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83% of organisations have increased supply chain investments

New research from Blue Yonder found that 97% of organisations faced disruption over the last 12 months. Factors outside of company control and the resulting consequences varied from company to company, with organisations facing customer delays (59%), stalled production (44%) and staff shortages (40%). As a result of this disruption, the supply chain has become a priority for nearly two thirds of businesses (63%).

The research, conducted by 3Gem, gathered insights from 250 supply chain decision-makers from the UK. It found that they are unsure about what the future holds, with 37% of organisations concerned about the long-term implications of the COVID-19 pandemic on the supply chain. This is followed by Brexit (24%), a pressure to be more sustainable (19%), the changing regulatory landscape (12%) and a lack of investment (7%).

“Businesses are right to feel concerned when it comes to their supply chain,” said Wayne Snyder, Vice President, Retail Industry Strategy, EMEA, Blue Yonder. “In 2021 we saw unprecedented disruption, and as we look ahead, several macro factors on the horizon are likely to drive further interference.

“To stay ahead of today’s supply chain complexities, organisations need to be able to plan intelligently, while having the visibility and flexibility to respond at pace. This can only be achieved by having a real-time, end-to-end view of the supply chain that leverages technologies such as artificial intelligence (AI) to recommend and optimise actions.”

The positive news is that organisations clearly understand the impact of disruption and are proactively managing concerns by investing time and resource in the supply chain. Blue Yonder’s research found an overwhelming majority (83%) of organisations have increased investment in the supply chain over the last 12 months, with 1 in 10 organisations (11%) investing more than $25 million.

Technology is the common factor when it comes to spending this investment. When asked about how they invested budgets, 86% of organisations invested in technology, followed by developing new skills and defining a new supply chain strategy (60%).

Interestingly, over half of organisations (58%) also invested in the sustainability of the supply chain. This is an encouraging move, given that 2021 research from the MIT Center for Transportation & Logistics, sponsored by Blue Yonder, found that nearly one in ten (9%) businesses had decreased their commitment to sustainability last year, while 55% thought it remained the same or were unsure as to the status.

When asked about the technology that would have the most significant impact in reducing disruption,  two thirds (67%) of organisations believe that having the ability to view and manage the supply chain from end-to-end will help them manage disruption better. This is followed by advancements in AI technology (53%), new types of delivery options powered by the likes of robots and drones (43%), and the use of technology to better manage their workforce (42%).

“These stats highlight just how vital new technology is in reducing risk across the entire supply chain,” said Michael Feindt, Strategic Advisor, Blue Yonder.  “Especially considering the fact that 71% of organisations have implemented new technology over the last 12 months to reduce disruption in the future.

“The study also showed that more than two-thirds (68%) of companies state that planning, forecasting, and inventory management were their most important areas for technology investment, with end-to-end supply chain management and AI technology deemed critical by more than half (53%).

“Of course, disruption isn’t always avoidable, but having the technology in place to support change and empower organisations to make decisions in real-time will go a long way in minimising risk and improving overall business resilience.”

Top supply chain priorities in light of climate crisis and COVID

Research from Reuters Events Supply Chain in partnership with Blue Yonder has revealed the priority strategies and investments for supply chain execution and risk management within transportation and warehousing.

Following a year of intense changes in the logistics industry, The State of Supply Chain Execution Report 2021 analysed the anonymous responses of supply chain professionals and found that the COVID-19 pandemic, customer centricity, rising e-commerce complexity and costs, need for Direct-to-Consumer (D2C), and the risk of financial peril are propelling retailers, manufacturers and logistics service providers (LSPs) to digitally transform.  

E-commerce and D2C Volumes Skyrocket  

E-commerce shows no signs of slowing down. Companies looking to capitalize on the omni-channel opportunities created by increased online-order volume over the last 18 months are prioritizing more agile delivery and fulfillment models, like D2C: 

·         Retailers’/manufacturers’ online sales increased more than 120% over the past year. LSPs have seen e-commerce volumes explode, reporting a 200% increase compared to 2019-2020.   

“As the economy transitions to a post-pandemic environment, retailers, manufacturers and LSPs are transforming their transportation and broader supply chain operations to address their most pressing supply chain challenges,” said Raj Patel, senior director, 3PL Industry Strategy, Blue Yonder. “In the long term, investment in execution systems like Transportation Management Systems (TMS) and Warehouse Management Systems (WMS), as well as end-to-end visibility, automation, and cloud strategies will help them – and their customers – build more sustainable, resilient and agile organizations for the future.” 

Pandemic Prompts Re-evaluation of Supply Chain Risk Management 

From constraints on raw materials, to labor shortages, to growing cybersecurity threats on distributed networks, pandemic-related challenges have shifted supply chain risk management priorities: 

·         Respondents are hesitant to pursue near/onshoring plans, with only 29% of retailers/manufacturers making an investment. 

·         63% of retailers/manufacturers stated that dual-sourcing was a favored strategy for risk management moving forward. Constraints on the availability of raw materials caused supply side disruptions, even for those with distributed manufacturing facilities. 

·         Environmental concerns are also being considered when planning for supply chain risks. Over half (53%) of retailers/manufacturers and half (50%) of LSPs plan to invest in sustainability as a strategy for risk management. 

Companies Prioritise Digital-First Practices and Technology Investments  

With the growth of e-commerce, investment in modern supply chain technologies and new approaches have become essential for businesses to keep pace with shifting trends and customer expectations. The report found that there are various factors driving investment in supply chain technologies and digital-first practices: 

·         LSPs cited the pressure to reduce supply chain costs (58%) while also improving service levels for their retailer customers (48%) and dealing with labor shortages (30%). 

In the current supply chain environment, companies are moving away from legacy systems and prioritizing technologies that enable visibility for customers and their operations, automate processes and support enterprise agility.   

·         63% of retailers/manufacturers and 60% of LSPs agreed that end-to-end visibility is currently yielding the highest ROI in their supply chain execution process. 

·         Roughly half (48%) of retailers/manufacturers and more than half (57%) of LSPs have a robust cloud strategy in place, helping to create high levels of infrastructure agility that on-premise, legacy technology systems can’t achieve. 

Richard Ebach, CIO Americas, DB Schenker, said: “In the current supply chain environment, companies need good visibility into their transportation/ freight and partners that help them operate in a very agile, resilient manner. Knowing this, we’ve been investing in technology that provides good visibility for customers and their operations; tools that support enterprise agility; supply chain automation solutions; and zero-trust IT security tools. Combined, these technology solutions help our customers address their most pressing supply chain challenges while also helping them build stronger, more resilient organisations for the future.”