Skills shortage blocking digitization

A shortage of skilled personnel is the main obstacle to supply chain digitization, according to a new study by the Council of Supply Chain Management Professionals (CSCMP) and ToolsGroup.

The study found that while 93 percent of companies are actively engaged in digital transformation, 52 percent say the people/skills deficit is the number one obstacle standing in the way of their efforts.

With respondents’ top growth investment for 2022 being “increasing recruitment and training efforts”, this year’s study reveals the effect that current labour shortages are having on digital supply chain transformation.

Read more: Why raising wages alone won’t solve your labour shortage

“The survey results show that companies are charting a steady course toward digital transformation,” observed Mark Baxa, CSCMP president and CEO.

“As supply chain challenges become more frequent and intense, company leaders are increasingly focused on implementing solutions that can help them better manage risk, bypass skills shortage and become more resilient.”

From January to March 2022, CSCMP and ToolsGroup surveyed more than 300 supply chain professionals around the world.

External influences

While most companies started 2022 with a positive business outlook, they remain extremely concerned about external factors that have impacted supply chain planning strategies in the last two years. A quarter said supply chain delays were their top concern, 24 percent cited surging inflation, and 19 percent said escalating fulfillment costs topped their list of external concerns.

Respondents were less concerned about internal issues such as shorter product life cycles, risk of obsolescence, or more production options.

External factors also influence the 2022 objectives for digital transformation in supply chain planning. As a response to labour shortages and the “great resignation”, 51 percent of companies say they will increase automation in 2022 to focus staff on higher value activities.

At 47 percent each, developing better and faster reactions to unplanned disruptions and increasing supply chain resilience are the other top objectives for 2022.

Last year’s top objective – to keep up with evolving customer behaviors and expectations – has plummeted to number five in 2022, demonstrating just how profoundly external factors are disrupting all supply chain activities.

People are key

But while external factors are pushing the digital transformation initiatives, it’s the people factors that are perceived as the most critical success factors. Half of the respondents said a continued focus on people, process, technology and security implications is vital to delivering successful digital transformation results. Change management and effective communication were most important for 45 percent, and the need to develop leadership-driven goals was top of mind for 43 percent.

“The past two years have put a spotlight on the need for digitizing supply chain planning, and fortunately, more companies than ever are responding by stepping up efforts to transform their operations,” said Caroline Proctor, chief marketing officer at ToolsGroup.

“The percentage of companies that are not pursuing a digital transformation strategy at all is, at seven percent, the lowest we have measured so far. Our findings reveal increasing investments in software, automation and people.”