Supply chain executives want to invest in powerful new technologies and business innovations to improve supply chain performance, but they are hampered by a shortage of qualified talent and continuous pressure to cut costs, according to a new study by MHI—an international trade association that represents the material handling, logistics and supply chain industry—and Deloitte Consulting LLP.
“Respondents clearly identified the need to rethink their approach to supply chain management,” says Scott Sopher, principal, Deloitte Consulting LLP and the leader of its Supply Chain & Manufacturing Operations practice. “In the past, organizations addressed supply chain challenges primarily through cost reduction and operational efficiency efforts. Today’s global supply chains require a new focus on technology and innovation as well as a willingness to invest in these areas for the long term. A true commitment to innovation will help organizations better prepare for the future, manage supply chain risks and stay ahead of the curve.”
I was interested to see that, according to the report, “Innovations that drive supply chains – The 2014 MHI annual industry report,” the top two strategic priorities of executives are supply chain analytics and multichannel fulfillment. A growing interest in supply chain analytics among executives isn’t surprising. As global supply chains become larger and more complex, it certainly makes sense to plan on leveraging analytics that produce insights which may lead to improved customer service while reducing costs and risk. Indeed, nearly 80 percent of the survey respondents said supply chain analytics is a “very important” or “moderately important” strategic priority.
Secondly, consumers’ demands are evolving, and their expectations are high. That places more demand and risk on retailers, and while most now do a decent job on the front end handling orders through their various channels—retail, wholesale and online—many retailers are struggling to adapt their back-end fulfillment processes, the report explains. With that in mind, it makes sense then to see that nearly three-fourths of the surveyed retailers expect their investments in multi-channel fulfillment to increase over the next three years.
Although executives recognize the need for innovation, there are—unfortunately—significant barriers. For instance, companies recognize the need for supply chain talent with the “right skills, experience and mindset to harness the value of supply chain innovations.” On the other hand, finding and retaining that talent is challenging. For example, more than 65 percent of the survey’s respondents indicated that process, technology and skillset gaps exist within their company.
It’s also worth pointing out that cost reduction is still a high priority for many supply chain executives, according to the survey. It reports that more than 70 percent of the respondents across industries said that controlling costs is a top priority for their companies and their customers. Although executives recognize a need for emerging innovations, those cost cutting initiatives may stand in the way. For example, a focus on cutting cost may still prevent companies from implementing sustainability programs, even though almost 80 percent of the survey respondents believe sustainability is at least “moderately important.”
Of more importance to the executives, however, is that mobility and machine-to-machine technologies can improve responsiveness and customer service by providing supply chain workers with the information they need, when and how they need it. Indeed, almost 75 percent of the respondents noted that their companies will continue to invest in this area—and nearly half of the respondents said plans call for increasing their investment over the next three years.
Are these results what you see as well? While there is a clear and pressing need for innovation, do a talent shortage and cost reduction initiatives stand in the way?