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Investments in Supply Chain Technology Drives Growth and Cuts Costs

Supply Chain Technology Investment Uneven

May 12, 2023
Just one in four (24%) manufacturers have applied artificial intelligence to their supply chains, according to new PwC survey.

More than half, 53%, of manufacturers, have adopted technologies that assist in managing their supply chains, including full adoption of cloud-based data platforms, IoT technologies,and connected services, according to new supply chain data from PwC. And close to 40% have adopted scanning and intelligent data capture.

When asked what objectives manufacturing companies have when they invest in technology the answers are as follows:

  • Drive growth-- 59%
  • Gain competitive advantage -- 49%
  • Optimize costs -- 43%
  • Improve customer service --35%
  • Increase resiliency-- 29%
  • Explore new innovations-- 27%
  • Respond to government regulations --18%

"The need to modernize supply chains with digital technologies comes at a pivotal moment, as manufacturers have learned that building in agility and resilience has never been more important to remain competitive, cyber-secure, and sustainable," the survey says.

Here are some highlights of the survey. 

Uneven investment across supply chain technology portfolio

Digital technologies that drive efficiency and visibility have been mainstreamed in manufacturing supply chains. Most manufacturers (53% of respondents) have achieved “full adoption” of cloud-based data platforms, IoT technologies and connected services. About a third (35%) have fully adopted scanning and intelligent data capture (OCR).

However, adoption of digital technologies that help drive predictive insights or cross-enterprise efficiency are in the early stages. Just one in four (24%) manufacturers have applied artificial intelligence to their supply chains, according to the survey. Even fewer have adopted blockchain (18%), robotics/robotic process automation (RPA) (16%) and augmented reality (14%).

Given the relatively lean adoption rates of these technologies, manufacturers expect to make investments to increase them. Nearly three-quarters (73%) report that they plan to make investments in AI/ML, robotics/RPA and blockchain over the next two years.

Room for improvement to integrate ESG into supply chains

Manufacturers face difficulties in tracking ESG in their supply chains. As they navigate into a new era of ESG regulations and compliance — namely the tracking, monitoring and reporting of Scope 1, 2 (and, in some cases, Scope 3) carbon emissions — many are facing challenges to do so on numerous fronts.

Chief among these is the lack of digital skills, nearly two of five respondents (39%) said that poses a “major challenge” in integrating ESG into their supply chain. Likewise, nearly a third (27%) cited inadequate availability of data and digital tools and a lack of understanding of ESG regulations among leadership.

Ramping up tech investment, digital skills to mitigate supply chain risk

Most manufacturers are acutely aware of the myriad supply chain risks that are only becoming more entrenched, persistent and far-reaching. These include cyber-attack vulnerability, tracking greenhouse gas (GHG) emissions, price volatility and uneven availability of materials and finished-product inputs.

Mitigating such rising risks requires investment in hard and soft infrastructure. Most manufacturers are well aware of this new reality. One-third (33%) “strongly agree” that their organization should invest more in technology to identify, track and measure supply chain risk. And just 27% strongly agree that the tech investments they’ve made so far have enabled faster decisions to help reduce risk.

But the need to manage supply chain risk also extends to enhancing digital skills. Only 20% of manufacturing leaders strongly agree that their workforce has the digital skills necessary to identify risk in the supply chain. A quarter of respondents cite the difficulty attracting, developing and retaining the digital native talent needed to transform their supply chain as a top-three biggest challenge related to digitizing their supply chain.