Study Uncovers Factors Driving Supply Chain Transformation

Press enter to search
Close search
Open Menu

Study Uncovers Factors Driving Supply Chain Transformation

By CGT Staff - 05/23/2018

A joint study from JDA Software and KPMG finds that retailers and suppliers are aggressively leveraging innovative technologies and strategic alliances to profitably improve speed to market and deliver a superior customer experience 

The “2018 Digital Supply Chain Executive Survey” finds that growing shopper expectations are driving investments on the retail side. Among suppliers, spending is being driven largely by the need for supply chain agility and innovation. Conducted in February by Incisiv, the survey involved 60 retail and manufacturing supply chain executives.

“Companies that offer the best customer experiences and service have raised the bar,” said Brian Higgins, KPMG's U.S. supply chain practice leader “Now, many [business to business] companies are expecting the same service levels as today’s consumers. How retailers and manufacturers are responding is a prevalent theme in our findings. It should come as no surprise that companies are investing in innovative technologies to remain relevant.”

Added Kevin Sterneckert, JDA's group VP, innovation strategy and solution marketing, “As Amazon extends from retail into manufacturing logistics, these industries recognize that the status quo for supply chains is no longer an option for success,”

One crucial finding is that more than half of companies cite real-time product visibility as a leading investment driver. Among retailers, end-to-end traceability (cited by 53% of respondents) and the ability to manage new fulfillment nodes (50%) are key considerations. Manufacturers are driven by the need to expedite innovation (40%), with lower cost to serve (33%) through improved planning.

Cognitive/predictive analytics is overwhelmingly viewed as the most disruptive technology due to its ability to influence all parts of the supply chain, including forecasting, fleet routing and inventory optimization. Retailers, however, rank cognitive/predictive analytics higher than manufacturers do. Manufacturers regard blockchain and autonomous vehicles as the most disruptive technologies, with half of companies planning to test these over the next two years.

When it comes to wearables, robotics-based automation, RFID and IoT/connected devices, many companies are conducting pilots. While fewer are testing AI/machine learning, a good number also regard this technology, along with IoT/connected devices, as highly disruptive.

Among retailers, cloud solutions are strong alternatives to on-premise systems and are becoming a de-facto option. The cloud provides greater agility and speed to market. Retailers that have been under pressure from companies like Amazon have embraced this change. Adoption has been growing at 15% annually, with cloud solutions no longer regarded as functionally inferior or less secure than on-premise solutions.

Manufacturers are more guarded when it comes to cloud solutions, their reluctance to embrace them often stems from perceived data security risks, the study finds.

Elsewhere, some retailers continue to lag when it comes to exceeding shopper expectations because they do not have a clear, integrated strategy. Top inhibitors include lack of management commitment (70%), limited IT budget (60%) and lack of an integrated strategy (30%).

Manufacturers, however, have the financial resources but struggle with internal decision-making. Fifty-seven percent cite resistance to change as a top barrier to supply chain investment. Decision making in the “rank and file” often is not streamlined. Plus, it's a challenge to change in a world where the CGs that traditionally called the shots are seeing their market share erode due to unexpected competitive forces.

JDA ranked among the top 10 solution providers in several categories, including Customer Relationship Management, Demand Data Analytics, Supply Chain Execution, and Supply Chain Planning in CGT's Readers' Choice Survey for 2018.