SYDNEY – 4 April 2022. SYSPRO, a global provider of ERP software, has announced new research findings from their latest global research survey, which explores the challenges and solutions to ongoing supply chain disruptions that manufacturers and distributors face today.
Conducted towards the end of 2021, the online survey assessed the sentiment of 163 manufacturing and distribution industry professionals of different managerial levels within EMEA, the Americas and APAC regions. The report reveals four key themes and illuminates the need for a long-term digital strategy that incorporates improved customer centricity, external collaboration and data driven decision-making to engineer a bounce-back.
Theme one: The disconnect between the investment in internal efficiencies and external collaboration
With global lockdowns and ongoing disruptions driving increased pressure, it comes as no surprise that 70% of businesses experienced supply chain disruptions over the last few years. Concurrently, 60% of businesses were unable to engage and collaborate with customers and suppliers in real-time. As a result, those businesses were often unable to deliver to their customers.
Pre-pandemic technology investments and outdated business models had been partly to blame for these ongoing challenges. In response to pressures, businesses have invested in short-term technology solutions to address the immediate impact of the pandemic. Even though 65% of businesses invested in business systems aimed at meeting order requirements and 64% of businesses invested in business systems to manage inventory control, the supply of inventory was not protected.
According to Paulo De Matos, Chief Product Officer at SYSPRO, “While the investment in internal efficiencies is crucial for any business, customer and supplier engagement should also be a top priority. What we are seeing now, is a knock-on effect of supply chain disruptions. It won’t matter how businesses try to up their game internally, if they are unable to communicate effectively with their external ecosystem and respond to shifts in the supply chain, businesses may fall behind.”
Theme two: Digital roadmaps do not align to execution
In response to the immediate impact of the pandemic, many businesses looked at building a digital strategy. The survey found that while building those roadmaps, 69% of businesses considered a digitalisation strategy aimed at enhancing existing business processes with digital technologies. However, only 29% of businesses committed to a fully-fledged digital transformation strategy.
Within the roadmaps, 48% of businesses committed to improving customer service, yet only 23% of businesses included external collaboration (i.e. the ability to talk to the customers) as part of their digital strategy.
When exploring the execution of the digital strategy, the survey found a clear disconnect. With 34% of businesses focused on investments to improve internal operations management, quality management and warranty management, and 33% of businesses looking at improving sourcing, procurement and inventory management, only 18% of businesses invested in business systems to improve external collaboration. Additionally, 50% of businesses chose to not invest in any systems at all, and to rely on current systems to keep the lights on.
As De Matos noted “When deep diving into the reasons behind the disconnect between digital strategy vs. digital execution, we found that 71% of businesses outsourced it to external service providers with no real understanding of the core business challenges or everyday reality of what was affecting the business. Businesses now have an opportunity to reset for the future and revisit their digital roadmap with the assistance of trusted advisors and industry experts. Of course, the inclusion of external collaboration solutions will be key.”
Theme three: Supply chains are not competing at a global level
When asked about technological investments, 47% of businesses had invested in sensors, and IoT networks. At the same time, only 20% of businesses had invested in data analytics tools to process and analyse the data that they were collecting, while only 5% of businesses had looked into AI and ML to draw any long-term benefit from the data collection.
“Business models as we know it are changing before our eyes. The classic model of company vs company is giving way for supply chain vs supply chain where simply selling a product is no longer good enough to survive in the long term. Manufacturers today should ideally assemble a team of companies to offer the best product and best service at the best price. To do this successfully, the right data insights are imperative,” states De Matos
Theme four: Customers are placed at the end of the supply chain and not at the centre
When exploring the knock-on effect of the above challenges, it was not surprising that only 22% of businesses had experienced revenue growth and only 26% of businesses had achieved customer satisfaction over the past 12 months. “The customer experience can make or break a business. While businesses improved operational visibility through technological investments such as IoT or even looked into alternative eCommerce sales channels, the reality is that ongoing and real-time external collaboration with suppliers and customers is vital. A balance along the supply chain can be achieved when a customer is placed at the centre of the supply chain, and their experience is not regarded as an afterthought. With real-time data insights into customer needs, improved revenue will soon follow,” states De Matos.
“Overall the study showed that your digital roadmap should be carefully aligned to changing business needs, to address ongoing challenges. Reverting back to old business models or investing in technologies to keep the ‘lights on’ will no longer suffice. An ERP system can support manufacturers and distributors to digitalise by providing the platform that resolves the biggest areas of impact; implementation and automation of business systems to handle procurement and sourcing policy changes, distribution and lead time planning; and analytics providing data real-time to support improved decision-making. While there has been downtime, manufacturers have the opportunity now to make a change to improve operational efficiency and thrive now and into the future,” concludes De Matos