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Taking the Pulse of Digital Supply Chain Transformation

June 10, 2024
Here are the primary drivers and roadblocks that companies say are dictating their supply chain transformation initiatives this year.

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As an authority in benchmarking, best practices, process and performance improvement, and knowledge management, American Productivity & Quality Center (APQC) periodically takes the pulse of the world’s supply chain operators. Last month, APQC turned its focus to digital supply chain transformation with its latest 2024 Quick Poll Report

Based on input from 300+ respondents, the APQC report provides a cross-industry snapshot of the current state of digital transformation in supply chain, including its elements, key drivers, top barriers and the teams that are leading the transformation process. The group defines digital transformation as the “strategic integration of multiple technologies” in relation to the supply chain. 

According to the survey, nearly two-thirds of respondents say their organizations are in the advanced stages of adopting digital transformation in their supply chains, including the achievement of full implementation with continuous improvement or in the process of a full-scale adoption. Only a small minority (16%) is still in the planning stage or conducting pilot projects, APQC reports. 

The Top 10 Drivers

Over half of the survey respondents (55%) consider data management to be a critical element of their organizations’ supply chain digital transformation efforts. Other common elements of digital transformation include generative and algorithmic artificial intelligence (GenAI and AI), advanced analytics, robotic process automation (RPA), enterprise resource planning (ERP) systems and the Internet of Things (IoT).

According to the APQC reports, the top drivers of supply chain digital transformation right now include the desire to improve quality (e.g., minimize errors); improve sales and operations planning; and enhance supplier/customer service and communications. Here’s how the numbers break down:

  • 33% of companies want to improve quality
  • 30% are interested in improving sales and operations planning/integrated business planning
  • 29% have their sights set on improving supplier/customer service and communications
  • And, 28% want to be able to provide better real-time access to data

Other core concerns right now include cybersecurity/IT risk reduction, the need for connected systems to support better decision-making and the need to reduce costs. Other companies are focused on improving supply chain cycle times, information sharing and collaboration. 

In contrast, the survey respondents say they’re less focused on pursuing digital transformation in their supply chains in order to enable remote work, improve accessibility on devices and update their existing legacy systems.

Barriers to Digital Transformation

APQC says the common barriers to digital transformation also include integration challenges, security and governance concerns, technology capability limitations, and the lack of skills to use new systems and processes.

  • 38% say cost of implementation keeps them from investing in new digital supply chain technology solutions
  • 42% blame integration challenges
  • 38% say security and governance concerns keep them from making this move
  • 38% say technology capability limitations are their biggest concern
  • And 37% say lack of skills needed to be able to use new systems and processes is a primary roadblock

The group also identified some consensus among the respondents, with nearly half (48%) perceiving the “cost of implementation” to be a top barrier to the success of their organization’s supply chain’s digital transformation. In this high interest rate and inflationary economic environment, such concerns could be keeping companies on the supply chain digital transformation sidelines this year.

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