Study Shows Two-Thirds of Companies Yet to Execute Digital Transformation in Supply Chain Planning
New survey finds that most companies are still formulating and gaining support for a digital strategy, with fear of change and data challenges as leading roadblocks
BOSTON, Mass. and HOUSTON, Tex. (September 26, 2019) A new study by ToolsGroup, a global leader in supply chain planning software, and Spinnaker, a supply chain services company, has found that only 7% of companies are reaping the benefits of digital transformation of supply chain planning. Additionally, 54% are seeking improved service levels in the coming year, and only 14% have a machine learning project underway, meaning for many AI-augmented planning is still more hype than adoption.
A North American-based survey of nearly 200 supply chain professionals from top CPG, distribution/wholesale, food and beverage, manufacturing, and retail companies found that 58% of respondents are still in the exploring or evaluating phases of digital transformation. Because digital transformation can involve selecting and implementing several different solutions, the early stages are often protracted. Having 27% in some stage of executing shows many organizations are making good progress in selecting and deploying enabling technology.
Drivers of supply chain planning digitization vary significantly by company, with 42% identifying increased operational efficiencies (e.g. productivity, working capital, cash flow) as a key driver. Evolving customer behaviors and expectations (41%), improving customer service levels/order fill rate (39%), and driving business performance (e.g. revenue and profit) (37%) rounded out the top four drivers of planning digitization.
Fear of change is the leading obstacle to implementation of digital planning (30%), with data quality/lack of data (25%), aversion to risk (24%), and people/skills deficits (23%) close behind. Planners and other supply chain practitioners in the new digital world need skills in communication, decision making, and change management on top of the standard technical skills.
“Eighty-nine percent of responding companies identify volatile demand and unpredictable customers as a supply chain planning challenge,” said Caroline Proctor, chief marketing officer of ToolsGroup. “We’re seeing more and more companies combating that uncertainty by leveraging machine learning, digital twins, and IoT. This enables them to automate supply chain processes, increase service, and free up working capital.”
Indeed, companies are looking to improve in the areas of cost and service in the coming year. Sixty-three percent of respondents said they would look for reduced cost as an outcome of planning digitization, 54% said improved service levels, and 42% are seeking faster delivery.
“Digital transformation is not seen as a singular activity but a set of interrelated activities that span across people, process, technology, policy, and metrics,” said George Fowler, group vice president in Spinnaker’s Supply Chain business unit. “The study shows that companies are aspiring to reinvent themselves as an entirely new entity, working to balance all these dimensions to achieve their digital transformation goals. And there’s no time to lose–the time is now to execute on a strategy before opportunity and competitive advantage is lost.”
To access the full report, please visit https://www.toolsgroup.com/resources/white-papers/survey-based-research-report/
ToolsGroup is a global provider of service-driven supply chain planning and demand analytics software. Our customers overcome demand volatility and supply chain complexity for outstanding service levels with reduced inventory. ToolsGroup’s service-driven planning platform features probability forecasting and stock mix optimization enhanced by machine learning automation for highly intelligent data-driven decision-making. ToolsGroup solutions include Demand Planning & Sensing, Inventory Optimization, Allocation & Replenishment, Demand & Supply Collaboration, Promotions Planning and S&OP. Visit www.toolsgroup.com and follow us on Twitter @ToolsGroup.
Founded in 2002, Spinnaker is a supply chain services company that helps clients grow, manage risk, reduce costs, and improve customer service by developing world-class supply chain capabilities. Our services help clients develop the right supply chain strategy for their business challenges and implement the process and technology solutions to improve Demand/Supply Planning, Procurement and Sourcing, Logistics and Warehousing, and Reverse Logistics business performance. Spinnaker offers a unique service delivery model that combines the strength of deeply experienced management and technology consultants with a seasoned team of business process outsourcing (BPO) and 3rd-party logistics (3PL) professionals. Founded in 2002, Spinnaker has offices in Boston, Columbus, Denver, Houston, Memphis, Pittsburgh, London, and Singapore.