60% of supply chain businesses say digital transformation has a big impact, and that percentage is rising.
According to The Hackett Group, almost half of businesses surveyed said digital transformation is affecting their operating model today, while six in ten say it’s having a big or very big impact on the industry as a whole. That number is expected to grow to more than 70 percent over the next two or three years.
An Accenture report said that over three-quarters of companies are missing out on growth opportunities in the supply chain. The takeaway here is that any supply chain business that wants to continue competing needs to start strategizing, building, and funding for digital transformation now.
The average supply chain has a digitization level below 50%.
Despite the impact of investing in digital technology, most businesses have not unlocked the transformation prospects in their supply chains. A study by management consultants McKinsey found that the average business had supply chains that only digitized 43 percent of its operations—the lowest of five business functions they examined which were products and services, marketing and distribution, ecosystems, processes and supply chains. The research also showed that digitizing supply chains can boost annual growth by more than three percent, the highest of each of the five areas examined.
Digital transformation can drive efficiency savings of more than 50%.
World-class procurement organizations enhance their efficiencies by 55 percent compared to businesses that haven’t taken full advantage of digital transformation. These savings aren’t just limited to technology and infrastructure, they’re also realized through structured work, knowledge work and interactions.
World-class supply chain organizations can save up to 75% through digital transformation.
The Hackett Group found that digital transformation helps procurement organizations to optimize their processes, integrate with other systems and minimize error rates. Combined with smart automation and other technologies, these businesses can streamline their operations and achieve savings of up to 75%. Even regular procurement businesses can reduce their costs by 45%.
These savings are across all areas of the business. A strict focus on technology changes alone, for example, robotic process automation, machine learning, AI and smart data capture can reduce costs by up to 20% by itself.
Analytics is extremely important to effective supply chain management.
According to The Hackett Group, advances in technology that make it possible to harness data on a global scale are today considered essential in the procurement function. New tools for data aggregation and data mining can provide insight about the past, helping to deliver savings from cost reduction and cost avoidance by anticipating future behavior. Advanced business intelligence tools designed for self-service use by procurement staff can be leveraged to identify new opportunities and track savings opportunities.