systems (LMS), not only help companies manage the physical movement of goods, but they also support the flow of information that connects suppliers, manufacturers, distributors and other stakeholders.

Software that can automate routine tasks, provide real-time inventory visibility and facilitate seamless communication is in big demand right now. According to a recent Modern Materials Handling reader survey conducted by Peerless Research Group (PRG), about 58% of companies are already using WMS; 25% have a TMS in place; 31% are using LMS; and 27% have adopted supply chain planning (SCP) software in their warehousing and distribution environments.

Looking out about two years, companies plan to add LMS (29% of them plan to do this; WMS (25%); warehouse execution systems (25%); and TMS (13%) to their supply chain tech stacks.

The drivers behind these investments vary by specific application. For example, the need for real-time control; the introduction of new picking/packaging requirements; and the need for better labor management rank as the top reasons why organizations are evaluating new warehouse management systems right now.

Vendor innovation and the increased use of artificial intelligence (AI), machine learning and generative AI (Gen AI) in SCM applications are two more reasons why companies are evaluating their current tech stacks, upgrading their SCM applications and investing in new solutions.

Balaji Abbabatulla, VP analyst at Gartner, says that AI and Gen AI in SCM were big topics in 2024, and that the buzz has spilled right over into 2025. Both technologies are being used to manage and orchestrate different aspects of the supply chain, including production and procurement.

“The leading software providers are delivering real supply chain management capabilities enabled by AI, and they’re deploying these solutions at a faster scale versus the historical development timeline,” says Abbabatulla, who’s also seeing more companies viewing SCM as a “strategic partner” for their operations, and not just another cost center.

“Not only have we seen a significant change in the way new technology is embedded within traditional supply chain software,” Abbabatulla adds, “but also a shift in the mindset of supply chain leaders who are using the technology.”

Getting all systems on the same page

As he surveys the current SCM environment, Howard Turner, director, supply chain systems at St. Onge Co., is seeing more interest in applications that can provide a “central view” of key information stored in multiple systems (aka, a control tower approach).

This isn’t a new need, but it’s one that’s being met through a combination of AI, advanced analytics and good integrations across systems, regardless of whether those systems were developed by the same software provider.

“Companies want more supply chain visibility, so they’re turning to control towers to help them break through the silos that may exist in their organizations,” says Turner, “and attempting to get data in a more timely manner.” One simple example of this finds companies using their WMS, TMS or fleet management systems to get an accurate answer to this very common customer question: Where’s my order?

“Everybody wants real time visibility,” says Amarendra Phadke, CTO at Capgemini Engineering. “They want that instantaneous know-how of where things are.” That sounds easy enough from a concept perspective, but Phadke says having the internal backbone from a technology infrastructure and data acquisition perspective is anything but. “It’s challenging to implement.”

The more disparate systems are involved in the process, the steeper the challenges become. For example, if that order is waiting to be picked or assigned out in the warehouse, then it’s still under the WMS’ or distributed order management system’s (DOM) domain.

But if the order has already been loaded onto a truck and on its way to the customer, then the TMS or fleet management system knows best. And, if the order has already been delivered, then last-mile delivery applications are typically used to capture and retain the proof of that.

Turner expects to see these and other systems better connected in the near future as companies move away from sending emails across departments and over to having a centralized view of their supply chain activities. Expect SCM to play an important role in this evolution.

“Having a centralized view of all of the key systems that are involved—from the ERP to OMS to sales and operations planning [S&OP] to TMS,” Turner adds, “and giving these different departments a centralized view is definitely of interest right now.”

Managing key threats & challenges

Companies expect a lot from their SCM applications, and the current business environment is putting more pressure than ever on those solutions. For example, Phadke says companies are very focused on workforce management now thanks to the continued labor shortage. They’re using more LMS, robotics and automation to better manage their current workforces while also augmenting those resources with technology.

“It’s about managing your overall workforce and workforce productivity,” says Phadke, who is seeing more innovation coming from SCM vendors on this front. The Modern Materials Handling survey is also tracking this trend. Labor management systems are the top application that companies want to evaluate, purchase or upgrade within the next 24 months. Twenty-nine percent of readers are planning this move right now, compared to the 15% that were doing so in 2023, and the 19% that were considering LMS in 2022.

Cybersecurity is another major concern for modern supply chain operators. Once primarily concerned with physical goods, logistics and supply chain managers have found themselves mired in the ever-evolving threat landscape of cybercrime.

“Cybersecurity will continue to be a top-of-mind concern and a significant challenge to solve,” says Phadke, who notes that the threat is a double-edge sword. On one hand, good visibility requires more collaboration and data sharing, but it can also open the door for malicious actors to infiltrate networks and disrupt operations.

“On one hand companies want that openness, but on the flip side they also need to build in good security principles that protect their data, business logic and identities,” Phadke points out. “As the [bad actors] exploit newer and newer vulnerabilities, companies have to be able to react in time and in ways that are fast enough to ensure business stability.”

Vendors race to outdo each other

On the AI and Gen AI front, Abbabatulla says SCM software providers are in a race to outdo each other. “It’s about keeping up with the Joneses; nobody wants to not have an AI proposition at this point,” he explains. These quick actions on the software developers’ part have helped produce some real business use cases much sooner than one would expect.

Oracle’s Operator Workbench user interface is one newer innovation that helps production operators complete tasks and access information in real-time. The interface cuts across all aspects of manufacturing and supply chain, guiding operators through a set of instructions to complete specific production tasks.

“Operator Workbench leverages Gen AI to help operators complete assigned tasks in a much more structured, guided manner,” says Abbabatulla, who notes that the AI-enabled technology is especially useful in today’s labor-constrained business environment. “Even if there’s a change in the operator workforce, the company can still expect consistent quality in the work that’s being produced and delivered because AI generates content based on various silos of information.”

“The technology is delivering net-new capabilities and we should see some real business use cases for it very soon,” says Abbabatulla. “It’s not just about investing in tech for the sake of tech, or taking processes and digitizing and/or automating them. It’s about doing things entirely differently.”

Through the software developer’s lens

From the software development perspective, Abbabatulla says SCM providers are moving away from offering a uniform, integrated set of applications provided by one company and over to a “hybrid application stack” approach.

That stack may comprise solutions offered via the Cloud or on-premises; deployed at the edge (i.e., where data processing and storage take place closer to the data source); or AI-powered.

“This is the reality that supply chain leaders have resigned themselves to, namely because they can’t ask all business functions to work with a single provider or accept a certain type of an application,” Abbabatulla explains. “Every business function has its own priorities and unless those priorities are fulfilled, they can’t deliver. And if they can’t deliver, the supply chain can’t
deliver and organizational growth stalls.”