Transforming your supply chain

Supply chains are increasingly facing major disruptions, with the impact of COVID-19 at the top of the list

We recently carried out a global digital operations survey that asked manufacturers to take a closer look at how their supply chains are transforming in this evolving marketplace.

We surveyed more than 1,600 supply chain executives in 33 countries across the globe and investigated what capabilities allow companies to stabilise their supply chains and stand out as a ‘supply chain digital champion’.

The findings

The results showed that four out of five of respondents in the UK cut of the global digital supply chain survey, that have already implemented a supply chain capability, have seen a positive impact on their business. 

Managing profitability and supply chain security were seen as the two biggest challenges facing companies in the UK.

When transforming the supply chain, we believe there are four key areas firms should focus on:

Digital
Champions
2025

Successful in E2E connected and autonomous supply chain ecosystems

The vision

Tomorrow's supply chains will be connected and self-orchestrated ecosystems: More than 80% of Digital Champions describe their supply chain focus as external integration or end-to-end orchestration.

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The benefits

Investments into supply chain excellence pay off: Digital Champions achieved savings of 6.8% annually in supply chain costs, along with a 7.7% revenue increase.

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Supply chain transparency and sustainability

Supply chain transparency sets the stage and is a catalyst for greater sustainability: More than 50% of Digital Champions say that supply chain transparency is a high or top priority.

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Closed loop and integrated planning

Next-level planning is synchronised real-time with execution, integrates supply chain partners and enables continuous optimisation: 72% of Digital Champions have implemented end-to-end supply chain planning; they are also taking the next step towards closed-loop planning.

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Smart logistics flows

Smart logistics is the key savings driver and a growth lever in the connected supply chain ecosystem: Digital Champions rate smart logistics as their top supply chain priority. Smart logistics accounts for more than 50% of overall supply chain cost savings.

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Dynamic supply chain segmentation

Dynamic supply chain segmentation enhances customer centricity and continuously balances service levels, costs and margins: 73% of Digital Champions have already implemented segmentation and report a strong positive impact on their business.

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AI-driven supply chain management

Artificial intelligence is accelerating supply chain improvements and will become the new norm: Digital Champions have clearly identified the areas where AI brings value and use AI two to three times more extensively than Digital Novices.

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Operating model development

Mastering tomorrow's supply chain challenges through the next-level supply chain organisation and capabilities: To excel in a constantly changing environment, companies need to develop a flexible organisation with a digitally empowered and upskilled workforce.

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Key themes emerging

Supply chain visibility

77% of UK digital champions within Industrial Manufacturing have implemented solutions to gain visibility across their end-to-end supply chain and recognise it as a key priority, this compares with 62% of global respondents. 

The benefits of having invested in an advanced supply chain include lower costs, increased revenue and better supply chain performance. For example, almost two thirds of UK companies (39%) achieve an on-time in full delivery performance of >90% vs 84% of digital champions. 

While investment in advanced supply chain technology is marginally lower than in the UK, only 29% globally have implemented supply chain transparency and control tower processes, although it is expected to grow by a similar level to the UK (36%) over the next five years, there is still quite a way to go to achieve ‘digital champion status’.

Flexibility and agility through integrated planning and demand intelligence

According to the global results, 81% of digital champions have achieved external collaboration or end-to-end orchestration. They have moved to a more advanced state in the planning space with 14% of them having synchronised closed loop planning across the entire value chain. 

UK companies are behind the rest of the world in the move to achieving external collaboration and end-to-end orchestration across their supply chains - 26% vs 36% globally. End-to-end supply chain planning is only seen as a priority for one in five businesses in the UK at present; in fact, one third of UK companies have no plans to implement end-to-end supply chain planning or manufacturing execution systems despite them being indicated as a high priority.

Resilience and cost control leading to better risk management, improved sustainability and increased asset utilisation

Implementing greater supply chain transparency including near real-time visibility for product, financial and logistics information can help businesses to boost supply chain resilience and reach their sustainability goals.

47% of digital champions have implemented near real time visibility of supply chain execution through a control tower compared to 7% in the UK.

36% of UK companies see embedding advanced analytics as a key priority in developing the next level supply chain organisation vs 42% of digital champions.

Customers are increasingly seeking information about where their products come/are sourced from. Making products fully traceable not only increases quality, allowing companies to track all products and provide customers with the information they seek, but allows businesses to identify for example, when and where products or goods were damaged while in transit.

Digitisation - adoption of AI to accelerate supply chain improvements and smart logistics

67% of UK respondents use Artificial Intelligence (AI) in at least one area of supply chain with the three highest priorities being cost to serve, supply chain transparency and supply chain segmentation; this is only a little behind the global statistic and that of the digital champions. Due to the fact that AI is accelerating supply chain improvements, it will soon become the new norm.

Already, we have seen that over a third are implementing AI and/or machine deep learning (36%) to support supplier and customer integration and collaboration. 73% of digital champions have implemented supply chain segmentation, enhancing customer centricity and allowing them to continuously balance service levels, costs and margins.

To summarise

Supply chains and logistics are experiencing a once in a generation challenge as a result of the COVID-19 pandemic, as they respond to significant changes in supply and demand from customers, governments, business and suppliers. Throughout the pandemic the companies that have come out on top have demonstrated the innovation possibilities such as manufacturers switching to PPE production and supermarkets rapidly scaling up their home delivery capability for the vulnerable. 

Where companies made investments in near real-time digital data and decision making, joining up their end-to-end supply chain, they tended to fare better and were able to be more responsive to demand changes and build resilience into their supply chains.

With environments constantly changing, companies need to be able to continuously adapt and improve. In order to prepare against future issues and increase resilience, companies should apply this innovative mindset to their supply chains, it can directly support more responsive, integrated planning, transportation and sourcing. Take a fresh look at those plans you shelved for a later date and what emerging technologies could benefit your operations.

Contact us

Suzanne Jenkins

Suzanne Jenkins

Digital Supply Chain Lead, PwC United Kingdom

Tel: +44 (0)7715 211155

Oz Ozturk

Oz Ozturk

Partner, PwC United Kingdom

Tel: +44 (0)7703 563 054

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