PwC Digital Trends in Supply Chain Survey 2022 (2024)

Near-term issues lead priorities as transformative actions largely wait

Increasing efficiency and managing or reducing costs in supply chainoperations top the list of priorities over the next 12 to 18 months by far, with a substantial majority of survey respondentsranking both among their top priorities.Both items are named as a number-one priority much more often than all others. For instance,managing costs is named as the number-one priority five times more than digitalupskilling, seven times more than increasing sustainability and corporate social responsibility and nine times more than manufacturing digitization and automation. This suggests that many companies are focusing more on the bottom line in the short term but have yet to make some of these potentially transformative actions a bigger focus.

As a testament to the ongoing disruption, a majority of surveyrespondents say that many attributes of their supply chains and supplierspose moderate or major risk for their companies. Securing raw materials and supplier operational issues top the list, but other areasstill are cause for concern. The overallresponse on risk is a stark contrast to how supply chain issues have influenced priorities, indicating that many companies are still in a defensive postureand are not yet leaning into such actions as increasing supplier diversity and transforming procurement practices.

Basic priorities far outweigh others that could help create value

From money to talent to tech, digitizing supply chains faces challenges

As companies continue to digitize supply chains,budget constraints remain the biggest hurdle, with nearly half of respondents ranking it among their top three challenges. But beyond dollars and cents, both talent and technology have posed problems with digitization in various ways, indicating room for improvement on both fronts.

Three out of ten respondents cite difficultygetting employees and teams to work differently as a top-three challenge, while nearly aquarter point to difficulties with the “digital native” talent needed to transform supply chains. On the tech side, a lack of understanding of business and technicalcapabilities, alongside software and hardware shortcomings with analytical and process capabilities also were top challenges.

With data becoming a more critical part of supply chain operations, companies generally didn’t report major challenges with their systems. But where there have been data-related issues, they haven’t been confined to any one area.Responses range from data management and data quality to data acquisition and manual data manipulation, with many other areas in between.

Money is the biggest concern in digitizing supply chains, but talent and tech also are challenges

Tech wins investment but isn’t fully delivering results

Emerging tech adoption in supply chain operations varies greatly, with cloud outpacing other technologies on the whole. Cloud also leads in planned investment, with more than a third of respondents saying their companiesare planning to invest at least $1 million. But technologies such as third-party analytics, scan and intelligent data capture,radio frequency identification (RFID) and the internet of things (IoT) are competitive at lower levels of investment.

While investments in supply chain technology have had benefits, four out of fiverespondents say they didn’t fully deliver the expected results. That’s a clear sign thatmore gains—whether in efficiency, productivity or customer experience—are possible.According to respondents, not getting the expected capabilities and needing more time to implement the technology are the top obstacles to full delivery of results, but other reasons are also cited.

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Why are tech investments in supply chains coming up short? Many reasons.

Employee retention and digital know-how test supply chains

Most companies report being satisfied with the talent in their supply chain operations and their investment in digital skills.However, as in other parts of the workforce, supply chain operations are seeing more employee turnover than before. That aligns with our recent PwC Pulse Survey in which 44% of chief operating officers and other operationsleaders say worker shortages and employee turnover will be one of their biggest operations challenges in 2022.

In addition, less than two-thirds ofrespondents say they have the necessary digital skills within their supply chain teams to meet future goals.Half say they anticipate the need for significant trainingand upskilling in digital, and two out offive say their companies will need to add more employees overall than they have now. As for operational systems changes, a substantial majority ofcompanies—about 65% to 70% across different supply chain areas—aren’t standing pat, and any changes are much more likely to be upgrades as opposed to replacing existing systems.

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Talent and skills are helping, but turnover is an issue

ESG is on the radar but not fully integrated into supply chains

As ESG becomes more critical in business strategies,supply chain teams see certain aspects as more challenging than others. Awareness of legislative and regulatory issues and identifying supplier risksare ranked as the top challenges, suggesting that many companies are still playing defense when it comes to ESG. That’s supported by a substantial majority ofrespondents who consider ESG issues either a minor challenge or not a current challenge at all.

Some respondentsdo say that ESG issues that aren’t a challenge today will become challenges in the coming years. But the current lack of prioritization of such areas as addressing stakeholder groups in ESG reporting, prioritizing racial and ethnic diversity in suppliers and deciding on an ESG framework and key metrics could leave those companies trailing competitors that are more proactive on purpose and sustainability.

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Supply chain functions are challenged by various ESG issues to different degrees