Almost 90 percent of supply chain execs say they face barriers to digitization

Almost 90 percent of logistics and supply chain executives say they face barriers within their own companies to adoption of technology.

A new survey released by Descartes Systems Group looked at how technology innovation is changing supply chain and logistics operations, and executives’ plans for investment. The study polled 1,000 supply chain and logistics decision-makers across nine European countries, Canada and the United State.

The report Supply Chain and Logistics Innovation Accelerates, but Has Long Way to Go, found that 59 percent of companies surveyed had accelerated the pace of innovation investment and deployment over the last two years. As well, 65 percent plan to increase their technology spending over the next two years. However, 87 percent indicated they still face internal inhibitors to supply chain and logistics innovation.

“The recent past has highlighted that supply chain performance can make or break companies and the need to innovate supply chain and logistics operations has moved to the forefront of many C-suite agendas,” said Chris Jones, executive vice-president, industry and services at Descartes.

“The study shows that, while efforts in supply chain and logistics innovation are accelerating, many companies are relatively early in their innovation journey in areas such as digitization and especially in the use of advanced computing technologies such as machine learning.”

Cost control

Over a third (37 percent) of those polled suggested that cost reduction and better reliability were the main reasons behind the push for technological innovation.

Order fulfillment and warehouse management were the top two areas of focus. Almost a quarter (24 percent) said WMS needed innovation, while 41 percent said order fulfillment was their top digitization initiative.

The study analyzes the connection between innovation and business success, the drivers of supply chain and logistics innovation, the expected benefits of innovation to companies, and the obstacles inhibiting the pace of innovation and innovation investment.

In spite of the large number who said they faced internal barriers, 43 percent said they felt their organization was ahead of the competition.

Executive commitment

The study found a correlation between executives’ commitment to innovation, the company’s financial success and employee turnover. “A higher level of senior management importance placed on supply chain and logistics innovation goes hand-in-hand with better financial performance and lower employee turnover,” the report said.

“Management focus, better financial support and a more stable workforce are critical for accelerating supply chain and logistics innovation. Conversely, a lack of senior management support and financial wherewithal and higher employee turnover are significant inhibitors to fostering innovation.”

Respondents who said that innovation was important to senior management were 20 percent more likely to be better financial performers and 13 percent more likely to experience lower employee turnover. Respondents who said they were better financial performers were 20 percent more likely to have senior management who believes innovation is important and 16 percent more likely to have lower employee turnover.

The study also examines where supply chain and logistics innovation is considered to be the strongest and the weakest, the degree to which key supply chain and logistics innovative technologies are deployed and innovation focus areas today and in the future. It  also provides insight into how the importance of supply chain and logistics innovation changes on a geo-demographic basis.