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Digitalization, sustainability, cost pressure: New challenges in SCM
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Study finds: These are the new challenges in the supply chain

by Editorial Office
This spring, companies worldwide continue to be affected by disruptions in their supply chains and need to protect against a wide range of risks. In the course of its study “Supply Chain Pulse Check Spring 2023“, the international consulting firm Deloitte surveyed 121 supply chain managers on current challenges and risks in their supply chain management – with interesting results, also about Germany as a business location. We have summarized the most important findings for you.

While global supply chains are showing signs of ease compared to previous years, many companies continue to face severe disruptions that threaten the resilience of their supply chain. A recent study conducted by international consulting firm Deloitte on current supply chain challenges shows that, at 53 percent, more than half of those responsible still see disruptions in the flow of information, finance or goods. Yet, what is it precisely that is causing disruptions in work processes? 121 supply chain managers from Germany have been surveyed on this topic. They predominantly work in the chemical, automotive and mechanical engineering/industrial goods sectors. The majority of survey participants (79 percent) are employed by companies with more than 250 people.

Increasing cost pressure is the most severe challenge for companies

Whereas in the past it was primarily a shortage of resources that led to impairments in the supply chain, now it is, among other things, the increased prices for energy and raw material that are creating additional pressure in many companies. 77 percent of respondents claimed that the level of purchasing prices had risen and that they were clearly aware of this fact. One in four companies (27 percent) said they had seen a drop in turnover and more than half (52 percent) of the respondents had witnessed a drop in profits due to supply chain issues. At the same time, more than three-quarters of respondents say they are facing severe or even very severe adverse effects from increases in energy supply costs (78 percent) or inflation (76 percent). According to the study, even new requirements such as the implementation of the Supply Chain Act, which has been in force since January, are currently still presenting one in two companies with challenges in supply chain management.

Measures for more resilience in the supply chain

To meet these challenges and make their supply chains more resilient, the industrial companies surveyed cited the following measures:
  • More than three-quarters of companies (77 percent) rate the topic of sustainability as very relevant for strengthening their supply chain in the long term.
  • More digitization is seen by almost half (47 percent) as an extremely important measure for counteracting problems in work processes.
  • Optimizing efficiency and cost management is also relevant for many in order to better cushion crises in the future (37 percent).
  • Around one-fifth attach particular importance to transparency and communication (21 percent).
  • 16 percent see more agility and supply chain adjustments as appropriate measures for greater resilience.
Other countermeasures already implemented or initiated by the companies include multisourcing (75 percent), increased warehousing (68 percent) and holistic supplier management (67 percent).

Study shows: Digitization is gaining in importance

Based on the current situation, almost one in three companies surveyed plans to introduce cross-supply chain data exchange, more monitoring and risk analyses in the future (29 percent): After all, companies that have a precise overview of the individual steps and processes in the supply chain and work closely with other companies can identify risks early on and minimize them efficiently by monitoring real-time data. Almost half of the companies surveyed (47 percent) have already recognized the importance of digitization for strengthening the supply chain. It is surprising that only around one in five study participants mentioned transparency as relevant for resilient work processes. However, this factor should by no means be underestimated: a shared view of the supply chain is a significant basis for efficiency, risk management and cost control. Real-time monitoring of individual process steps in particular allows room for maneuver and timely intervention should obstacles occur. Accordingly, disruptions can be circumvented in the event of an emergency, thus preventing time losses and cost increases. In order to safeguard production and strengthen supply chains in the long term, the companies surveyed would also welcome government funding for key technologies, more investment in education, infrastructure and digitization, and generally less bureaucracy in work processes. The study shows that far-reaching measures are necessary in order to successfully counter current and future crises. Strategic supply chain management is once again gaining in importance: Companies can protect against supply chain problems with professional risk management, more transparency and collaboration and thus sustainably strengthen their competitiveness.

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