Cycles of growth and retraction are enterprise mainstays and are especially apparent today. Another tradition is the continued investment to improve the systems and data that drive profits in business and foster supply chain intelligence. As part of a challenging economic environment to close in 2022, U.S. companies, as well as ones globally, are facing rising inflation, higher costs of goods and services, and raw material shortages.
For some organizations like Alphabet, Hewlett-Packard, Amazon, Meta, and Twitter, this has meant cutting staff and reducing employee headcount to position themselves with less fixed costs to begin 2023. On top of this, businesses are also struggling with other disruptive challenges, including disorganized supply chain data that make it difficult to stay agile and resilient.
Economic Instability – Greatest Threat to Business
These trends are reflected in our new 2022 State of Supply Chain Management survey, which found that almost 70% of respondents identified economic instability as the greatest threat to business. This financial instability indicates a profound reckoning of supply chain performance across industries.
Respondents noted that poor data quality, outdated technology, and disparate data silos are the top three causes of inefficiency in supply chain executives’ materials management process.
Not surprisingly, the survey shows that many companies want agility and cost control, but they need more clarity on a sustainable path forward.
Most respondents indicated that reducing supply risk for their materials is their #1 priority in 2023. However, 76% of execs pointed to disparate silos of materials data and lack of knowledge as possible hurdles to a digitally transformed approach to materials management. In addition, 43% of executives surveyed reported a need for more visibility into inventory availability as the primary hindrance to sharing critical materials with other facilities within their network.
This lack of visibility plays into flawed decision-making. For example, over 80% of supply chain executives said they needed more capability to digitally track how direct and indirect materials move across their networks. Why? 38% of respondents use the same materials management practices they’ve always used. But using old tools to fix new challenges is unequal.
The ‘2022 State of Supply Chain Management’ survey was conducted with leading global supply chain executives based within companies showing revenues ranging from under $1 billion (70%) to over $1 billion and above, past $20 billion (30%).
Key findings included:
- When asked about hurdles to a digitally transformed approach to materials management, 76% of execs pointed to disparate silos of materials data and lack of knowledge.
- 43% of executives surveyed reported a need for more visibility into inventory availability as the primary hindrance to sharing critical materials with other facilities within their network.
- The #1 priority amongst survey respondents over the next 12 months is reducing supply risk for their materials.
- Over 75% of respondents believe implementing an AI-driven Materials Management solution would take 12-24 months.
- 80%+ report they cannot digitally track the movement of direct and indirect materials across their enterprise network.
The results indicate that many companies need more resources and direction to meet their supply chain management goals. Unfortunately, this means that supply chain woes may persist ahead.
Over half of U.S. companies surveyed by SAP say that supply chain issues will persist in 2023, even as business and enterprise organizations seek to become more agile to meet their customers’ needs better.
The way forward with AI Tools
A top priority for supply chain industry leaders is reducing material supply risk to avoid unplanned production delays and outages to keep goods moving and fulfill customer promises. Companies are taking a journey to digital transformation to become more agile and resilient against disruptive forces. Data is central. AI tools can quickly evaluate large datasets to generate guidance for actionable decisions across an enterprise supply network.
Executives should look into purpose-built platforms to gain control of their global supply chain and materials data. By applying the power of AI across the enterprise through a materials management platform, businesses can centralize data from all points of the supply and materials inventory and link and leverage production and supplies to accelerate profitability.
Using advanced data science and artificial intelligence to harmonize disparate material data across multiple enterprise systems can provide complex supply chains in 2023 with the support for their people and material truth they need for supplier transparency, inventory planning and procurement intelligence.
Founder & CEO of Verusen