Technology in supply chains: Investments yield mixed results

Insights from the PwC Digital Trends in Supply Chain Survey 2022

As companies in many industries update and upgrade their supply chains, how they use technology is critical. But while supply chain leaders generally agree that such tech investments are important, where and how their companies have adopted technologies has differed, and the returns on those investments have been uneven, according to our PwC Digital Trends in Supply Chain Survey 2022.

Only 20% of the operations and information technology leaders, C-suite executives and other supply chain officers we surveyed said their investments in supply chain technology have fully delivered the expected results. Led by cloud-based systems, tech adoption varies widely in supply chain operations, as do future spending plans. While cloud is commanding larger investments, other technologies are being adopted at more modest levels.

The results of that spending have been net positive, but it’s clear they could be better. For areas ranging from cost efficiencies to competitive differentiation, a minority of respondents — generally about one-fourth — said their companies’ tech investments fully led to positive business outcomes. More often, the outcomes were moderately positive. In such cases, companies may not have committed to a strategy that’s linked to their investments. Without a clear business case and dedicated change management — including actions such as leadership communications and adequate training — full technology adoption and execution can suffer, and the anticipated value from the investment may not be achieved.


How companies are using technology in supply chains

A wide range of tech adoption and investments

Cloud far outpaces other technologies for adoption and planned investment; 52% of companies reported full or moderate adoption, and 72% plan to invest in cloud, including 35% planning at least $1 million in investment over the next two years. But when you consider lower levels of spending, other planned investments — such as third-party analytics, scan and intelligent data capture, RFID and the Internet of Things (IoT) — are comparable to cloud.

Using tech across the supply chain still has far to go

Companies are using emerging technologies in various parts of the supply chain, with different functions requiring different kinds of tech. But no single technology was cited by more than one-third of respondents in any area. The plan function is seeing the most tech adoption overall, with 77% of respondents identifying at least one tech that is being used to automate and enhance supply chains.

The returns on supply chain tech investments? More singles and doubles, but few home runs

While supply chain leaders say investing in technology is worthwhile, in a significant majority of cases, those investments haven’t been 100% successful for the business. Cost efficiencies have seen the greatest impact, with two-thirds of respondents reporting positive business outcomes. They’re less impressed with how tech investments have set them apart from competitors. This may be because in some cases tech investments for cost efficiencies may have been for isolated solutions instead of being part of a transformation initiative, which is more likely to distinguish a company from its competition.

Where you go from here

The survey revealed opportunities for companies to better deploy technology at different points along the supply chain. Consider these actions to help build resilience, boost efficiency and drive business growth.

  • Evaluate and confirm how each new investment in supply chain technology aligns with your company’s overall strategic priorities and ensure the people and processes are in place to execute that strategy. Are you spending on technology just because it’s available and may be useful, or are you prepared to deploy tech for business transformation?

  • With the heightened focus on supply chains due to recent disruptions, determine which technologies can make operations more transparent and how you can provide more supply chain visibility to other functions in your organization.

  • As geopolitical unrest and pandemic-related shutdowns continue disrupting parts of the supply chain, assess how individual tech successes can be scaled and replicated elsewhere. How can a limited investment be a blueprint for more sweeping improvements elsewhere in the company?

  • Adjust ongoing optimization efforts to account for current inflationary pressures and a volatile economy. Consider how short-term investments in automation could help reduce recurring costs in the long term.

  • Evaluate each of the supply chain stages — plan, source, make and deliver — and determine if and how a focused investment in artificial intelligence (AI), intelligent data capture or another tech could improve speed, efficiency and/or resilience.

  • Don’t limit your company to dealing with current disruptions and fighting day-to-day battles. Consider where a strategic tech investment in the near term could better position your company to recognize and mitigate risks that may emerge one, two or five years from now.

Methodology

The PwC Digital Trends in Supply Chain Survey 2022, fielded November 2021 to January 2022, surveyed 244 operations and information technology leaders, C-suite executives and other supply chain officers from companies in select supply chain-intensive sectors to assess how they are addressing supply chain management operating models, including the use of enterprise and emerging technologies. Sectors surveyed include aerospace, automotive, chemicals, and other manufacturing and industrial products; consumer markets and retail; energy, utilities and mining; pharmaceuticals and life sciences; and technology, media and telecommunications.

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Matthew Comte

Matthew Comte

Operations Transformation Practice Leader for Consulting, PwC US

Marc  Waco

Marc Waco

Operations Innovation Leader, PwC US

Meghan   Murray

Meghan Murray

Sourcing & Procurement Leader, PwC US

Brian Matthew Houck

Brian Matthew Houck

Connected Supply Chain Leader, PwC US

Rafael  Lander

Rafael Lander

Operations Strategy Leader, PwC US

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