This post originally appeared in the ToolsGroup supply chain planning blog.
The Council for Supply Chain Management Professionals (CSCMP) and ToolsGroup surveyed more than 200 supply chain professionals around the world on the state of supply chain digital transformation in planning. This blog post highlights some of the key findings.
The phrase ‘digital transformation’ has been tossed around for decades but for global supply chains, it’s no longer some vague platitude that sounds cutting-edge or tech cool. A reckoning arrived in the form of COVID-19 which ruthlessly exposed supply chain weaknesses in virtually every industry. Fear and uncertainty became the evil twins that have compelled organizations to act–propelling them to seek digital supply chain solutions that minimize the impact of demand volatility, while improving agility and resilience. As customer expectations continue to evolve, the pressure on supply chains to deliver has never been more urgent.
The Current State of Supply Chain Digital Transformation
According to our 2021 Digital Transformation in Supply Chain Planning survey, 42% of organizations say the pandemic has accelerated their digitization plans. Companies are turning to increased investment in digital planning technologies, with many projects already underway or slated to kick off within the next 12 months.
The global pandemic not only had a profound impact on supply chains (only 3% of survey respondents said the pandemic had no impact on their business) but it also upended the digitization strategy for many organizations (75% of survey respondents said the pandemic affected their journey toward digitization). While supply chain professionals aggressively apply lessons learned in the past year–with a laser focus on resilience–supply chain digital transformation can no longer be just another item on a long to-do list for supply chain and IT leadership. It now occupies a top spot on the list of business priorities.
The Race to a More Profitable and Resilient Supply Chain
The pandemic left organizations scrambling to find the right solutions to improve resiliency and business perfrmance. According to survey respondents, the ability to keep up with evolving customer behaviors and expectations (44%); the need to increase automation to focus staff on higher level activities (43%); and an overall desire to improve business performance (revenue, profit, cash flow) (42%) were the top reasons companies accelerated their digital transformation plans. Most experts agree that the ability to handle disruptions with agility and resilience have become mission-critical requirements to maintain a healthy supply chain. “Companies should re-evaluate their overall supply chain strategy and determine the optimal level of resilience that they are prepared to build into their operations, said Brett Wood in Deloitte’s Innovation Resilience report. “The ability to flex and adapt rapidly is more critical than ever, and it is essential to have a recovery plan in place that addresses considerations for people, technology, suppliers, assets and overall risk.”
Technology and the war for talent continue to dominate the supply chain digital transformation process. Key technology investment areas include demand forecasting and planning (53%), inventory optimization (51%), and demand sensing (41%), which automate decision making and free up working capital while guaranteeing service. Transformation initiatives are not without obstacles, however. Survey respondents rated supply chain talent and skills deficits (41%) as the top obstacle to digital supply chain transformation, followed by data quality/lack of data (34%). Building a supply chain that’s ready for anything will require organizations to align digitization plans with their organization’s talent strategy, as the competition for millennial and Gen Z talent becomes increasingly fierce.
“Disruption breeds opportunity and competitive advantage, said John Paxton, CEO of MHI. “Like jagged rocks under the surface, when the tide went out the pandemic exposed the vulnerabilities of supply chains. Firms that invested in innovation were able to quickly identify and address these vulnerabilities. This resiliency and flexibility enabled them to respond much more successfully than companies who had not made as much of a digital transition.”
As companies continue to learn how to respond to supply chain disruption, they must take a proactive approach to technological investment–meeting customer expectations and the right talent must be key ingredients of an agile, resilient and profitable supply chain strategy.