No Match Found
As US manufacturers recover in the wake of debilitating supply-chain issues ushered in by the COVID-19 pandemic, efforts are underway to ramp up adoption of digital technologies to strengthen supply chains to drive growth and efficiencies, according to PwC’s 2023 Digital Trends in Supply Chain Survey. 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.
Q: Which of the following are your main objectives when investing in technology for your supply chain?
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 our 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.
Q3: To what extent have the following technologies been adopted by and/or applied within your supply chain operations?
Despite some success in adopting digital technologies — and plans to invest in areas that are lagging — many manufacturers are encountering systemic obstacles and other challenges in getting the most out of digitizing the supply chain. For example, few tools yield “out of the box” benefits, requiring more time and digital know-how to make an impact, which should be considered in the business case. Nearly half (47%) cite budget constraints as the top challenge of digitizing their supply chains, followed by insufficient capabilities of supply chain hardware and software systems (31%) and a misalignment of supply chain goals and the business’ overall strategic goals (31%).
Q2: What are your biggest challenges related to digitizing your supply chain?
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.
Q12: To what extent do the following pose a challenge to integrating ESG into your supply chain?
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.
Q14: To what extent do you agree or disagree with the following statements about risk in your supply chain?
Assess how your existing digital tech contributes to making your supply chains more efficient, resilient and secure — and put in place plans to continually improve on the impacts of that technology. Areas of improvement can occur on numerous fronts, including a better understanding of demand and supply, visibility of inbound materials and customer shipments, collaboration with suppliers, and enhanced ROI. Increasing your investment in newer technologies (including artificial intelligence/machine learning, blockchain, robotic process automation, augmented reality, etc.) can help yield such impacts. For example, AI can help provide deeper insights on future demand as well as improve machine learning applications that can lead to more effective decision-making.
Digital technologies are only as strong as the talent implementing them. Upskill your existing workforce — and attract new talent — to extract the greatest value from what has become a wide portfolio of digital technologies, including GHG emissions tracking, monitoring and reporting capabilities.
As rules and regulations — as well as societal and customer buy-in — surrounding ESG become more stringent and mainstreamed, you can get in front of the curve in order to stay compliant and competitive. For example, manufacturers may increasingly need the technologies and capabilities to integrate GHG emissions data into parts data, customer data, transportation data, as well as include ESG variables into operations optimization algorithms. According to our survey, nearly one in five (18%) respondents agree that a lack of urgency to address ESG issues poses a major challenge to integrating ESG into their supply chains.
Leadership should take the lead on tracking supply chain emissions. Most manufacturers are well aware of the financial and operational benefits of adopting supply chain technology. Yet only 18% of respondents agree that “responding to government regulations” was a top-three objective for digitizing supply chains. And just one in four (27%) agree that a lack of understanding on the part of leadership poses a challenge to integrate ESG into the supply chain. Going forward, it’s likely to become increasingly important for leaders to accelerate efforts to monitor — and report — emissions throughout their supply chains through greater investment in the technologies needed to carry that out.