Talent And Technology: Challenges And Opportunities In Supply Chain Management

The modern supply chain landscape has evolved quite a bit in recent years. Economic issues, increased costs of goods and services, shortages of raw materials, and many other factors create constant uncertainty for manufacturers. As businesses strive to make needed improvements in this complex environment, integrating digital technologies and developing a skilled workforce are becoming crucial factors.

PwC recently released its 2024 Digital Trends in Operations Survey, which surveyed 600 operations and supply chain officers. The research found that 69% of operations and supply chain officers report that their technology investments have not fully achieved the anticipated outcomes, highlighting a significant gap between investment in digital transformation and its effective execution.

In other words, while businesses are investing in digital technologies to improve their supply chain operations, they are struggling to realize the expected benefits of these investments fully. This suggests that a more strategic and effective approach to digital transformation in the supply chain is needed.

Modern supply chains are navigating an era of unprecedented uncertainty, primarily influenced by the complexities of a global economy fraught with challenges. The rise in inflation has emerged as a key factor, significantly impacting the cost structures of businesses across industries. This inflationary pressure not only drives up the costs of raw materials but also affects labor and operational expenses. This pushes companies to adapt their strategies to maintain market competitiveness and profitability constantly.

These economic pressures have led to increased costs of goods and services. Companies are at a crossroads, deciding whether to absorb these additional costs or pass them on to consumers. This decision can significantly impact consumer behavior and market demand.

To navigate this situation, manufacturers closely examine their processes to identify supply chain optimization and efficiency opportunities. Implementing innovative, technology-driven solutions is a critical piece of the puzzle regarding reducing costs and maintaining competitiveness.

What is interesting is that when you dive deeper into these organizations' overall digitization goals, you find that they are focusing on less strategic objectives.

Digitization goals that could have a longer-term impact aren’t taking priority:

• 55% - Driving growth
• 54% - Reducing costs
• 53% - Improving speed and quality of decision-making
• 40% - Exploring and piloting new innovations
• 35% - Increasing resiliency
• 30% - Implementing different business model(s)
• 29% - Simplifying legacy technology

Of all the technologies, it is no surprise that generative AI continues to pick up speed as one of the technologies driving the most interest, yet is is still not widely adopted.

Digital transformation within supply chains is not just about technology adoption but also about aligning these innovations with strategic business goals. Research shows that many companies have invested in more than one technology to digitize operations, including cloud, AI, and machine learning software. Yet, more than two-thirds say their investments have not delivered the expected results.

The top five reasons why operations professionals say they aren’t getting what they expect from technology investments include:

• 30% - Integration complexity
• 28% - Technology didn’t meet expectations
• 27% - People capabilities
• 26% - Data issues
• 25% - Vendor capabilities

This creates concern because the supply chain is constantly changing and evolving, so if businesses cannot realize the impact of technical investments, they may become stuck in a dated environment. The inflexibility of those situations can hinder their ability to keep up, ultimately making them irrelevant in the market.

Artificial intelligence (AI) and machine learning (ML)

AI and ML have immense potential to transform supply chains. These technologies can analyze complex datasets, forecast demand with great accuracy, and identify logistics and inventory management efficiencies.

For example, AI-powered analytics can predict supply chain disruptions before they occur, enabling companies to mitigate risks proactively. However, realizing the full benefits of these technologies requires businesses to find and/or develop a workforce with the necessary data and analytics expertise.

IoT for real-time insights

The internet of things (IoT) is another technology transforming supply chain management. IoT devices throughout the supply chain provide real-time data on product movement, environmental conditions, and operational efficiency. This data can drive significant improvements in product quality, customer satisfaction, and environmental sustainability.

However, effectively using IoT requires not only technical know-how but also strategic vision to integrate these insights into the organization's decision-making processes.

Unified systems for one true source of information

Companies frequently juggle various independent software systems to support planning, production, warehousing, inventory management, and beyond. It's not uncommon for businesses to manage critical information across 10 or more disparate systems. This can break a seamless flow of information, compromising its accessibility and accuracy.

The ability to easily communicate supplier, demand, and production scheduling information is crucial for strategic decision-making. Unfortunately, data passed between disconnected systems is prone to miscommunication and mistakes, leading to inefficiencies or severe errors that can significantly impact a business financially.

The solution lies in finding integrated enterprise resource planning (ERP) solutions that consolidate critical business processes into a unified environment, from sales and purchasing to inventory management and shipping. This integration reduces errors and serves as a single source of truth, enabling businesses to make informed decisions based on real-time data. This enhances their agility and adaptability in today’s dynamic market environment.

Digital and automated processes

As businesses evolve, automation has become a cornerstone for maintaining operational efficiency, a need that current supply chain challenges have only amplified. The reliance on manual processes burdens employees with monotonous work and poses a risk of costly errors, ultimately obscuring visibility and delaying decision-making.

The traditional mantra of “the way things have always been done” is no longer acceptable. The transition to technology-enabled automation throughout business operations can significantly improve data reliability so businesses can respond to demand changes faster and stay ahead of supply chain challenges.

Automating processes is up-leveling how businesses manage operational performance and cost management. They can quickly provide critical information through cross-application analysis and intelligent alerts.

This shift streamlines operations and enables businesses to respond proactively to the evolving supply chain landscape, ensuring their continued competitiveness.

