Digitalization, Sustainability, Cost Pressure: New Challenges in SCM

121 supply chain managers were surveyed about current challenges and risks in their supply chain management – with exciting results also regarding the economic location Germany. We have summarized the most important points.

Although global supply chains show signs of relaxation compared to previous years, many companies still face strong disruptions that threaten the resilience of their supply chain. A study by the international consulting firm Deloitte on current challenges in the supply chain shows that more than half of the respondents (53 percent) still report interruptions in information, financial, or goods flows. But what exactly leads to impairments in work processes? For this topic, 121 supply chain managers from Germany were surveyed, predominantly from the chemical, automotive, and machinery/industrial goods sectors. The majority of survey participants (79 percent) work in companies with more than 250 employees.

While it was primarily a shortage of resources that led to disruptions in the supply chain recently, it is now, among other things, rising energy and raw material prices that create additional pressure in many companies. More than three-quarters of respondents (77 percent) report that the level of purchase prices has increased and that they feel this significantly. More than a quarter (27 percent) of the surveyed companies reported a decline in revenue due to supply chain problems, and over half (52 percent) reported losses in profit. At the same time, more than three-quarters of respondents are exposed to strong or even very strong impairments due to cost increases in energy supply (78 percent) or inflation (76 percent).

New requirements, such as the implementation of the Supply Chain Act that has been in effect since January, currently pose challenges for every second company in supply chain management, according to the study.

To address these challenges and make their supply chain more resilient, the surveyed industrial companies mention the following measures:

• More than three-quarters of companies (77 percent) consider the topic of sustainability to be very relevant for strengthening their supply chain in the long term.
• Almost half (47 percent) see digitalization as an extremely important measure to counteract problems in work processes.
• Optimizing efficiency and cost management is also relevant for many to better cushion crises in the future (37 percent).
• About one-fifth attach particular importance to transparency and communication (21 percent).
• 16 percent see more agility and adjustments of the supply chain as suitable measures for more resilience.

Other countermeasures that companies have already implemented or initiated include multisourcing, increased inventory (68 percent), and a holistic supplier management (67 percent).

Based on the current situation, almost one in three surveyed companies plans to introduce cross-supply chain data exchange, more monitoring, and risk analyses in the future (29 percent): Because those who have a clear overview of the individual steps and processes in the supply chain and work closely with other companies can identify risks early through real-time data monitoring and minimize them efficiently. Almost half of the surveyed companies (47 percent) have already recognized the importance of digitalization for strengthening the supply chain. It is surprising that only about one in five study participants mentioned transparency as relevant for resilient work processes. This factor should not be underestimated: a shared view of the supply chain is a significant basis for efficiency, risk management, and cost control. Especially real-time monitoring of individual process sections allows for flexibility and timely intervention in processes in case of obstacles. This way, disruptions can be avoided in critical situations, preventing time losses and cost increases.

To secure productions and strengthen supply chains in the long term, the surveyed companies also wish for government support for key technologies, more investments in education, infrastructure, and digitalization, as well as generally less bureaucracy in work processes. The study shows that extensive measures are necessary to successfully address current and future crises. In this context, a strategic supply chain management is gaining importance once again: Companies can equip themselves against supply chain problems with professional risk management, more transparency, and collaboration and thus sustainably strengthen their competitiveness.

Further results of the Deloitte study "Supply Chain Pulse Check 2023" can be viewed here free of charge.