New research from SYSPRO spotlights an enormous gap between tech investment and digital transformation readiness.
SYSPRO, a global provider of ERP software, has announced new research findings from their latest global research survey, which explores the challenges and solutions to ongoing supply chain disruptions that manufacturers and distributors face today.
Among its more surprising findings were that 47% of manufacturers and distributors invested in sensors and IoT networks, but just 20% of them did the same for data analytics tools, which are necessary to gain insights from the data they’re collecting. This finding is just one of many statistics that reveal disconnects and challenges within the supply chain around tech investment and digital transformation readiness.
Key takeaways from respondents include:
There is a large disconnect between the investment in internal efficiencies and external collaboration
The supply chain disruptions of the last two years have been severe, with lasting effects.
- 70% of businesses experienced supply chain disruptions over the last few years
- 60% of businesses were unable to engage and collaborate with customers and suppliers in real-time, often rendering those businesses unable to deliver to their customers
Pre-pandemic technology investments and outdated business models had been partly to blame for these ongoing challenges. In response to pressures, businesses have invested in short-term technology solutions to address the immediate impact of the pandemic. Even though 65% of businesses invested in business systems aimed at meeting order requirements, and 64% of businesses invested in business systems to manage inventory control, the supply of inventory was not protected. Only 44% of business systems have allowed manufacturers to effectively collaborate with external suppliers and customers.
According to Paulo De Matos, Chief Product Officer at SYSPRO, “While the investment in internal efficiencies is crucial for any business, customer and supplier engagement should also be a top priority. What we are seeing now is a knock-on effect of supply chain disruptions. It won’t matter how businesses try to up their game internally, if they are unable to communicate effectively with their external ecosystem and respond to shifts in the supply chain, businesses may fall behind.”
Digital roadmaps do not align with execution
In response to the immediate impact of the pandemic, many businesses looked at building a digital strategy. The survey found that while building those roadmaps:
- 69% of businesses considered a digitalization strategy aimed at enhancing existing business processes with digital technologies
- But only 29% of businesses committed to a fully-fledged digital transformation strategy
- 48% of businesses with roadmaps committed to improving customer service
- Yet only 23% of businesses included external collaboration which would enable them to talk to the customers as part of their digital strategy
When exploring the execution of the digital strategy, the survey found a clear disconnect.
- 34% of businesses focused on investments to improve internal operations management, quality management, and warranty management
- 33% of businesses were looking at improving sourcing, procurement, and inventory management
- But only 18% of businesses invested in business systems to improve external collaboration
- Additionally, 50% of businesses chose not to invest in any systems at all and to rely on current systems to keep the lights on
As De Matos noted:
“When deep diving into the reasons behind the disconnect between digital strategy vs. digital execution, we found that 71% of businesses outsourced it to external service providers with no real understanding of the core business challenges or everyday reality of what was affecting the business.”
“Businesses now have an opportunity to reset for the future and revisit their digital roadmap with the assistance of trusted advisors and industry experts. Of course, the inclusion of external collaboration solutions will be key.”
Supply chains are not competing at a global level
When asked about technological investments:
- 47% of businesses had invested in sensors and IoT networks
- Yet only 20% of businesses had invested in data analytics tools to process and analyze the data that they were collecting
- And only 5% of businesses had looked into AI and ML to draw any long-term benefit from the data collection
“Business models as we know them are changing before our eyes. The classic model of company vs company is giving way to supply chain vs supply chain where simply selling a product is no longer good enough to survive in the long term. Manufacturers today should ideally assemble a team of companies to offer the best product and best service at the best price. To do this successfully, the right data insights are imperative,” states De Matos.
Customers are placed at the end of the supply chain and not at the center
When exploring the knock-on effect of the above challenges, it was not surprising that:
- Only 22% of businesses had experienced revenue growth, and
- Only 26% of businesses had achieved customer satisfaction over the past 12 months
“The customer experience can make or break a business. While businesses improved operational visibility through technological investments such as IoT or even looked into alternative eCommerce sales channels, the reality is that ongoing and real-time external collaboration with suppliers and customers is vital. A balance along the supply chain can be achieved when a customer is placed at the center of the supply chain, and their experience is not regarded as an afterthought. With real-time data insights into customer needs, improved revenue will soon follow,” said De Matos.