Why enterprises must prepare for the future of operations technology

Forward-thinking enterprises are gearing up to harness the power of operational technology for a competitive edge

In brief

• Prepare for rapid operational technology change to help mitigate operational risk.
• Discover how emerging tech enables integrated operations and which technologies will have a significant impact on operations.

There was a time when operations were more of a catch-all term for the many moving parts within an organization. Consider HR, IT and Finance operations as examples. And supply chain functions of manufacturing, warehousing and distribution were viewed as necessary, but not differentiating, compared to crucial customer-facing services. But the escalation in global competition, the complexity of supply chain operations and increasing consumer expectations has had a very?significant impact on operational thinking for forward-focused enterprise leaders.

For organizations to continue to have relevance and differentiate themselves with their employees and customers, it’s essential to embrace supply chains as the backbone of enterprise-wide operations and support the management of them as a pivotal strategic enabler for business success and growth. Doing so in today’s fast-evolving and ultracompetitive marketplace means onboarding top-tier talent, simplifying processes and integrating advanced technologies capable of driving a new kind of strategic business operations for the future.

Prepare now for rapid operational technology change

There have been pivotal moments in societal and business development, but none like the era we’re rapidly accelerating into. Three years from now, or more likely even less, generative AI (GenAI) will be an unavoidable and undeniable part of daily business – and life. And this won’t be at the same level as hyped technologies that flared bright and quickly faded. Organizations must realize that this tectonic shift for operations is coming, and this period should be one of intensive preparation to put the proper and agile structures, guidelines and protections in place to manage this evolution and scale use of emerging technologies.

Mitigate tech-enabled operational risk today

Some pundits have claimed that GenAI has the potential to be what the advent of electricity or growth of the internet has been for humanity and businesses. However, most companies are in the early phases of GenAI adoption and simply don’t have the appropriate data security protocols in place to make sure their corporate intellectual property (IP) does not end up on the open internet or used to fine tune other companies’ large language models. Some are lacking the right training to take advantage of GenAI, including prompt generation, creative content production and using it for design and optimization of processes among other things. Companies are just starting to scratch the surface of the value this technology can bring.

When it comes to integrating emerging technologies ?such as GenAI into end-to-end operations, plenty of moving parts must come together to enable success. Ask yourself: Does your company have the right ecosystem of technology solutions and partners in place to enable you to run and accelerate your operations in a differentiated manner? As you plot the people, process and technology changes that need to be enacted for a technology-enabled operational future, take steps to ensure you build a technology ecosystem that includes all internal resources but also factors in relationships, expectations and interactions with your universe of vendors, suppliers and other aligned resources.

Understand how emerging technology enables integrated operations

Technology can play a fundamental role in enabling supply chain operations ?to become more strategic by providing tools and capabilities that enhance supply chain visibility, decision-making, optimize processes and improve overall performance. Emerging technologies are helping companies to validate their strategic vision though improved forecasting accuracy, detailed simulations of customer and market behaviors and exploration of new areas for growth. Technology is also enabling better workforce optimization, helping to ensure all employees are in the right locations to serve customers and that they have the skill sets and training to drive the company mission forward.

Determine which technologies will have significant impact on operations

There are several key technologies to grasp that are impacting integrated operations now and into the near future:

• Composite GenAI enabling intelligence: combines application of multiple GenAI techniques to improve the efficiency and accuracy of learning.
• Augmented connected workforce: includes technologies such as augmented and virtual reality (AR/VR) to reduce the time required for onboarding for an employee to become fully productive.
• Next-generation humanoid robots: robots that look like humans will take on dangerous or repetitive jobs in manufacturing. Humanoid robots will also inspect, assemble and assist with logistics.
• AI-enabled vision systems: cameras and sensors will help augment autonomous operations and improve data accuracy.
• Data analytics and predictive modeling: these technologies are used to improve accuracy for forecasting, ordering and optimization.
• IoT and real-time monitoring: the sensorization of equipment and machines aids operations in staying online, efficient and safe.
• Cloud computing and collaboration tools: integrated data and applications help enable speed and efficiencies in daily operations.
• Digital twins: these technologies help simulate decisions in the design of products, optimization of plants, networks and physical infrastructure.
• Cybersecurity: intrusion detection systems, next-generation firewalls, identity access and management technologies, anti-malware tools and more help enable a safe and connected supply chain ecosystem.

Consider the escalating emerging tech impact over the next five years

Operational technology is rapidly evolving, which is not only reshaping current business practices but also laying the foundation for future development. We’ll soon see synchronization of operational systems thanks to composable application architecture, enabling better, more informed decision-making; and cyber-resilient supply chain technologies will enable better and safer data sharing across organizations boundaries. Industry-based cloud platforms will connect supply chain partners, vendors, manufacturers, customers and machines, accelerating collaboration and efficiencies across supply chain networks. And 5G and futuristic XG-enabled ecosystems will enable the operation of machineries from any location with astonishing speed. Add to this AI-enabled vision systems and operators can expect advances in productivity, data accuracy and autonomous operations.

Avoid “pilot purgatory”

Not all emerging technology solutions are deployed. In fact, the supply chain and operations industry has a long history of technology exploration, with many projects becoming trapped in what is known as "pilot purgatory" — a state where initiatives fail to move beyond the pilot or testing phase and are never fully integrated into regular operations. To circumvent this common pitfall, here are four steps for successfully onboarding technology:

1. Clearly define objectives, success criteria and key performance indicators (KPIs): Before embarking on an operational technology deployment, companies should clearly define their objectives and establish measurable success criteria.
2. Pilot with purpose: Focus on tangible outcomes and learnings from pilot implementations, to help mitigate risks and make more informed decisions about how and when to scale projects.
3. Invest in change management and training: Accelerate return on investment (ROI)and user adoption through comprehensive change management initiatives.
4. Monitor and continuously improve: Through fostering a culture of continuous improvement and agility, companies can adapt to changing requirements, optimize performance and maximize their ROI over time.

The pace or proliferation of emerging and intelligent technologies in operations won’t slow down to allow organizations to catch up. It’s important for every operations executive to understand the capabilities, associated risks and demands for successful integration of these technologies into the enterprise. While integrating emerging technologies may seem overwhelming to most executives, taking a systematic and orchestrated “big picture” approach can help with alignment, ROI and adoption. With AI and other emerging technologies advancing at an exponential pace, there is no time to delay in creating a vision for the future of operations in your enterprise.

Sanju Sethumadhavan, Managing Director, Ernst & Young LLP, also contributed to developing this article.

Summary

In an era of intense global competition and rising consumer expectations, enterprises must orchestrate tech-enabled operations to stay relevant. Embracing supply chains as strategic assets and integrating advanced technologies like generative AI (GenAI) is crucial for growth. Companies must prepare for rapid tech changes, mitigate risks and build a robust ecosystem. Key technologies impacting operations include artificial intelligence (AI), Internet of Things (IoT), robotics, vision systems, predictive modeling and more. Over the next five years, emerging tech will further transform operations, demanding proactive adoption and continuous improvement to avoid “pilot purgatory” and help ensure a strategic, tech-enabled future.