Many companies are exploring how better use of technology can help improve supply chains, but few of them are applying those initiatives to build resilience and reduce risk, according to a study from the consulting firm PwC.
Just 34% of operations leaders cited increased resilience as one of their top objectives when investing in supply chain technology, PwC found in its “2023 Digital Trends in Supply Chain Survey.” And 86% agreed or strongly agreed that their company should invest more in technology to identify, track, and measure supply chain risk.
When asked about their priorities in the next 12-18 months, only 23% of survey respondents chose increasing responsiveness and resilience among their top three, the firm said. By comparison, more than half picked increasing efficiency (58%) and reducing costs (54%) as top priorities.
PwC cited two reasons for that “tepid” approach. First, many companies either find the concept of resilience too vague or take for granted that their supply chains have adequate digital capabilities to maintain operations during delays and other obstructions. And second, many don’t recognize that risk mitigation by itself isn’t a business continuity plan, and that investing in resilience better enables you to “look around the corner” versus simply responding to immediate threats.
Based on the results of its study, PwC listed five actions that companies can take when they are ready to be smarter in using technology to reduce risk and help improve resilience in the supply chain:
• Pivot from short-term risk mitigation to long-term stability. Current disruptions should be managed, of course, but supply chains are less likely to thrive with a crisis-to-crisis approach. Determine what changes to operations networks and supply chain footprints should be made now to allow the long lead times required to identify and close organizational gaps in supply chain capabilities.
• Find the right global-regional balance. Geopolitical and policy shifts, which sometimes occur rapidly, can challenge long-established networks with choke points, delays and other inefficiencies. Assess where you can be proactive and insulate your operations with more geographic diversity in sourcing and distribution.
• Include impairment planning in supply chain decisions. Broader trends also can impact specific assets in your supply chain — not only disrupting them but affecting their remaining useful life and value to your organization. Anticipating these impacts can minimize the risk of wasted capital.
• Build R&D and product development capacity to fuel growth. The rise of connected products and services brings a new dimension to the skills and capabilities needed in supply chains. Determine which elements of your supply chain can benefit from increased investment in innovation instead of just short-term efficiency.
• Embrace AI … without losing the human element. Artificial intelligence and machine learning already have improved agility and responsiveness in supply chains, but in many cases they’ve yet to become integrated into business planning. Refine your AI/ML strategy with the goal of leveraging both the technology and your teams — with digital upskilling as needed — in managing supply chain risks.