Service providers are transforming supply chain management with predictive analytics, automation and AI, ISG Provider Lens report says
“Compared to the U.S. market, the European market places a greater emphasis on digitalization, sustainability, risk management, regulatory compliance and resilience.”
The 2024 ISG Provider Lens Supply Chain Services report for Europe finds service providers across Europe have adopted a highly targeted approach to the design and delivery of their supply chain services based on each client’s digital maturity.
For enterprises with low digital maturity, the report says, the focus is on process standardization and establishing a strong digital foundation. Providers prioritize quick wins by addressing low-hanging fruit, such as process automation or other low-cost, low-risk initiatives. For clients with moderate digital maturity, the focus shifts to refining existing digital processes and optimizing performance.
For clients at the high end of the digital maturity curve, providers focus on maximizing the potential of digital technologies, ISG says. They collaborate with clients to develop advanced solutions that leverage AI, ML, IoT and other technologies to transform business processes and create new growth opportunities. This may include developing bespoke digital platforms, implementing predictive analytics models and exploring emerging technologies to stay ahead of the curve.
“The European market has seen a tremendous surge in the demand for digital supply chain services over the past 24 months, driven by a strong focus on Industry 4.0, rising political unrest and stringent regulations,” said Philipp Glatz, ISG partner and Smart Manufacturing lead for EMEA. “Compared to the U.S. market, the European market places a greater emphasis on digitalization, sustainability, risk management, regulatory compliance and resilience.”
Data-driven supply chain transformation, aimed at cost reduction and process optimization, remains a key focus for enterprises and their service providers, the report says. Technologies such as analytics, AI and automation, and data management are deeply integrated into most solutions. Network optimization, digital twins and blockchain have also gained traction.
For its ability process and analyze large, textual datasets, generative AI (GenAI) is being adopted in procurement, supply chain execution, and after-sales services, the report found. GenAI is also helping with ordinary supply chain functions such as warranty management, contract management, and guided recommendations for customer service agents and supplier risk assessors.
“The dynamics of the global supply chain are changing dramatically, and advanced technologies are pivotal in supporting digital transformation and creating more responsive, circular and sustainable supply chains,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “These technologies will be crucial in enabling enterprises to achieve significant operational efficiency and optimization.”
