Careers
LOGISTICS RESEARCH
What are supply chain executives’ main challenges? According to the 2023 Supply chain priorities and challenges report by the American Productivity & Quality Center (APQC), companies will allocate the most resources to the strategic areas of planning, procurement, innovation, and logistics over the course of this year.
Based on a survey of leaders from more than 25 industries, the study analyzes the challenges faced by supply chain executives in their organizations. For 86% of respondents, planning will be the top priority, followed by procurement (75%), innovation (73%), and logistics (67%). Other key areas will be order management (61%), manufacturing (60%), and new product development (57%).
1. Supply chain planning
To improve supply chain planning, executives will focus on fine-tuning demand forecasting capacity and process automation. “Automation and digitization can enable the organization to make faster decisions, leveraging larger quantities of data, while freeing up staff for more value-added activities,” say the authors of the study.
2. Sourcing and procurement
Sourcing and procurement comprise the second priority area for the executives surveyed. “Ongoing challenges have made clear the connection between an organization’s success and its suppliers’ success,” says the APQC. The report highlights the need for better supplier relationship management as a central focus of managers in the procurement phase.
3. Innovation
The third area of interest for APQC survey participants is innovation. “The top two priorities in this area, improving collaboration and operational/process innovation, speak to the need for organizations to find new and better ways of working while building strong ecosystems across their value chains.” The executives acknowledge the need to implement repeatable processes that lead to novel solutions to meet future challenges. Integrating innovation into organizational objectives will also be crucial for supply chain executives.
4. Logistics
Logistics is one of the fundamental pillars of supply chain strategy. The executives polled affirmed that they would devote the most effort to inventory management, followed by automation and digitalization of logistics processes.
“Some industries started the year with a glut of inventory and no room to store it, while others are still dealing with shortages. Automation and digitization along with advanced analytics can bring greater transparency and traceability to inventory all throughout the supply chain,” say the APQC analysts. New technologies will play a decisive role in the supply chain both now and in the future: “Leading-edge technologies will enable the scalability and traceability required for truly competitive logistics.”
Future supply chain trends
The APQC report also sets out executives’ forecasts for supply chain trends in the next three years. Eighty-two percent of respondents expect big data technology and advanced analytics to have a direct impact on industry. “The volume of data facing supply chain professionals will only continue to multiply and in turn increase the reliance on emerging technologies for analytics that enable organizations to make faster and, ideally, better decisions,” say the authors.
For the respondents, trends such as global trade uncertainties (82%) and sustainability (82%) will also significantly affect the supply chain.
Over the next three years, 81% of executives believe that digitalization will be critical for the supply chain. “The digitization trend also underpins process improvements such as reducing the reliance on manual procedures and standardizing processes for greater efficiency,” say the APQC analysts.
Lastly, the study predicts the weight of supply chain operations within the corporate budget: 50% will increase their budget allocation for this area, while 41% will maintain their 2022 investment. Only 9% of respondents plan to reduce their supply chain budget.