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Supply Chain Executives Turn to Technology Amid Prolonged Challenges

Supply Chain Executives Turn to Technology Amid Prolonged Challenges

May 4, 2023
Investments include warehouse management systems, order management systems, supply chain visibility tools, and transportation management.

Supply chain disruptions continue. In a new study,  2023 Supply Chain Executive Survey from Blue Yonder,  the majority (87%) of businesses report experiencing supply chain disruptions within the last year, with over half (52%) citing customer delays as the most frequent outcome.

However, most respondents (62%) indicated their supply chains were reliable enough to withstand the pressure.

“Business leaders have come to expect the unexpected,” said Chirag Modi, corporate vice president, Industry Strategy – Supply Chain Execution at Blue Yonder, in a statement. “After the initial supply chain shock in 2021, organizations sprang into action and invested in tools and technology that would help them preempt and weather the storm. More than half (52%) of respondents have increased their supply chain investments in the last year, with 38% reporting investments of at least $10 million. Most (56%) of these investments are going toward technology.”

Business Leaders Make Strategic Technology Investments Amid Rising Costs

Inflation remains top-of-mind for supply chain leaders, with 43% reporting increased costs of raw materials as a result. Inventory (15%), transportation (14%), and labor (14%) have also become more expensive due to prolonged inflation. Nearly half (48%) of respondents reported shrinking profit margins over the past 6 months.

In response, supply chain executives have sought avenues for strategic investment to bolster their preparedness for and responsiveness to inevitable logistics disruptions. Most of these investments (56%) are in technology, including warehouse management systems (44%), order management systems (39%), supply chain visibility tools (36%), and transportation management (30%).

The continued pouring of resources into these systems suggests that the widespread shift toward omnichannel commerce and fulfillment has not yet reached its conclusion, so investing in technology has been a way to improve processes. So far this has worked as the survey found that over half (54%) reported improved efficiencies, 42% reported fewer disruptions, and 39% reported revenue growth.

Growing and Retaining Talent Remains Key Priority for Supply Chain Executives

Organizations remain laser-focused on attracting and retaining talent, with 42% reporting increased investments in their workforce, up from 40% in 2022.  This has resulted in 87% of organizations implementing new initiatives to stay competitive, with 51% offering more competitive pay and bonus structures and 40% creating more flexible scheduling options.

Nearly half (47%) of executives plan to address the tight labor market in the next 12 months by investing in workforce management technology and another 47% plan to enhance workforce training procedures. A third of executives (32%) plan to increase automation investment across supply chain networks (i.e., robots).

“Today’s labor market and the substantial skills gap in supply chain management have pushed organizations to double down on training and overall employee experience,” said Hong Mo Yang, senior vice president, Industry Strategy - Manufacturing at Blue Yonder., in a statement. “Modern supply chains are grounded in cutting-edge technology. To take full advantage of industry-leading data-intensive tools, business leaders must pull out all the stops to ensure their teams are supported, intellectually stimulated, and appropriately compensated.”

Sustainable Investments Lead to More Efficient Operations

Sustainability is another avenue of investment for supply chain executives, with 35% reporting investing in tools that unlock greener and more efficient fulfillment options (up from 23% in 2022). A majority, 84%, of respondents plan to amplify or maintain their current sustainability initiatives, and 43% plan to seek more sustainable upstream options.

Even if businesses’ sustainability practices result in shipping delays, their customers are happy to accommodate – Blue Yonder’s 2023 Consumer Sustainability Survey found that a whopping 78% of consumers would wait for up to a week for a delayed delivery in favor of an environmentally friendly shipment.

The data suggest that sustainable business is here to stay, with key stakeholders continuing to dedicate significant resources to technology that improves efficiency, reduces waste, and meets customer expectations for greener operations.

Supply Chain Executives Make Room for AI/ML

In terms of what technology companies are investing in more than three-quarters (78%) of respondents are leveraging AI/ML in their supply chains, with top use cases including inventory and network optimization (33%), warehouse resource management (29%), supply chain risk management (26%), and demand forecasting (25%).

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