Supply chain management has changed dramatically over the past decade — thanks in large part to digital technology and the implementation of analytics that gives supply chain professionals new insights.
But where are we headed? What are top supply chain executives today thinking about for tomorrow? Our team did some research and pulled 15 top supply chain statistics that we think are most worth sharing.
And from our perch at eAlchemy, as a top custom data tool developer for the past 12 years, we’re also sharing our point of view on the five takeaways that we see from these important supply chain statistics.
(Editor’s note — What do you think? Tweet to us with your favorite supply chain stat.)
1. Adoption of digital technology and data is still lagging in supply chain
As much focus and attention as supply chain technology has received in the past decade, it still lags behind many other parts of an organization when it comes to technology implementation. As Gartner analyst Steve Steutermann wrote, “While the data confirms the majority of supply chain organizations struggle to drive digital transformation across their organizations, the good news is companies furthest along the digital journey have aligned their digital investments to customer and shareholder value.”
BY THE NUMBERS
- According to Gartner, only 1 in 5 companies is in what it considers to be the advanced stages of digital supply chain implementation (source: Gartner).
- Nearly two-thirds (63%) of companies do not use any technology to monitor their supply chain performance (source: BCI study reported by Zurich Insider).
- Only 4% of organizations are using AI in their supply chain (source: Eyefortransport survey).
2. Data and analytics will lead supply chain investments
While supply chain technology implementation may still be lagging in some areas, supply chain professionals and top companies recognize the importance of investing in data infrastructure, analytics and machine learning capabilities.
In particular, many expect dramatic growth in the application of advanced data technologies like AI and machine learning. As Material Handling and Logistics News reports, “deep learning modules can aid in the creation of cognitive models, which in turn would be the core of a highly automated supply chain. This will drive cost efficiencies in labor expenditures, waste reduction, and better utilization of assets.”
BY THE NUMBERS
81% of supply chain professionals say analytics will be important in reducing landed costs (source: Hackett Group).
- By 2019, 75% of large manufacturers will update their operations using IoT implementations and analytics to accelerate the time to market and mitigate risk (source: IDC).
- 84% of supply chain professionals believe that big data and analytics will be “disruptive and important” to supply chain strategy (source: Gartner’s SCM World report, “Future of Supply Chain”).
- By 2020, one-third of manufacturing supply chains will have analytics-powered cognitive capabilities — improving cost efficiency by 10% (source: IDC as reported by Material Handling and Logistics News).
3. Organizational visibility continues to be a big supply chain challenge
Even companies that invest in technology continue to have issues with achieving supply chain transparency. According to Christian Titze, research director at Gartner, part of the problem is that vendors providing solutions sometimes overpromise and underdeliver.
“These myths distract us from the real issues and solutions surrounding supply chain visibility, causing us to make decisions based on assumptions that are wrong, expensive or even dangerous,” Tize says. “In doing so they stifle innovation and slow progress toward real goals, accomplishments and outcomes. By separating the truth from fiction, supply chain leaders can make more informed decisions about their visibility and multienterprise initiatives and investments.”
BY THE NUMBERS
- 21% of supply chain professionals say that visibility is their biggest organizational challenge. That number increased dramatically from 2017, when only 12% suggested visibility was a big challenge (source: 2018 Statista report).
- 82% of supply chain professionals say analytics are needed to improve the visibility of the supply chain across the enterprise (source: Hackett Group).
4. Social media and unstructured data has potential to impact supply chain
While still immature in relation to other types of data being harvested for supply chain insight, social media and other external sources of unstructured data are becoming increasingly important.
Just one example: A 2016 study found that feedback on Twitter has the potential to greatly reduce waste in the beef industry. “On an average, 45,000 tweets are tweeted daily related to beef products to express their likes and dislikes,” wrote authors Nishikant Mishra and Akshit Singh. “These tweets are large in volume, scattered and unstructured in nature.” By using data mining and machine learning to determine the volume and sentiment of social messages, a company could gain immediate feedback from customers on its products. In the case of beef waste, the authors asserted that consumer perception of beef discoloration and high pricing could have been addressed through changes in packaging and price adjustments.
BY THE NUMBERS
- 77% of supply chain professionals see social media as an important indicator of real-time customer feedback (source: Gartner’s SCM World report,”Future of Supply Chain”).
- 55% of supply chain professionals believe that data from social media can help to forecast top-selling products (source: Gartner’s SCM World report, “Future of Supply Chain”).
5. Expect continued innovation around shipping and fulfillment as costs rise
Rising shipping costs continue to be a big concern for consumer goods companies, which certainly won’t be allayed for U.S. based businesses with the current administration’s evolving positions on foreign trade and manufacturing.
Perhaps the biggest takeaway when it comes to freight costs may come via Amazon, which has seen its shipping expenses nearly double in two years, between 2015 and 2017. Don’t expect Amazon to just watch passively as its margins are eaten away by shipping costs. You can expect the online retail giant will continue to innovate by finding new ways to reduce its freight cost per order — and investigate entirely new ways to deliver to consumers (e.g. drones).
BY THE NUMBERS
24.7% of supply chain professionals say that delivery costs are the biggest challenge for B2C e-commerce companies (source: Eyefortransport survey).
- Amazon reported that shipping costs increased to $21.7 billion in 2017, an increase from just 11.5 billion in 2015 (source: Marketwatch).
- Half of all manufacturing supply chains will be capable of direct-to-consumer shipments and home delivery by 2020 (source: IDC).
- 30% of supply chain leaders feel they must respond to consumer demand for faster, more accurate and new types of delivery (source: Logility study as reported by SupplyChain247).
Looking to make better use of your supply chain data?
eAlchemy has been helping supply chain and operations teams make better use of their data for more than a decade. Contact us and we’d be happy to set up a free consultation.