Blue Yonder’s 2024 Supply Chain Executive Survey reveals the many shared challenges and trends that continue to impact businesses worldwide. Once again, supply chain disruptions, rising costs and sustainability pressures proved top of mind for many. Unsurprisingly, the combined impact of all these issues has served to hit the bottom line, with almost half (46%) of global organisations confirming that profit margins are down.
To address these challenges and regain a degree of control, supply chain leaders are turning to innovative technology solutions to elevate end-to-end capabilities and make their supply chains more resilient, sustainable and agile.
Let’s take a look at what they are doing, and why.
The top twin challenges: disruptions and rising costs
Dealing with disruptions remains the number-one challenge facing today’s supply chain teams. In addition to raw material shortages (48%), delivery lags from suppliers (47%), labour shortages (44%) and transportation capacity restrictions (41%), senior executives cited issues resulting from extreme weather conditions, shipping route changes and geopolitical unrest.
Asked to evaluate how these disruptions had impacted their business, senior decision makers identified a number of negative outcomes including delays for customers (42%), production stoppages (42%), regulatory compliance issues (39%), reputational or financial damage (38%) and an inability to meet customer demand (38%).
In addition to managing frequent disruptions, supply chain organisations also confirm that soaring cost inflation is putting profitability under pressure. Globally, rising transportation costs (38%) and raw material costs (34%) were identified as the two most significant issues generating supply chain stress.
These combined challenges have had a significant commercial impact, with almost half (46%) of organisations globally reporting a decline in profit margins. Firms operating in the US appear particularly hit by these ongoing supply chain vulnerabilities, with 60% reporting decreased margins.
In response, many firms are doubling down on sustainability initiatives in a bid to reduce waste and excess and, by doing so, gain greater control of their cost base.
Sustainability: a strategic investment
Maximising sustainability across the supply chain is now a key focus for supply chain firms, with nearly half (44%) increasing their investment in sustainability initiatives last year.
Reducing waste and excess – including production, inventory and raw materials – was the top sustainability goal for 57% of senior executives. Meanwhile, 55% said their primary focus was increasing transportation efficiency, optimising fuel usage, redesigning network and transportation routes and creating greener fleets.
In addition to the pursuit of initiatives that boost efficiency and reduce the consumption of resources, and thereby lower operational costs, supply chain organisations are also looking to improve supplier sustainability (46%), enhance the returns process (34%), and innovate product design for enhanced reuse/circularity (34%).
To accelerate these sustainability initiatives, and optimise supply chain decision-making at scale, more and more organisations are increasing their investment in AI technologies. The reason – so they can improve supply chain efficiencies (53%), reduce disruptions (37%) and increase profitability (29%).
AI and supply chains: navigating uncertainty with enhanced insight and agility
The survey shows the extent to which supply chain organisations are already harnessing AI technologies to drive efficiencies, augment decision-making, and speed up how they pivot in the face of unexpected or disruptive events.
Over half of supply chain organisations have deployed AI and ML solutions to improve the performance of supply chain activities such as planning (56%), transportation (53%) and order management (50%). Furthermore, 80% currently have generative AI initiatives underway, having either fully (12%) or partially (33%) completed these implementations or are running pilot programmes (35%).
Asked to evaluate the success of their generative AI programmes to date, 91% of firms stated these technologies are having a measurably positive impact when it comes to optimising supply chain processes and enabling improved decision-making.
So much so, that 86% of all survey respondents confirm they plan to increase their investments in AI, ML and generative AI in the coming year. The top motivations for these investments include boosting supply chain visibility (43%), driving automation (40%), optimising supply chain planning (35%), elevating supplier and partner collaboration (27%) and improving last mile delivery (25%).
Reimagining the future: digitalising the supply chain
Persistent and ongoing challenges are spurring organisations to digitally transform their supply chains so they can synchronise decision making in near real time and leverage data to drive smarter end-to-end resource planning and utilisation.
Changing how organisations execute their sustainability strategies, manage unexpected events and empower their personnel with insights – such as disruption predictions and course-correction recommendations – supply chain decision-makers are increasingly relying on AI technologies to power their organisation’s future success.
Looking ahead, supply chain executives have clear strategic investment objectives in their sights. In the coming year their top functional areas for targeted advanced technology adoption include transport management systems (49%), advanced warehouse management systems (41%), sales and operations planning (37%) and integrated demand and supply planning capabilities (34%).
- AI in Supply Chain
