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Study Digitalization and Offshoring Supply Chains
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Study shows: Digitalization and Offshoring enhance resilient Supply Chains

Digital transformation

by Editorial Office

In the wake of technological change and global challenges, many companies need to rethink production processes and realign their supply chains in order to remain competitive. Digitalization, automation, cybersecurity: According to the “Smart Manufacturing Survey” conducted by IT company Avanade, there are many topics on the transformation agenda of the companies surveyed. We have summarized the most interesting results for you.

Geopolitical tensions, scarcity of resources and legal changes: Supply chain managers are currently facing various disruptions and need to develop strategies to make their supply chain more resilient in order to protect against them. Yet, what measures are companies planning on taking in response to these challenges? And which digital technologies are they using to minimize the impact of risks and ensure operational stability? For a study on these and related questions, Avanade collaborated with Statista to survey 450 German companies from the mechanical engineering, consumer goods, information technology, automotive and manufacturing industries.

Survey shows: Many companies are planning to relocate parts of their production abroad

As global systems, supply chains connect a large number of logistical processes, suppliers, manufacturers and retailers: nine out of ten of the companies surveyed (90 percent) state that they source goods or services from foreign suppliers. But that’s not all: 60 percent, and therefore more than every other company surveyed, are now also planning to relocate parts of their own production abroad. Western and Eastern European countries were named as the most important offshore destinations (30 percent each), followed by Asia with 18 percent and the USA and Canada with 16 percent.

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The planned relocation of production capacities abroad reflects the strategy of many companies to benefit from the advantages of international procurement and production – be it through cost savings or access to specialized manufacturing expertise. This development underlines the need to carefully analyze global opportunities and risks in the supply chain and to develop suitable measures to safeguard and optimize supply chain performance. But how can the complex requirements associated with international, multi-level supply chains be managed?

Process optimization: Majority of companies relies on digitalization

In order to better coordinate and manage the complex structures of cross-border production, the managers surveyed are planning to use digital innovations: According to the Avanade study, 92% of companies want to optimize their processes and workflows with the help of technology. Further, significant investments are planned for this matter: At 49 percent, Cloud Computing ranks in first place for firmly planned future expenditure. The study participants see further promising potential in the implementation of the Internet of Things (IoT) or Big Data (both 32%).

The high level of agreement among respondents shows that the industry has recognized how effective it can be to meet the challenges of globalization and volatile world markets with increasing digitalization: After all, the use of smart technologies enables greater visibility, control and adaptability of business processes.

Cybersecurity is gaining relevance

With increasing digitalization, the importance of IT security is also growing: As more confidential real-time information is exchanged between different supply chain partners, the risk of cyberattacks increases. Almost eight out of ten respondents (79%) therefore rate the topic of cybersecurity as very relevant to their processes and workflows. While the majority of companies already consider themselves to be at least “well positioned” in this area (63%), 41% of study participants plan to invest in expanding their IT security infrastructure over the next 24 months. This is also important in view of the changing cyber world: attackers are constantly developing new methods to gain access to company data.

Study shows dynamic development of supply chains

The results of the Avanade study illustrate how dynamically the global supply chain landscape is developing. With the growing trend towards offshoring production capacity, companies are recognizing the opportunities arising from international sourcing and production, but are also facing new challenges. The increased or planned use of advanced technologies to overcome these challenges shows that the digital transformation of supply chains is continuously progressing and will continue to increase in the future. Companies need to implement a balanced strategy that takes advantage of the benefits of digitalization without neglecting IT security aspects.

Further results of Avenade’s “Smart Manufacturing Survey” can be viewed here free of charge.

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1 comment

Manoj Kumar jena July 9, 2024 - 8:58

Yes raight


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