Workforce and Risk Mitigation Are Still Top Priorities for Supply Chains

A new report released today by MHI, an international trade association representing material handling, logistics and supply chain industry) and consulting firm, Deloitte, finds that 74% of supply chain leaders are increasing their supply chain technology and innovation investments with 90% saying they are planning to spend over $1 million, an increase of 24% over last year. Thirty-six percent plan to spend over $10 million, up 19%.

This investment includes solutions for improved supply chain transparency and sustainability, according to the downloadable 2023 MHI Annual Industry Report, “The Responsible Supply Chain: Transparency, Sustainability, and the Case for Business.” The report provides new insights into trends and technologies that are transforming supply chains and the priorities of the people who run them.

The 2023 report, the tenth in a series of annual industry reports published by MHI and Deloitte, provides updates on the innovative technologies that have the most potential to transform supply chains into more transparent, sustainable, and responsible operations.

“Responsible supply chains must react in real-time to changing conditions, this requires actionable data, automation and automated decision-making,” said John Paxton, CEO of MHI.

“Investments in automation and other digital solutions like IoT, advanced analytics and AI not only arm your operations with speed, accuracy, and improved visibility. These solutions enable the real-time decision-making and transparency necessary for reporting and improving performance up and down the responsible supply chain.”

Workforce tops list of supply chain challenges, disruption a close second

Once again, hiring and retaining qualified workers (57%) and the talent shortage (56%) were the top supply chain challenges cited by survey respondents. However, this was followed closely by supply chain disruptions (54%), out-of-stock situations (52%) and customer demands (52%).

The worker shortage is spurring companies to invest in technologies that improve agility and efficiency and reduce the need for repetitive, manual labor. These investments create the kind of advanced technology environment that results in more rewarding supply chain jobs that appeal to today’s top talent.

This could provide a new path to upskilling current employees and attracting new talent – creating a more modern, capable workforce that can quickly adapt and adjust to changes in the technology and market landscape.

Forty-one percent of respondents are reskilling/upskilling workers for emerging technologies, 34% are recruiting for skillsets for future needs and 27% are working to create a culture of innovation.

“Tech investment is only part of the equation,” said Paxton. “Having an innovative culture and the right people in place to implement innovation and to bring it all together to exceed your customer demands and expectations – whether they are fast delivery, personalization, low cost, delivery transparency or sustainability goals.”

To prepare for supply chain disruption and build transparency, collaboration is key

Company leaders understand that planning for digital supply chain investments now is the only way to create a strategy to win the future – a future where supply chain disruption will be the norm. As a result, 49% are partnering with vendors to understand application/benefits and 31% are piloting new technologies.

Previously, companies could succeed by primarily collaborating with a small set of suppliers and distributors. However, the supply shocks of the past few years vividly illustrated that a broader approach to collaboration and data sharing is needed to achieve true transparency, sustainability, and resiliency.

Increased focus on sustainability

Supply chain companies are faced with increasing pressure to become more environmentally responsible and sustainable. In fact, nearly half of this year’s survey respondents (48%) say they face increased influences to adopt a more sustainable supply chain. The pressure is coming from many angles, including consumers, regulators, industry groups, traditional and social media, and other stakeholders that increasingly expect brands and their supply chains to adhere to their own high standards.

According to the survey, the top focus areas for sustainability are electrification (40%), natural resource management (29%), water usage (27%), and transition to renewables (27%). However, only 23% of respondents have made Scope 3 emissions a top focus of their sustainability efforts.

With so much valuable new data being generated by supply chains, the ability to share that data securely and transparently has become a strategic priority. Scope footprinting, target setting, abatement and disclosure for sustainability simply isn’t possible without collaboration up and down the supply chain and the availability of accurate and reportable data. Additionally, achieving true end-to-end supply chain transparency requires the same.

“As leaders, we must drive transparency and coordinate change across the end-to-end supply chain as we work collaboratively to reduce Scope 3 emissions and move toward the circular economy,” said Paxton. “Sustainability will become a key competitive advantage in the future. Investments in sustainability and transparency help reduce risk exposure and build loyalty with customers and employees alike.”

The report includes a Climate Readiness Assessment to help companies evaluate their operations’ maturity across five modules of climate with a brief diagnostic that can provide a snapshot of an organization’s climate maturity. Upon completion, the user is classified into one of 6 climate profiles.

“Supply chain companies embarking on their sustainability journey will need input from across their organization to support reporting,” said Wanda Johnson, Specialist Leader, Deloitte Consulting. “Embracing circularity, reducing environmental impacts, regenerating nature, and embedding equity should all be coded to their DNA and driven from the top down for them to be successful.”

The report also provides real-world case studies of digital supply chain technologies and recommendations for leaders for developing strategies to implement these innovations. The report ends with a report on Supply Chain 2033 with predictions on what will be the future state of supply chains.

The findings of the 2023 report are based on survey responses from over 2,000 manufacturing and supply chain industry leaders from a wide range of industries at the end of 2022. Eighty-three percent of respondents hold executive-level positions such as CEO, vice president, general manager, department head or engineering management. Participating companies range in size from small to large, with 74% reporting annual sales of more than $50 million, and 8% reporting $1 billion or more.