(708) 946-9792 Inquire

SC Execs’ Dilemma: Innovate While Cutting Costs

Volume 2, Issue 8
April 30th, 2014
View/Print Entire Newsletter

Investment in new technologies and innovative logistics processes are top priorities for supply chain managers throughout the world, but they are frustrated by a shortage of qualified talent and never-ending pressure to cut costs, according to a recent study by MHI and Deloitte Consulting.

“The findings of this study have significant implications for how companies design and manage their global supply chains,” said George Prest, CEO of MHI, the logistics association that produces the Modex and ProMat trade shows.innovation

Released at this year’s Modex show, “The 2014 MHI Annual Industry Report: “Innovations That Drive Supply Chains,” found the top two strategic priorities of executives are supply chain analytics and multichannel fulfillment.

The two biggest barriers to innovation are a talent shortage and a continuing focus on cost reduction, the supply chain managers’ survey also found.

It identified three emerging innovations that while not top-of-mind for executives right now, may be soon be: sustainability, mobility/machine-to- machine technology and 3-D printing.

“Respondents clearly identified the need to rethink their approach to supply chain management,” said Scott Sopher, principal with Deloitte Consulting and leader of Supply Chain & Manufacturing Operations practice.

“In the past, organizations addressed supply chain challenges primarily through cost reduction and operational efficiency efforts,” Sopher observed. “Today’s global supply chains require a new focus on technology and innovation as well as a willingness to invest in these areas for the long term.”

Among the study’s findings was that nearly 80% of respondents said supply chain analytics is a “very important” or “moderately important” strategic priority.

Almost three-quarters (74%) of retailers expect their investments in multi-channel fulfillment to increase over the next three years.

More than 65% of respondents indicated that process, technology and skillset gaps exist within their company. (In the U.S., the supply chain field is expected to add 1.4 million new jobs by 2018, according to another recent MHI study.)

The annual survey found that more than 70% of respondents across industries said controlling costs is a top priority for their companies and customers.

Nearly 80% of respondents felt that sustainability was at least moderately important, but more than 60% indicated that significant capability gaps in their companies and clients may prevent them from effectively implementing sustainability programs.

About three-quarters (73%) said they will continue investing in mobility and machine-to-machine technologies to improve responsiveness and customer service by providing supply chain workers with information they need. In addition, nearly half said they plan to increase their investment in these areas during the next three years.

Leave a Reply

Your email address will not be published. Required fields are marked *