Shifting and more demanding consumer expectations are changing the way organizations work. According to the EY Americas Supply Chain Reinvention Survey 2019, 53% of respondents said fast-changing customer preferences require supply chains that can turn on a dime.
Glenn Steinberg, EY Global and EY Americas Supply Chain Leader, said: “We know today’s Transformative Age will force all aspects of an organization to evolve – and the supply chain is no exception. Supply chain executives have an opportunity to be the drivers of change, bettering the customer experience while improving speed, efficiency and safety in the process. Our EY Americas Supply Chain Reinvention Survey 2019 underscored that digitally networked supply chains will be best positioned to thrive in the future. We also saw supply chains that are digitally networked or autonomous report increased market share and customer satisfaction, compared to their linear supply chain counterparts.”
The EY Americas Supply Chain Reinvention Survey 2019 reviewed the supply chain reinvention practices of 500 senior-level executives (C-suite, EVP/SVP) at organizations with over $1 billion in revenue. Sectors included consumer products, retail, life sciences, industrial products, automotive, power and utilities and technology. Regions included North America, Mexico, Brazil and Argentina.
Supply chain companies are on a journey to be digitally networked
- 14% Linear: digital connectivity to suppliers is limited to sharing spreadsheets and email
- 26% Transitioning: still mostly linear and internally focused, but are adopting digital tools and/or cloud-based platforms for several supply chain functions
- 34% Developing digital: digitally networked with some suppliers; hiring data scientists and using advanced analytics across most supply chain functions, but still have a way to go
- 20% Digitally networked: most suppliers and customers sharing data in the cloud or directly integrating data, with end to end visibility up and down the supply chain
- 6% Autonomous: planning function is fully automated and requires little to no human presence; robotics fulfill orders and driverless forklifts/trucks are next
The supply chain secret sauce: a move towards digitally networked and autonomous
- 90% of respondents with autonomous supply chains reported that their market share increased somewhat or significantly in the past year, compared to 7% of linear supply chains.
- 97% of respondents with autonomous supply chains reported their customer satisfaction somewhat or significantly increased in the past year, compared to only 8% of linear supply chains.
Looking ahead: the autonomous supply chains of the (near) future
- While over 50% of senior-level supply chain executives expect autonomous supply chains by 2025, today only 6% surveyed are autonomous – suggesting there is a lot of work to be done in the next 6 years.
- Automotive companies (63% of respondents), industrial products (61%) and consumer products firms (57%) are more likely to expect autonomous supply chains than other industries.
Putting money where your priorities are: supply chain sustainability goals vs. investments
- Over the next three years, sustainability is the #2 priority for supply chains, just behind increased efficiency.
- The more digitally-enabled the supply chain, the more sustainability-conscious it is. For example, 90% of companies with autonomous supply chains say sustainable management reduces costs in the long term, versus 25% of those with a mostly linear supply chain.
- 57% of all respondents say good sustainability practices reduce overall risk, 55% say sustainable supply chains are a competitive differentiator and 55% say their organizations have a plan to reduce carbon emissions.
- Despite sustainability being cited as a #2 priority, companies may not be reflecting this in their financial investments.
- Reducing carbon footprints is the least-prioritized supply chain investment (only 11% of respondents ranked it as a first or second priority), meaning either their investments aren’t matching their priorities, or their sustainability goals aren’t currently focused on reducing their carbon footprint.
- When asked to pick up to two top priorities, executives answered: Increasing productivity (34%); Increasing supply chain efficiency (30%); Reducing supply and chain risk (25%); Increasing innovation (25%); Increasing speed to market (23%); Reducing costs (22%); Automating existing processes (18%); Adding new revenue opportunities (11%); Reducing carbon footprint (11%)
Recruiting, retaining and retraining: where supply chains are feeling the pressure
- While 55% of companies report they are retraining employees in the supply chain function for digital technologies, a lack of skilled employees is cited as the #2 obstacle for a successful supply chain.
- In fact, only 44% of enterprises say they their employees are prepared for digital innovation in the supply chain.
- Companies with linear supply chains struggle the most with recruitment. 61% of mostly linear supply chain executives cited this as a top three concern, compared to 36% of digitally networked and 48% of autonomous supply chain executives.
- 44% of companies are using more contingent or contract workers compared to three years ago.
Top factors for creating a successful supply chain
|Ranked #1||Ranked #2||Ranked #3|
|Real-time responsiveness to internal and external issues||16%||13%||17%|
|Hiring the right people with the right Skills||13%||16%||13%|
|Increasing supply chain velocity||9%||8%||8%|
|Adoption of the latest digital technologies||9%||9%||9%|
Evolving customer demands impacting the future of supply chain
- 55% of surveyed executives say their customers expect more personalized products
- 54% of surveyed executives say their customers expect real time updates/tracking
- 52% of surveyed executives are tailoring supply chain processes to satisfy different customer segments
Fad or future: how supply chains plan to adopt technologies
|Not planning to use||Actively planning to use||Piloting today/deploying|
|Robotic process automation||13%||20%||66%|
|Internet of Things||14%||21%||66%|
|Big data analytics||14%||23%||63%|
|Mobile (including tablets)||20%||24%||56%|
|3D printing/additive manufacturing||53%||19%||27%|