A major survey of supply chain executives revealed that companies are constantly looking for ways in which to modernize their value-chains to meet the challenges of inflation, pandemic, and supply shortages.
Yesterday’s survey results showed that chief supply chain officers (CSCOs), at major US companies, are facing significant challenges following the Covid-19 crisis. They also face global economic headwinds due to soaring energy prices, supply constraints, as well as geopolitical volatility.
However, the survey also indicated that many supply chain officers plan to increase their monitoring of their value chains, processes, and implement energy efficiency, sustainable energy, and circular economy measures in order to lower costs and emissions.
The survey was conducted by technology giant IBM, data processing company Celonis, and analysis firm Oxford Economics. The survey was conducted by 500 CSCOs from 10 industries, including banking, consumer products and manufacturing, telecommunications and insurance.
Jonathan Wright, managing partner at IBM Consulting for finance and supply chain Transformation, stated that the combination of post-Covid-19 challenges and inflation, supply issues, security and sustainability has created the “most complex operating environment in modern business.”
“This has forced organisations rethinking and rebuilding their supply chains to become more agile, efficient and sustainable,” he stated, while arguing technology and data were “key to both evaluating current workflows, inefficiencies, and identifying new opportunities.”
Out of 500 CSCOs surveyed, 80 percent stated that demand volatility was their top challenge. 77% pointed to rising transportation and logistic costs, which they warned would lead to missed opportunities and rising business costs.
Only 2/3 of respondents said that environmental sustainability was a core part of their overall business value. More than half (51%) said they would sacrifice short-term profits to improve the sustainability and sustainability of their supply chains and businesses.
According to IBM, the average response was that respondents would sacrifice around 5% of their firm’s profit. This would amount to approximately $22bn per year for US Fortune 500 companies.
The survey results suggest that many people believe that investing into sustainability initiatives in supply chain supply chains can yield significant business and environmental benefits. The three most important benefits that can be expected from supply chain sustainability initiatives include compliance with environmental regulations, reducing reputational risks, and driving innovation.
The survey revealed that 47% of respondents plan to implement full lifecycle design of materials and products to increase re-use, reduce waste, and 44% said they will improve the energy efficiency of products and services.
35% said they intended to develop products and services that are based on renewable energy, while 30% expect to engineer zero-waste products and services.
Many CSCOs polled felt that better monitoring and reporting of environmental and social performance across their supply chain is needed to realize these benefits. In fact, 55% of respondents indicated that they are planning to implement such processes within three years.
Technology is expected play a significant role in this regard. 72% expect their processes and workflows in the next three- to five years. 27% expect their workflows in the same timeframe to be AI enabled. This number will rise to 33% by 2030.
83% stated they would implement AI-enabled, real time inventory management by 2025. 81% already look to AI-enabled processes in real-time demand assessment and 74% believe hybrid cloud technologies will be crucial for digitizing their supply chain.
Janina Nakladal is the Celonis global director of sustainability. She stated that eliminating inefficiencies in core supply chain processes offers a tremendous opportunity to reduce carbon emissions at scale and that digital technologies play a major role in this.
“Chief supply chain officers know they need to adapt, and in many cases are, but they often don’t have the insight they need to truly understand where changes need to be made – and lack the toolset to drive the change,” she said. Our research has shown that CSCOs can transform their supply chains by using the technology currently available – hybrid clouds and process mining.
