Study: Global Supply Chains Undergoing Digital Transformation

GEP, a provider of procurement and supply chain strategy, software and managed services to Fortune 500 and Global 2000 enterprises, unveiled its “State of Global Supply Chain” commissioned survey of global business leaders conducted by Harvard Business Review Analytic Services, which found the importance of supply chains — and the particularly urgent need to transform them — has dramatically escalated.

The report reveals:

• While 90% of executives say supply chains are a strategic resource that helps ensure their company’s profitability and survival, just 8% have achieved digital maturity across six key components of supply chain operations: warehousing and logistics, procurement, inventory management, supply planning, demand planning and management and supplier risk management.
• As a result, companies are moving quickly to digitally transform their supply chains, with nearly 70% accelerating their supply chain modernization with a greater emphasis on collaboration tools and real-time demand forecasting analytics to foresee and mitigate future disruptions.
• Just 28% rate themselves as “leaders” and as having achieved a high level of digital maturity across key supply chain operational areas.
• Half “lack the capabilities to track end-to-end performance across the supply chain.”
• The “lack of real-time data about end-to-end performance of the supply chain” is the biggest barrier to most companies.
• Only one fifth can “quantify ROI for its investment in supply chain transformation.”

“Many global companies spent the last thirty-plus years outsourcing everything from back-office functions like IT to the last mile delivery to customers, and as a result, they don’t have sufficient control and are at a material competitive disadvantage,” said David Doran, vice president, consulting, GEP. “I am not saying to disregard outsourcing — in fact, the disruption to the world’s supply chains is going to get worse, so companies need to accelerate their investment to build resilience, flexibility, visibility and control over their complex, multitier, interdependent global supply chains. But they need to do it right.”

In response to supply shortages, cyberattacks, skyrocketing logistical costs, volatility and inflation, companies are rapidly transforming their supply chains expressly to reduce business risk and improve resilience, according to the study:

• Achieving agility and business reliance is a top supply chain priority for three-quarters of respondents, along with reducing risks and costs.
• Two-thirds of organizations cite automating operations as a top procurement priority.
• More than half expect supply chain transformation funding to increase this year.
• Analytics, demand sensing, AI and robotic/automation are seeing the biggest funding increases.
• Supply chain “leaders” invest significantly more in employee training and soft skills to accelerate their transformation than “followers” and “laggards.”