Findings show that cost, talent hamper supply chain innovation

Executives want to invest in powerful new technologies and business innovations to improve their supply chains, but a shortage of qualified talent and never-ending pressure to cut costs are getting in the way, according to a new study by MHI and Deloitte Consulting LLP, “Innovations That Drive Supply Chains – The 2014 MHI Annual Industry Report.”

“Respondents clearly identified the need to rethink their approach to supply chain management,” says Scott Sopher, principal, Deloitte Consulting LLP and the leader of its Supply Chain & Manufacturing Operations practice. “In the past, organizations addressed supply chain challenges primarily through cost reduction and operational efficiency efforts. Today’s global supply chains require a new focus on technology and innovation as well as a willingness to invest in these areas for the long term.”
 

Cost reduction chokes investment

Lowering operating expenses is still the No. 1 priority for most supply chain executives. More than 70% of respondents say that controlling costs is a top consideration for their companies and their customers.
 

Talent shortage hurts

Companies need supply chain talent with the right skills, experience, and mindset to harness the value of supply chain innovations. These days, that kind of talent is hard to find. More than 65% of respondents indicate that process, technology, and skillset gaps exist within their companies.
 

Sustainability squeezed

The traditional focus on cost cutting is squeezing out innovations in sustainability, even though executives believe these investments are important. Nearly four out of five respondents (79%) feel that sustainability is at least “moderately important.” More than 60% of respondents indicate that significant capability gaps exist, which may prevent them from effectively implementing sustainability programs in their companies and with their clients.
 

M2M technology

Mobility and machine-to-machine (M2M) technologies can improve responsiveness and customer service by providing supply chain workers with information – whenever and wherever they need it. Nearly three-fourths (73%) of respondents say their companies will continue to invest in this area, with nearly half planning to increase their investment over the next three years.
 

3D printing

Additive manufacturing – 3D printing – could revolutionize production processes and have far-reaching implications for product supply chains. However, executives in this study do not see immediate potential for the innovation. Only 17% of respondents view 3D printing as a strategic priority, while 70% of respondents say 3D printing is not a key consideration.

MHI
www.mhi.org

Deloitte Consulting LLP
www.deloitte.com

Download “Innovations That Drive Supply Chains – The 2014 MHI Annual Industry Report” at www.mhi.org/publications/report.