Only 28% of manufacturers already use digital technology to improve their supply chains; many others are still in the early stages of deploying or planning digital supply chains, a new study from Deloitte and The Manufacturers Alliance for Productivity and Innovation finds.

There’s a lot of new digital supply chain and e-commerce technology available or under development for manufacturers, including artificial intelligence, blockchain, cloud computing, and predictive analytics, to name a few.

But even as manufacturers have big ambitions and concrete reasons for why they will apply more digital tools to better web-enable and automate their supply chains—such as procuring products online and improving product data—most are just getting started with digital technology projects or plans, according to a recent study based on a survey of 200 manufacturing companies by consulting firm Deloitte and trade group The Manufacturers Alliance for Productivity and Innovation (MAPI).

While many companies are aware of the benefits, a majority still remain slow to fully embrace a digital shift.
Stephen Laaper, analyst
Deloitte

Today, only 28% of manufacturers have implemented what Deloitte and MAPI call a “digital supply chain network” transformation, compared with 33% that say they are “prioritizing it among our strategic objectives,  32% that plan to start implementing a digital supply chain in the next year and 7% that have no plans, according to the Deloitte/MAPI study, “Embracing a digital future: How manufacturers can unlock the transformative benefits of digital supply networks.”.

“While many companies are aware of the benefits, a majority still remain slow to fully embrace a digital shift,” says Stephen Laaper, a principal with Deloitte and head of its digital supply network practice. The study describes a digital supply chain network, or DSN, as being able to integrate data from disparate sources and locations “to drive the physical production and distribution of manufactured goods.”

Lack of funding is listed by 33% of manufacturers as the biggest barrier or challenge to launching more digital supply chain and B2B e-commerce technology, followed by data fragmentation (32%), lack of strategy (27%), and no data ownership (26%). Another key challenge is finding and hiring skilled employees—30% of manufacturers say they are having trouble either in finding talent—or in training their current workforce. “Two thirds of current manufacturing employees lack the computing, technical and problem-solving skills necessary to function in increasingly advanced production facilities,” the survey says. “We estimate that as many as 2 million U.S. manufacturing jobs are likely to be unfilled over the next decade.”

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But even with challenges and seemingly slow implementation, manufacturing executives see clear cut reasons for wanting to be more digital, according to the survey. The top initiatives for companies rolling out more digital and e-commerce tools include:

  • Demand and supply planning synchronization—38%
  • Technology infrastructure improvement—36%
  • Security or risk assessment—33%
  • Product quality improvement—31%
  • Aligning digital initiatives with business goals—30%
  • Digital procurement—30%
  • Applying visualization and predictive analytics—28%

“The top three initiatives that manufacturers are focused on, are planning and synchronization, infrastructure and risk,” Laaper says.

Getting a better handle on measuring and analyzing data through advanced analytics to improve supply chain efficiency is the top digital feature listed by 40% of manufacturers, according to the survey. Other advanced technologies included cloud computing (40%), modeling and simulation (34%), Internet of Things platform (33%), predictive analytics (32%), sensors and controls (27%) and artificial intelligence 26%).

“Smaller companies with annual revenue of less than $1 billion are investing most heavily in advanced analytics while larger companies with annual revenue of more than $5 billion are more focused on the cloud,” the report says.

“DSN is still very much an emerging field that many organizations have not yet fully embraced or taken the time to understand,” the study says. “While the executives we surveyed showed near-universal interest in the benefits that DSNs can provide, their responses also revealed that many organizations face several internal and external challenges before they can realize the full potential a DSN can offer.”

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