The value of installing new technologies in supply chains: How current users are getting it wrong and how to change it

A new study, led by Bayes Business School, explains how organisations using or planning to use emerging technologies develop inflated expectations followed by deep disappointment.

This phenomenon, termed ‘The Hype Cycle’ by advisory firm Gartner, means often technologies are selected by organisations without fully understanding their needs, resulting in an impact on organisational value.

The study surveyed 405 supply chain professionals from the Chartered Institute of Procurement & Supply (CIPS) regarding their organisations’ goals, constraints, and perceived benefits regarding three very different technologies: Artificial Intelligence (AI), blockchain and Internet of Things (IoT).

Comparing the perceptions across the technologies, they found that the professionals collectively prioritised goals, constraints, and benefits exactly the same way regardless of the technology. Moreover, this similarity did not change with the industry sector, type of organisation, or even the type of supply chain.

A reasonable explanation is that the respondents are looking only at their own generic supply chain needs and expecting – at the emerging stage the technology is – that the adopted technology, or technologies, will somehow meet them. As experience grows, the needs are not met in entirety, or not at all, leading to disappointment.

Besides offering an explanation, even a confirmation, of the Hype Cycle, the study can benefit managers by offering a ready list of goals, constraints, and benefits, which they can use to better calibrate their expectations when doing pilots. By doing so, they would avoid falling into the trap of the Hype Cycle and losing value for their organisations.

ManMohan Sodhi, Professor in Operations and Supply Chain Management at Bayes, notes that there will be even greater push for technologies to be installed in the supply chain with ongoing disruptions caused by the pandemic – still picking up steam in China – the ongoing war in Ukraine, and the weaponising of finance against sanctioned countries going forward. As such, there is the potential for premature deployment and even further disruptions caused by emerging technologies.

“Currently, we have astronomically high valuations of new technologies, whether proposed by start-ups or established tech companies," said Professor Sodhi, a world-leading expert in operations management.

“At the same time, the world is experiencing huge supply chain disruptions with the pandemic and geopolitics. AI, blockchain, and IoT, in particular, are being proposed as silver bullets to all supply chain challenges, creating what might well be misplaced hopes and expectations, possibly setting the stage for deep disappointment.”

‘Why Emerging Supply Chain Technologies Initially Disappoint: Blockchain, IoT, and AI’ by ManMohan Sodhi, Professor in Operations and Supply Chain Management at Bayes Business School and co-authors Dr Zahra Seyedghorban and Professor Danny Sampson from the University of Melbourne and Hossein Tahernejad at Deakin University, is published in Production and Operations Management, from where it can be downloaded freely.

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Notes to Editors

1. For the study, respondents first selected which of the three technologies their organisation had experienced. Based on their response, they would prioritise the goals, affordances, and constraints for the selected technologies.
2. There were 232 respondents from the private sector and 131 from public sector companies.
3. The IoT is the concept of connecting any device (so long as it has an on/off switch) to the Internet and to other connected devices. The IoT is a giant network of connected things and people – all of which collect and share data about the way they are used and about the environment around them.