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CEOs upbeat but agree supply chain issues major threat to recovery

CEOs of the world’s largest businesses are increasingly optimistic about the outlook for their own business and despite the Delta variant slowing down the ‘return to normal’ – but remain concerned over problem with supply chains slowing recovery.

The KPMG 2021 CEO Outlook, which asked more than 1,300 global CEOs about their strategies and outlook over a 3-year horizon, finds that 60 percent of leaders are confident about the global economy’s growth prospects over the next 3 years (up from 42 percent in the January/February’s pulse survey).

The prospect of a stronger global economy is leading CEOs to invest in expansion and business transformation, with 69 percent of senior executives identifying inorganic methods (e.g. joint ventures, M&A and strategic alliances) as their organization’s main strategy for growth.

A majority (87 percent) of global leaders stated that they are looking to make acquisitions in the next 3 years to help grow and transform their businesses.

The survey found that 30 percent of CEOs plan to invest more than 10 percent of their revenues toward sustainability measures and programs over the next 3 years.

However, when looking at risks for growth over 3 years, senior executives identified three areas they see as top risks: supply chain, cyber security and climate change. Fifty-six percent of global CEOs say that their business’ supply chain has been under increased stress during the pandemic.

Meanwhile, just 21 percent of CEOs now say they are planning to downsize, or have already downsized, their organization’s physical footprint, a dramatic shift from August 2020, with the first wave of the pandemic at its peak, when 69 percent of global leaders said that they planned to downsize their space.

CEOs are focused instead on providing increased flexibility for their workforce with 51 percent (up from 14 percent in the January/February’s pulse survey) looking to invest in shared office spaces. Furthermore, 37 percent of global executives have implemented a hybrid model of working for their staff, where most employees work remotely 2–3 days a week.

Survey reveals contrasting digital supply chain transformation strategies

A joint survey of supply chain executives carried out by JDA Software and KPMG has revealed that customer expectations are driving retailer supply chain investment.

Meanwhile, agility and innovation are driving manufacturers’ investment in their supply chains.

The 2018 Digital Supply Chain Executive Survey, conducted by Incisiv, found that more than half of respondents identified the need for real-time product visibility as the leading driver in digital supply chain investment.

The survey found that both retailers (57 per cent) and manufacturers (50 per cent) include real-time product visibility as a top driver of investment. Retailers express the need for end-to-end traceability (53 per cent) with the ability to manage new fulfillment nodes (50 per cent), where manufacturers are driven by the need to innovate faster (40 per cent), with lower cost to serve (33 per cent) through improved planning.

Cognitive/predictive analytics is overwhelmingly viewed as the most disruptive technology by executives for its ability to impact all parts of the supply chain, including forecasting, fleet routing and inventory optimization.

Interesting, manufacturers view blockchain and autonomous vehicles as the most disruptive technologies, with half of the companies surveyed planning to test these in the next 24 months.

“As Amazon extends from retail into manufacturing and logistics, these industries recognize that the status quo for supply chains is no longer an option for success,” said Kevin Sterneckert, group vice president, innovation strategy and solution marketing at JDA. “The 2018 Digital Supply Chain Executive Survey outlines how retailers and manufacturers are leveraging innovative technologies and strategic alliances to improve speed to market and deliver a superior customer experience profitably.”

 

“Companies that offer the best customer experiences and service have raised the bar on expectations, and now many business-to-business companies are expecting the same service levels as today’s consumers,” said Brian Higgins, U.S. supply chain practice leader at KPMG. “How retailers and manufacturers are responding is a prevalent theme in our survey findings, and it should come as no surprise that companies are investing in innovative technologies to remain relevant.”