Tension in supply chains pushes companies to postpone their digitalization

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Tension in supply chains pushes companies to postpone their digitalization

The situation caused by the pandemic, the scarcity of raw materials, geopolitical conflicts and the general rise in prices have strained the supply chains of companies around the world, which are focusing their short-term efforts on improving their efficiency and managing their costs, and have left their transformation and digitization in the background. This is the main conclusion of the survey Digital Supply Chain Survey 2022, prepared by PwC based on the opinion of 244 directors and operations managers of large international companies.

The main priorities of large global companies for the next twelve to eighteen months, in relation to their supply chains, are improving efficiency and management and reducing costs, according to 63% and 59% of those interviewed , respectively.

The responses reveal that companies are prioritizing these issues well ahead of others such as automation of processes and use of data analysis either improving the resilience of their supply chains, which are only priority issues for 21% of those interviewed. Something similar happens with the digital training of its employees and with the improvement of sustainability in supply chains.

The study reveals that, in addition to those related to the current situation, there are other factors that are an obstacle to the digitization of supply chains. The first of them -and by far- are the budget constraints -according to 48% of the managers interviewed-, followed by the difficulty of finding the necessary talent (30%) and of deploy the right technologies (29%). In fact, 80% of the participants in the report say they have not obtained the expected return on their technology investments, whether in terms of efficiency, productivity or improvement of the customer experience.

Precisely, if we talk about emerging technologies applied to supply chains Cloud It is the one with the greatest potential for development and where the companies that have participated in the report plan to invest the most. Other relevant technologies, although at lower levels of investment, are those that have to do with the data analysis and exploitation, artificial intelligence, automation and the internet of things.

ESG and supply chains

Despite the fact that ESG occupies and worries and, in fact, is an unstoppable and irreversible trend, the responses of the managers who have participated in the study reveal that there is still a long way to go for companies to fully integrate these criteria into their supply chains.

At the moment, 66% recognize that the main concern of international companies in terms of ESG is that of keep abreast of regulatory changes that occur in the different countries in which they operate. And 58% say that the main challenge they face is that of identify the environmental, social and governance risks of its suppliers.

The report reveals that a majority of those surveyed recognize that ESG criteria are currently considered less of a challenge for supply chains, although they expect them to take on much greater weight and relevance in the coming years.

The report asks the opinion of managers about the risks they have in their supply chains associated with the characteristics or attributes of the suppliers that integrate them. The ethical concerns (58%), lack of a diversified supplier base for critical supplies (53%), operational problems (51%), and the impossibility that these have to respond to the technological challenges (49%) are the most relevant.

But it does not seem that the companies have, at the moment, planned measures to minimize weak points related to their suppliers: only 21% of respondents plan to improve the resilience of their supply chains, 16% change their purchasing practices and policiesand 13% diversify and segment their suppliers.

For Bernat Figueras, partner in charge of Strategy&, PwC’s strategic consulting firm, “These answers reveal to what extent the difficult current situation that supply chains are going through is marking their priorities and is causing many companies to move in defensive positions, and lose opportunities to create value -agility, adaptability, collaboration-, arising from transformation and digitization”.

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