Significant investment needed in supply chain tech
Events of the past year upended the procurement industry, illustrating the fragility of a complex international supply chain and forcing a sea change in the industry. However, many supply chain professionals across the globe lack the tools, data and platforms needed to diversify supply chains and optimise processes.
This is according to the 2021 Supply Chain Insights Global Survey conducted by research firm IHS Markit earlier this year.
The survey asked 340 supply chain leaders across 60 countries and 33 industries to identify their priorities and capabilities in three key industry capabilities: strategy and process; platforms and technology; and intelligence, insight and expertise, across nine functional elements.
Nearly two-thirds of respondents reported needing better technology, platforms and data to meet cost goals.
COVID-19 has disrupted supply chains around the world, across many sectors, including electronics, mobile and telecoms, food and manufacturing.
The survey results signalled that in today’s world of complex supply chains, one missing link can have drastic cost and reputational benefits. It also highlighted that successful supply chains of the future will need to balance precise cost optimisation strategies with a proactive approach to risk management and environmental, social and governance (ESG) considerations, notes IHS Markit.
“Supply chains can no longer operate as siloed, disconnected functions; recent events such as the COVID-19 pandemic and the Suez Canal saga have illustrated the need for supply chains to be resilient and agile,” says Wilhelm Greyling, executive director, supply chain solutions at IHS Markit.
“Supply chains can only truly be optimised via end-to-end collaboration and visibility. As the old saying goes: you can’t manage what you can’t see; an integrated approach is not only a nice to have, it’s essential.”
While respondents noted prioritising spend analytics and reported having a strategy in place to optimise costs, 63% lacked the necessary data, platforms and technology needed to make critical cost-saving decisions.
Only 51% of supply chain professionals surveyed said they have a strategy in place to combat ESG issues.
Supplier risk management and ESG were prioritised as among the least important considerations, rated at nine and seven, respectively.
The results, according to IHS Markit, represent a clear misalignment between strategic intent and capability, and send a signal that significant investment is needed in technology, platforms and data to enable seamless processes and deliver overall supply chain objectives.
“Increasing legislation and regulation will continue to drive the importance of third-party risk management and ESG considerations, as companies increasingly become accountable not only for their own actions, but also for that of their suppliers,” adds Greyling.
“The reluctance in investment into the areas of third-party risk and ESG could easily wipe out a firm’s cost-optimisation gains, as the penalties for oversights or breaches can be severe."