Although executives are increasingly aware of the benefits of digital supply networks (DSNs), many report that their organization is still in the early phases of adoption, according to a new study. While 51 percent of respondents believe their DSN maturity is at least “above average” compared to competitors, only 28 percent reported their organization has started implementing DSN solutions.
Conducted by Deloitte and the Manufacturers Alliance for Productivity and Innovation (MAPI), the survey of executives from more than 200 manufacturing organizations found that most respondents believe DSNs can provide significant advantages in comparison to traditional linear supply chains, but few expect implementation will lead to “game-changing” positive impact. The resulting report, “Embracing a digital future: How manufacturers can unlock the transformative benefits of digital supply networks,” explains that, nonetheless, 56 percent of the respondents said they do believe a DSN will provide a significant benefit to their company.
Increasing speed remains a primary reason for implementing DSN among manufacturing organizations surveyed. Most respondents (52 percent) cited the ability to dramatically reduce the time to make strategic decisions as a top reason, followed by the ability to operate more efficiently and effectively (43 percent).
Most executives also said many in their companies recognize the potential financial benefits of DSNs. When asked about the most important financial goals of a DSN, they cited increasing sales efficiency/effectiveness (22 percent), reducing operating costs (17 percent) and improving pricing and margins (17 percent).
There are, of course, significant challenges to address. For instance, the changing nature of work in advanced manufacturing technology may also impact DSN rollouts. Two of the biggest barriers associated with implementing DSNs were finding and training employees, each cited by 30 percent of respondents as a top challenge.
Additionally, organizations are potentially hesitant to change. Nearly four in 10 respondents (37 percent) said overcoming resistance to change is the greatest risk to the success of their DSN initiatives, followed by operating in silos/lack of integration (33 percent).
“While enthusiasm is high and manufacturers realize the benefits of digital supply networks, many companies struggle to identify the right technology landscape which will provide the most value when they are approaching a digital shift,” says Stephen Laaper, principal, Deloitte Consulting LLP and co-author of the study. “As a result, many hold off with key aspects of their transformation, which in turn puts their transformation at too slow a place to avoid disruption.”
To determine the best route to digital transformation, Laaper says executives should be asking key questions, such as: What is the strategic vision they are working toward? Other critical questions to ask are: “How is the company going to win?” and “How will the company execute in sprints to start down the path without having all the details worked out?”
There is no one way to deploy a DSN, says John Miller, council director, MAPI. All companies operate differently, thus their DSN implementations carry unique challenges based on the existing infrastructure, talent base, culture and technological requirements, he explains.
“Companies which are too conservative in their approach may wait too long before finally implementing initiatives that are too large and complex,” Miller says. “In the end, these companies risk being late to the game and implementing solutions whose value is hard to measure because of either the time it takes to show an improvement or the overall scale of the implementation.”
What are your thoughts on digital supply networks? What do you think are the main obstacles to implementing solutions?