Firms struggle to scale digital supply chain initiatives

The pace of digital disruption is ever increasing, and organisations are being forced to constantly reinvent themselves, according to the new study from the Capgemini Research Institute 'The digital supply chain’s missing link: focus'.

Over three quarters (77 per cent) of companies said their supply chain investments were driven by the desire for cost savings, with increasing revenues (56 per cent) and supporting new business models (53 per cent) also frequently cited. Organisations, especially in the UK (58 per cent), Italy (56 per cent), The Netherlands (54 per cent) and Germany (53 per cent) have supply chain digitisation as one of their top priorities.

More than 1,000 organisations across consumer products, manufacturing, and retail were surveyed from April to May 2018. The aim was to understand the digital initiatives they are adopting, the benefits they are deriving, and the ways in which they are transforming their supply chains.

Digital supply chain initiatives use digital technologies to optimise operations across the entire supply chain by enabling connectivity, data management, insights, and smart automation. Nearly two-thirds (63 per cent) of the organisations surveyed say that their management realised that supply chain digitisation is a process that is continuous and takes a long time.

"While most large organisations clearly grasp the importance of supply chain digitization, few appear to have implemented the necessary mechanisms and procedures to turn it into a reality. Companies are typically running too many projects, without enough infrastructures in place, and lack the kind of focused, long-term approach that has delivered success for market leaders in this area. Digitisation of the supply chain will only be achieved by rationalizing current investments, progressing on those that can be shown to drive returns, and involving suppliers and distributors in the process of change," Dharmendra Patwardhan, head of the digital supply chain practice for Business Services at Capgemini, said.

The research revealed that supply chains are becoming more consumer driven and organisations should look at ways to make their supply chains more agile. Nearly half of the organisations surveyed mentioned that they are building manufacturing footprint closer to their consumer markets.

There was also a clear gap in procedure and methodology between organisations that had and had not implemented digital supply chain initiatives at scale. The vast majority of companies to have successfully scaled said they had a clear procedure in place to evaluate the success of pilot projects (87 per cent vs. 24 per cent) and had clear guidelines for prioritizing those projects that needed investment (75 per cent vs. 36 per cent).

Laura J Alber, CEO, president, and director of Williams-Sonoma, Inc., a US-based consumer retail company, has outlined why customer focus is a major driver for their organisation. "Our supply chain remains a primary focus for us and we are continuing to invest in those initiatives that directly improve our customers’ experience and value perception and that position us even further ahead of the competition. We’ll continue to prioritize these customer-centric initiatives as our supply chain is a competitive advantage for us and a critical component of the customer experience." (RR)

Fibre2Fashion News Desk – India