Study shows 74% of digital supply chain planning transformations influenced by Covid

A new study by ToolsGroup, a provider of supply chain planning software, and the Council of Supply Chain Management Professionals (CSCMP) has found that only 3% of companies experienced no COVID-related business impact, and 42% of organizations say the pandemic has accelerated their digitization plans. Additionally, the majority (90%) are somewhere along the digital journey, but talent deficits threaten to slow progress, with 42% of respondents saying they are handing staff/skills shortages poorly or very poorly.

CSCMP and ToolsGroup surveyed more than 200 supply chain professionals around the world from manufacturing, retail, consumer packaged goods, aftermarket parts, wholesale distribution, and third-party logistics (3PL) firms, as well as consulting organizations. Fifty-four percent of those who said they were ‘reaping the benefits of digital transformation’ said that they were managing COVID-related demand and supplier uncertainty ‘very well’. However, only 13% of those in the ‘evaluating’ or ‘not pursuing’ stages reported handling this area ‘very well’, indicating that digital technology and processes may be enabling better management of disruption.

The top three business drivers for digitizing planning are: the ability to keep up with evolving customer behaviors and expectations (44%); the need to increase automation to focus staff on higher level activities (43%); and an overall desire to improve business performance (42%). Other top factors include improving customer service levels (39%); improving reaction to unplanned disruptions (35%); and increasing supply chain resilience (34%).

The biggest obstacle to transformation for respondents is a skills deficit among their staff (41%). Digital business requires skills such as change management and decision making in addition to the standard technical planner skills. Data quality/lack of data (34%), COVID-related uncertainty (28%), an existing rigid technology structure (28%), and fear of change (28%) are also roadblocks.

“In our 2019 survey, the biggest factor holding back digital transformation was ‘fear of change’. Today we see a sharp contrast as COVID-related demand uncertainty has accelerated digitization to enable future resilience,” said Caroline Proctor, chief marketing officer of ToolsGroup. “Technologies such as demand forecasting and inventory optimization, which automate decision making and free up working capital while guaranteeing service, are top priorities for investment.”

Findings suggest that driving digitization from higher up leads to better outcomes. “Half of those firms reaping the benefits of planning digitization say their transformation is being led by their CEO,” observed CSCMP president & CEO Mark Baxa. “Whereas those not pursuing a strategy say their digitization efforts are being led by line-of-business managers. We believe the more successful companies are actively pursuing change for greater future resilience; the alternative is to be a victim of tomorrow’s unplanned disruptions.”