Integrated quality control technology

Quality control (QC) within the framework of digital transformation is becoming increasingly critical, especially in high-stakes sectors like food manufacturing.

Cloud-based enterprise resource planning (ERP) solutions allow manufacturers to implement robust quality control technologies. These systems minimize the risk of product recalls and liability issues by providing precise tracking and tracing of every material down to the smallest production units. This helps reduce contamination, mislabeling, or the absence of labels.

Maintaining high-quality control standards requires continuous improvement. Leveraging cutting-edge technology through ERP solutions is an effective strategy for achieving this goal and ensuring safety and compliance.

Inventory management

Effective inventory management involves overseeing stock levels, ranging from raw materials and components to work-in-progress (WIP), finished goods, and maintenance, repair, and overhaul (MRO) supplies. It strikes a critical balance, ensuring there's neither an excess of stock resulting in waste and unnecessary storage costs, nor an inability to meet customer demand. Challenges such as over-ordering, managing warehouse space efficiently, and adapting to rapid market changes require the function's complexity.

Sophisticated inventory management systems can harness data for consumer trend analysis, sales forecasting, and optimizing warehouse space. With it, businesses can significantly enhance operational efficiency, improve inventory visibility, and boost customer satisfaction.

Smart traceability and tracking

The unpredictability of supply chain disruptions amplifies the need for end-to-end tracking of goods throughout the journey. The lack of visibility risks late arrivals of materials and can jeopardize a company’s ability to fulfill orders. It is essential to promptly inform customers of any shipping changes, as delays in product receipt can lead to inventory pile-ups, stalling future production efforts.

Manual tracking is sufficient for the complex modern supply chain. Companies need software with material requirements planning (MRP) functionality to ensure the timely availability of necessary materials for production. MRP helps facilitate clear team communication about inventory statuses, supporting efficient order placement and maintenance. Companies can mitigate future supply chain challenges by proactively upgrading processes and adopting end-to-end business management solutions, regardless of market conditions.

Adapting to ecommerce demands

Online shopping, boosted by the pandemic, demands that businesses provide an online buying option, making an online experience a competitive advantage.

By using customizable and easy-to-navigate software, businesses can improve the shopping journey, streamline checkout processes, and build consumer trust. This approach to ecommerce can enhance customer loyalty and prevent them from turning to competitors.

The transformation of supply chains through technology also raises the critical issue of effective talent development.

Furthermore, the research identified that:

• 87% of companies are upskilling their workforce on how to use digital technologies
• 80% state they are retraining employees for new roles.

Effective talent management in the digital era involves upskilling existing employees, attracting digital-native talent, and fostering a culture of continuous learning.

The changes happening in supply chains show us that old ways of working with suppliers no longer hold up. With the economy being unpredictable, costs rising, and supply chains being disrupted, finding smarter, cost-effective ways to work has become crucial.

It’s now more important than ever for manufacturers and suppliers to work together closely rather than sticking to the old, siloed ways. More value will come from working through tough times together, ensuring that costs don't get out of control, and enabling both sides to keep their businesses running smoothly.

Moving towards a new kind of supply chain management (SCM) is all about turning competition into cooperation. Imagine a world where manufacturers and suppliers aren't at odds but are partners working towards the same goals. Using modern SCM training and tools, companies can share information easily, plan together more effectively, and ensure they're always ready for whatever the market throws.

SCM software helps everyone stay on the same page with up-to-date information on inventory, production schedules, and market trends. This means better planning, less waste, and smoother operations overall.

This new way of working together shows a big shift from the old "us vs. them" mindset to a more united approach.

Material requirements planning (MRP), a sophisticated digital inventory management system, is crucial in improving inventory planning, production scheduling, and overall SCM.

Accurate inputs like sales forecasts, customer orders, a bill of materials (BOM), real-time inventory views, and a master production schedule are essential for MRP's success. By accurately understanding inventory needs, professionals can maintain a delicate balance between supply and demand, avoiding overstocking and shortages, thereby ensuring operational efficiency even amid inflation, labor shortages, and material disruptions.

However, leveraging MRP to its fullest potential requires a workforce adept in utilizing these advanced systems, accentuating the importance of upskilling. Upskilling employees to optimize the power of MRP software systems enables businesses to harness real-time data to make informed decisions, thus mitigating risks associated with liability and product recalls.

The automation facilitated by MRP, such as pulling historical sales data, allows businesses to maintain optimal inventory levels efficiently without the extensive manual data entry previously required. By investing in talent development focused on digital tools like MRP, companies can streamline their supply chain operations and adapt more swiftly to market changes.

The intersection of talent and technology within supply chain management presents significant challenges and opportunities. As the PwC 2024 Digital Trends in Operations Survey reveals, the path to harnessing the full potential of digital transformation is complex. Businesses must adopt a holistic approach, prioritizing strategic alignment between technology investments and workforce development to effectively navigate the evolving supply chain landscape. They can turn these challenges into opportunities, driving innovation, resilience, and growth in an increasingly competitive and unpredictable global market.

The trend toward digital transformation highlights the critical need for agility and resilience in modern supply chains, which is crucial for maintaining competitiveness and ensuring sustainability. Manufacturers strongly agree to escalate investments in both emerging and foundational digital technologies. Enhancing digital skills within the workforce is a pivotal step toward modernizing supply chains at a pivotal moment.