Just one in seven organisations have the ability and capacity to scale digital supply chain initiatives due to a major lack of focus, a new report has found.
Capgemini’s “The digital supply chain’s missing link: focus”, has revealed a significant gap between expectations of what supply chain digitisation can deliver, and the reality of what companies can achieve. The report shows that half of the surveyed organisations identify supply chain digitisation as one of their top priorities, 83% are still struggling to move beyond testing.
The Capgemini Research Institute surveyed supply chain executives from 1001 organizations across Consumer Products, Retail and Manufacturing industries, about their existing digital supply chain initiatives.
Return of Investment (ROI) seems to be key in driving the enthusiasm for focusing on digital supply chain initiatives. The research finds that ROI on automation in supply chain and procurement averaged 18%, compared to 15% for initiatives in Human Resources, 14% in Information Technology, 13% in Customer Service and 12% in Finance and Accounting, and also R&D. According to the report, the average pay back period for supply chain automation is just twelve months.
Most organisations appear stuck in the pilot stage, as only 14% have succeeded in scaling even one of their initiatives to multi-site or full-scale deployment. However, for those that have achieved scale, 94% report that these efforts have led directly to an uplift in revenue.
There’s also a gap in procedure and methodology between organizations that had and had not implemented digital supply chain initiatives at scale. The vast majority of companies to have successfully scaled said they had a clear procedure in place to evaluate the success of pilot projects (87% vs. 24%) and had clear guidelines for prioritizing those projects that needed investment (75% vs. 36%).
Dharmendra Patwardhan, Head of the Digital Supply Chain Practice for Business Services at Capgemini, added: “While most large organizations clearly grasp the importance of supply chain digitization, few appear to have implemented the necessary mechanisms and procedures to turn it into a reality. Companies are typically running too many projects, without enough infrastructure in place, and lack the kind of focused, long-term approach that has delivered success for market leaders in this area. Digitization of the supply chain will only be achieved by rationalizing current investments, progressing on those that can be shown to drive returns, and involving suppliers and distributors in the process of change.”