Digital technologies are impacting specific industries, both through internal change and competitive threats. In "How to jumpstart digital transformation in healthcare," I proposed a healthcare IT transformation strategy. But these forces also are transforming standard business functions, such as finance, marketing and HR. Also undergoing transformation are the key areas of supply chain and procurement.\nLike many business processes, supply chain and procurement have their own inertia. A case in point is the persistence of the Electronic Data Interchange (EDI) protocol. \u201cEDI is Dead! Long Live EDI!\u201d That was the title of an Industry Week article from 2004, yet it could still apply today.\nThe arrival of XML two decades ago, along with supportive APIs, did not lead to the displacement of EDI, which may be clunky and slow by comparison, but remains widely deployed. Anyone who continues to use EDI for supply chain functions, however, should be aware of API-based alternatives. You never know exactly when a technology will prove disruptive \u2013 or how disruptive it will be.\nCloud computing and ERP\u00a0\nThe same principle also applies to other aspects of supply chain and procurement. Some changes have occurred, but others not yet. From our perspective as a global IT and communications service provider, cloud computing has already transformed the sourcing, acquisition and use of key IT resources. Just consider the widespread availability of SaaS, IaaS and PaaS offerings.\nThere\u2019s a similar finding in the 2018 MHI Annual Industry Report, which focuses on innovations that apply to the supply chain. Produced by MHI, a materials handling and logistics industry association, and Deloitte, the report tracks the adoption rate of 11 separate innovations. At the top of the list is cloud computing and storage.\nWith adoption in supply chain currently at nearly 60 percent (and its 5-year estimate at 90 percent), cloud computing and storage would appear to have \u201ccrossed the chasm\u201d or \u2013 to borrow from Gartner terminology \u2013 reached the \u201cplateau of productivity.\u201d But it has taken years. First to understand the variations (public, private, hybrid) and then to figure out how best to apply them to supply chain solutions, such as Enterprise Resource Planning (ERP).\nThere was a time, for instance, when many doubted ERP giant SAP would move to the cloud. Then in 2012 it bought two SaaS providers, including Ariba, a major provider of supply chain software. Several years later, SAP was claiming that its broader move to the cloud was boosting growth.\nBut disruption can breed disruption. Would Ariba or others offering procure-to-pay solutions upend existing ERP platforms? The answer seems to be that their impact has been real but not devastating. \u201cERP will still be there, just not the single place to go to manage your procurement,\u201d says Dawn Tiura, CEO of Sourcing Industry Group (SIG), a global membership organization for sourcing, procurement and outsourcing executives.\nSensors, inventory, bots and 3D printing\nAn astute observer of industry trends, Tiura, sheds light on several other innovations identified in the MHI-Deloitte report, as noted in the following summaries:\n\nSensors and automatic identification. Expected to reach an adoption rate of 80-90 percent within five years, sensor tracking technology is already becoming tables stakes. \u201cI can\u2019t imagine a supply chain not using sensors today,\u201d Tiura says. And combined with IoT, sensors become even more powerful.\nInventory and network optimization. Forecast to be as widely deployed as cloud computing by 2023, this category promises effective use of big data. Tiura thinks that together with predictive analytics and automation, smart inventory management could lead to interesting \u2013 and even life-saving \u2013 scenarios, such as the shipping supplies before a hurricane hits or vaccines at the first signs of an epidemic.\nRobotics and automation. The report highlights robotic warehouse machines, which makes sense from a materials handling perspective. (As do driverless vehicles and drones.) But true digital transformation, Tiura says, is more about bots than robots. Bots are the software applications that can run sequences of automated tasks, much faster and with significantly fewer mistakes than humans.\n3D printing. \u201cThis is one that\u2019s going to completely change some supply chains,\u201d Tiura says. Indeed, this category is looking much less like a science project than it once did. Applications range from custom medical and pharmaceutical solutions to more conventional, on-premises manufacturing that could substantially reduce the size of some warehouses.\n\nBlockchain and AI\nAt the far end of the deployment spectrum are blockchain and artificial intelligence (AI), two categories that are nonetheless attracting considerable attention these days.\nEmerging technologies often generate both hype and misunderstanding. According to one Gartner report, blockchain was \u201cextremely hyped\u201d back in mid-2017. It is also still associated with cryptocurrencies, which for some retain an unsavory link to hyper-secrecy for illicit activity and the dark web. But as understanding of distributed ledger (blockchain) technology grows, so does interest in potential applications, especially in chain of custody.\n\u201cEventually it could power payment systems, so that when goods are transferred, payment occurs automatically,\u201d says Tiura. \u201c(But) as an asset management system, it\u2019s fantastic.\u201d\nGiven network-effect driven momentum, blockchain could hit its tipping point at a rapid pace. It does face a few threats. Quantum computing has some observers worried, and any given blockchain could be disrupted by a \u201chostile takeover\u201d of its consensus protocol. Yet the MHI-Deloitte report expects industry adoption to hit 50 percent within five years. CIO Senior Writer Clint Boulton says blockchain is already approaching a \u201cbig business breakout.\u201d\nAs for AI, one promising application will be on tail spend. Defined as the roughly 80 percent of suppliers that provide 20 percent of an organization\u2019s goods, tail spend is \u201cfraught with cyber risk,\u201d says Tiura. \u201cCompanies don\u2019t know who these suppliers are, they don\u2019t know who their second \u2013 or third-tier \u2013 suppliers are and they\u2019ve never sourced them correctly.\u201d\n\u201cIf AI can do all the work and you can analyze it, it\u2019s going to be huge,\u201d she says.