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Skills/Labor Crunch Hurts 3PLs

While most companies (93%) are actively engaged in logistics digital transformation, the people/skills deficit is the No. 1 obstacle (53%) standing in the way of their efforts, say expert researchers.

This is according to the third annual study that was jointly conducted by ToolsGroup, a producer of supply chain planning software, and the Council of Supply Chain Management Professionals

With respondents’ top growth investment for 2022 being “increasing recruitment and training efforts,” this year’s study is said to reveal the profound effect that current labor shortages are having on digital supply chain transformation and other targeted changes, CSCMP reported.

While most of the companies surveyed started 2022 with a positive business outlook, they remain extremely concerned about external factors that have impacted supply chain planning strategies in the last two years.

Supply chain delays (25%), surging inflation (24%) and escalating fulfillment costs (19%) are said to top the list of suppliers’ external concerns.

In comparison, respondents said they were less concerned about internal issues such as shorter product life cycles, risk of obsolescence, or more production options.

External factors also influence the 2022 objectives for digital transformation in supply chain planning, the research found. As a response to labor shortages and the “great resignation,” where many employees were lost during Covid epidemic, 51% of companies say they will increase automation in 2022 to focus staff on higher value activities.

Polled at 47% each, the prospects of developing better and faster reactions to unplanned disruptions and increasing supply chain resilience are the other top objectives for 2022.

Last year’s top survey objective — to keep up with is a three-dimensional evolving customer behavior and expectations – has plummeted to number five in 2022, and are said to be demonstrating just how profoundly external factors are disrupting all kinds of supply chain activities.

But while external factors are pushing the digital transformation initiatives, it is the people factors that are perceived as being the most critical success factors, according to the researchers.

Half of the survey respondents (50%) said a continued focus on people, process, technology and security implications is vital to delivering successful digital transformation results, which are followed by change management and effective communication (45%) and the need to develop leadership-driven goals (43%).

“The past two years have put a spotlight on the need for digitizing supply chain planning, and fortunately, more companies than ever are responding by stepping up efforts to transform their operations,” said Caroline Proctor, chief marketing officer of ToolsGroup.

“The percentage of companies that are not pursuing a digital transformation strategy at all is, at 7%, the lowest we have measured so far. Our findings reveal increasing investments in software, automation and people,” she added.

Mark Baxa, president of CSCMP, further explained., “The survey results show that companies are charting a steady course toward digital transformation.”

“As supply chain challenges become more frequent and intense, company leaders are increasingly focused on implementing solutions that can help them better manage risk, bypass skills shortage and become more resilient.”

CSCMP is the preeminent worldwide professional association dedicated to the advancement and dissemination of research and knowledge on supply chain management, including professional development and academic institutional support.

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