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10 Supply Chain Transformation Stats That Demonstrate Where the Industry Is Headed

Supply chain transformation has been an objective for manufacturing, warehousing, and logistics firms for a number of years.

Transforming supply chains through the use of digital technology has typically been pursued as a means for businesses to improve their productivity and efficiency. Of course, these are still central aspects of bettering a supply chain, but the events of 2020 have thrust into view a new priority: disruption.

With the onset of the pandemic, organizations found themselves scrambling to adjust to the disruption caused to their supply chains. Invariably, those who already had a digitized supply chain in place and access to the right data and analytics were the businesses that came out with the fewest difficulties.

Related Post: Supply Chain Disruption: Mitigating Threats Effectively with Analysis

What does this mean for digital supply chains in business? Have perspectives changed? What precedents will take priority in 2021 and beyond?

Take a look at these stats as we shed light on these key issues.

1. 75% of CFOs say the increased flexibility developed during the crisis is a factor that will make their organization stronger over the long term.

Of businesses that already developed digital supply chains prior to the pandemic and lockdown restrictions, three-quarters said the increased visibility was important and will remain important over the long term.

Organizations must have the ability to pivot in times of disruption, and supply chain transformation goes a long way to ensuring this.

Analyzing data in real time aids decision making significantly, allowing businesses to get a leg-up over competitors who lack this ability.

2. 50% report they plan to accelerate automation and new ways of working.

Automation is an extremely common tool used by businesses in every industry.

The Economist Intelligence Unit found that over 90% of organizations already use technology to automate business processes.

Using automation improves productivity, saves on labor costs, and streamlines working processes so they can be completed in less time with fewer mistakes. This makes it a very attractive option for SMBs, many of whom are or have already adopted strategies for implementation.

3. 30% of CFOs say changing their supply chain strategies is now a priority.

For many businesses, the pandemic has been a wake-up call in terms of their readiness to deal with supply chain disruptions.

77% of respondents believed that their supply chains were at least somewhat prepared for a major disruption before COVID-19, while only 39% believed that their supply chains were at least somewhat prepared for a major disruption during COVID-19.

In light of the disruptions caused this year, one-third of CFOs are now indicating that revamping and implementing a supply chain transformation is a priority for the future.

4. 62% of Digital Champions within industrial manufacturing have implemented solutions to gain visibility across their end-to-end supply chain.

“Digital Champions”, a term PwC uses to describe organizations that are leaders in technology adoption, are shown to have been implementing solutions that are aimed at achieving total visibility across their supply chains.

Visibility, the ability to retrieve, crawl, and use actionable data that has been accrued from every step of the supply chain, is a crucial step in moving towards having a process where decision makers are afforded complete flexibility when disruption hits.

5. 73% of Digital Champions have implemented supply chain segmentation, enhancing customer centricity and allowing them to continuously balance service levels, costs, and margins.

Supply chain segmentation, the process of using differing strategies for supply depending on the channel, customer, and product, has allowed businesses to pursue an approach that better serves the customer.

Segmentation is typically adopted by businesses with a diverse set of offerings and a diverse customer base. Using digital technology for supply chain transformation allows organizations to successfully segment it, and in doing so, improve customer satisfaction .

6. Organizations with digitally mature supply chains invested 9.1% of their supply chain costs into advanced supply chain capabilities last year and plan to continue even stronger levels of investment this year.

Companies that invest in their supply chains tend to see a positive return on investment after implementation.

McKinsey research suggests that, on average, companies that aggressively digitize their supply chains can expect to boost annual growth of earnings before interest and taxes by 3.2%—the largest increase from digitizing any business area—and annual revenue growth by 2.3%.

After successful initiatives, businesses feel emboldened, and indications suggest that supply chain investments will continue in 2020 and 2021.

7. 28% of them say more effective risk management is one of three key benefits they are gaining from their investments into advanced supply chain capabilities.

It shouldn’t come as too much of a surprise that businesses who invest in their supply chains are gaining in terms of their ability to manage risk.

The use of big data and analytics means decision makers have a better idea about the health of their supply chains, as well as more accurate forecasting of market trends through the use of predictive analytics.

8. 80% of Digital Champions describe their supply chain focus as end to-end orchestration, compared to just 36% companies overall.

Organizations that are more digitally mature have a propensity to favor focusing on end-to-end visibility—supply chain orchestration.

The objective here is to be able to have real-time control over every step of the supply chain, as opposed to just transportation, including manufacturing, warehousing, customs, and cross-docking.

Supply chain transformation allows better end-to-end visibility, which is something all businesses should consider to improve the quality of their service.

27% of companies with an above-average level of supply chain maturity intend to invest in software aimed at achieving end-to-end visibility, and 5 out of the 10 logistics service providers surveyed separately expressed plans to implement such software in 2021. 

9. More than a quarter (27%) of manufacturing firms say they are undecided on which systems to choose for their supply chains. 96% of digitally mature businesses have already made a decision, by comparison.

Organizations, aware that they have to invest in digitizing their supply chains, often find themselves unsure on where to turn to achieve what they need.

Many are turning to managed service providers, who already work with businesses in their industry and can formulate proven strategies for implementation.

10. Forward-thinking businesses have recognized the importance of smart logistics, with 59% saying it’s a high or top priority.

Smart logistics is the natural extension of the principles already established in end-to-end visibility.

In short, smart technology utilizes Internet of Things (IoT) devices, whether they’re mobile phones, tablets, or sensors and relays information from them in real time for even more accurate information about the supply chain.

As IoT technology continues to have a tremendous influence on business operations, we can expect the number of organizations investing in related strategies to increase over the next year.

2020 has been a test for the supply chains of businesses all over the world. With enterprise resource planning (ERP) technology, you can achieve unparalleled insights into your supply chain and processes. Using analytics, actionable data in real time can be directed to decision makers so that they can respond to disruption, no matter how big or small. Learn more about our ERP consulting and implementation services.