Many Companies Stuck in Planning Phase of Supply Chain Digitization [Report]

Man using tablet with logistics hub in background and graphics overlaid representing supply chain concepts

Even companies with the best-laid plans for supply chain digitization often struggle to achieve their goals, and recent Capgemini research provides some insight into the various factors holding some businesses back. The study, which suggests that many businesses remain stuck in the planning phase of digital transformation, offers several useful takeaways.

Released in December, “The Digital Supply Chain’s Missing Link: Focus” report surveyed more than 1,000 supply chain executives in the consumer products, manufacturing, and retail fields.

Key Survey Takeaways

The opportunity for cost savings was the primary motivator for the executives interviewed, with 77% saying that this impacted their decision in aiming to digitally transform the supply chain. Increasing revenues (56%) and supporting new business models (53%) were also cited.

Although digitization is a top priority, most of the surveyed companies — 86% — were “still struggling to get projects beyond the testing stage.”

Due to lack of focus, or spreading investments “too thinly,” Capgemini noted that “only one in seven organizations are able to scale digital supply chain initiatives.” Survey respondents had an average of 29 digital supply chain projects in planning or pilot stages.

Yet without smart prioritization, it becomes more difficult to scale. Apple CEO Tim Cook was quoted saying, “We say no to good ideas every day. …We say no to great ideas in order to keep the amount of things we focus on very small in number, so that we can put enormous energy behind the ones we do choose.”

The 14% of respondents who were able to successfully deploy their initiatives reaped substantial benefits, though. Of those, 94% directly credited digitization efforts with revenue increases.

Capgemini also pointed to some major other roadblocks to successfully digitizing the supply chain, including:

  • Lack of clear procedure for evaluating pilot project success
  • Failure to effectively prioritize digitization projects
  • Absence of infrastructure and supplier and distributor involvement

How to Unlock Digital Value

In addition to analyzing key impediments to supply chain digitization efforts, the researchers also suggested several ways to best unlock digital value. Along with embracing a company-wide mentality that prioritizes supply chain innovations demonstrating ROI, the researchers highlighted the importance of:

  • Management and C-suite buy-in and advocacy
  • Alignment across the organization of the digitization initiative with other objectives (e.g., increasing transparency, cutting costs, or improving customer satisfaction)
  • Collaboration across supply chain functions to break down silos
  • Recruitment, development, and retention of the right people to start and sustain digitization efforts

The payoff is real. Capgemini’s survey found that procurement and supply chain departments had the highest average return on investment for implementing automation at scale (18%) compared to human resources (HR), the next closest, at 15% ROI, or information technology (IT), at 14% ROI. The average payback period for the supply chain digitization initiative was 12 months.

Digitizing for the Future

Looking to digitize the supply chain? Capgemini identified several use cases that could net quick wins, including rapid prototyping or creating parts using 3D printing techniques; amplifying demand, sales, and operation planning with Big Data analytics; automation of assembly, robots/drones for last-mile delivery; and making use of smart glasses to support part assembly or product repair.

Image Credit: Travel mania / Shutterstock.com

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