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Bridging the Digital Divide in Supply Chain (Part 2)

By Josh Collins | January 7, 2019

In our last blog post, we discussed how we surveyed 98 middle- and senior-level managers so we could learn more about the current attitudes and progress towards digital transformation within the supply chain and logistics industry. Much to our surprise, only 15.3% of respondents were confident in their market leadership to implement digital technologies. And 50% reported they aren’t implementing any new technologies, showing the large divide when it comes to digital maturity.

Now, in part two of this three-part series, we will dive into discussing the greatest opportunities for digital transformation as well as the importance of company culture in innovation.

Plentiful Opportunities for Innovation

What aspects of the business are primed for change? We started by asking respondents where they saw the greatest opportunity for digital technologies when it comes to supply chain and logistics at their respective organizations. Overall, back office efficiency (25.5%) was the most popular answer, closely followed by customer interface and user experience (24.5%), and business intelligence (22.5%).

26% SEE BACK OFFICE EFFICIENCY AS ONE OF THE BIGGEST OPPORUTNITIES.

Across all of these areas, there is potential to save businesses significant time and money—as well as to grow customer loyalty. However, when operating within tight margins, we’ve seen that some supply chain professionals can be hesitant to invest digitally. Less wiggle room in the budget and timeline can make it feel as if there’s no room to innovate. That being said, the risks that are associated with stagnation can put the business in even more jeopardy long-term, making innovation that much more important short-term.

The Critical Importance of Culture

Clearly there’s no shortage of opportunities for digital growth, but unlike other industries, this space also has less trouble managing technical debt. Only 4.1% of respondents felt strongly that their existing technology deployments are holding them back from new innovations. A whopping 67.4% don’t see their current technology deployments as an issue.

67% DON’T SEE THEIR CURRENT TECHNOLOGY AS AN ISSUE.

Time and time again, through our work with various global brands, we’ve found that companies with lagging digital maturity around the supply chain don’t have an issue with technology—rather, their biggest roadblocks come back to culture issues around digital transformation.

Traditionally, leaders that do well in supply chain and logistics are process-centric, as opposed to product- or technology-centric. As we’ve seen working with these teams, even among leaders that are technology-savvy, their core competency is their own hardware solutions. They simply don’t have the expertise or visibility across business functions to spark the start of digital transformation.

A culture of innovation around new digital technologies simply isn’t there—and these cultural obstacles began rising to the surface when we asked respondents about specific challenges their organizations encountered when trying to implement new technologies. A lack of enthusiasm or support for change was cited by 23.5% of respondents followed by 27.6% who cited unrealistic budgets, pointing to an overall lack of appetite for change.

28% SITE UNREALISTIC BUDGETS AS AN OBSTACLE.
24% SITE LACK OF SUPPORT AS AN OBSTACLE.

Interestingly enough, 23.5% indicated that they’d encountered issues with legacy technology or infrastructure when looking to implement new technologies. Contrasted with the 4.1% we mentioned earlier who felt their existing technology is holding them back, it appears that those problems with legacy infrastructure largely come to the surface only when digital transformation gets underway.

This challenge is, in all likelihood, compounded by the fact that 18.4% of respondents say a lack of in-house technical skill holds them back from implementing new technologies. Although supply chain teams can be technology-savvy when it comes to their own products or hardware, they usually aren’t built to roll out new software deployments or the logistical tools needed to support them.

Inaction can feel like the safer road forward, but in reality, it’s the riskiest long-term strategy a business can take. Making the decision to move forward with innovation and digital transformation is the first step toward finding stability and success. To learn more about how to take this first step forward, check back for the final post in our three-part “Bridging the Digital Divide in Supply Chain“ blog series, or download the entire 12-page report.

Our team is always here talk through your digital transformation goals and obstacles. Reach out to us so we can help get you started on your journey.

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