A new report shows that most supply chain leaders plan on increasing investments into technology while aiming to mitigate the effects of workforce shortages and disruptions.
The insights come from the 2023 MHI Annual Industry Report, “The Responsible Supply Chain: Transparency, Sustainability, and the Case for Business.” This is the 10th in a series of annual industry reports published by MHI and Deloitte. MHI is an international trade association representing the material handling, logistics and supply chain industry.
According to the report, survey respondents said hiring and retaining qualified workers is still the top concern at 57%, followed closely by the talent shortage at 56%. However, this was followed closely by supply chain disruptions at 54%, out-of-stock situations at 52% and customer demands at 52%.
MHI states the worker shortage is spurring companies to invest in technologies that not only improve agility and efficiency but also reduce the need for repetitive, manual labor. This could appeal to the next generation of supply chain workers who are more likely to find a tech-infused work environment more rewarding.
Tech investments are also a pathway to upskilling current employees and attracting new talent, which the report suggests can create a modern, capable workforce that quickly adapts and adjusts to changes in the technology and market landscape.
The survey reports 41% of respondents are reskilling/upskilling workers for emerging technologies, 34% are recruiting for skillsets for future needs and 27% are working to create a culture of innovation.
“Tech investment is only part of the equation,” said John Paxton, CEO of MHI, in a statement. “Having an innovative culture and the right people in place to implement innovation and to bring it all together to exceed your customer demands and expectations – whether they are fast delivery, personalization, low cost, delivery transparency or sustainability goals.”
Investing in Technology
With technology playing such a crucial role in improving workforce shortages and operations, it’s important to know which technologies to pursue.
According to the report, the top three categories that supply chain companies are investing in include: inventory and network optimization at 87%, cloud computing and storage at 86%, and sensors and automatic identification at 84%.
Other areas of interest to survey respondents include advanced analytics (82%), robotics and automation (78%), and artificial intelligence (73%).
The survey shows 74% of supply chain leaders are increasing their supply chain technology and innovation investments, with 90% saying they are planning to spend over $1 million, an increase of 24% over last year. A total of 49% of company leaders are partnering with vendors to understand application/benefits and 31% are piloting new technologies.
According to MHI and Deloitte, in the past, companies could succeed by primarily collaborating with a small set of suppliers and distributors. However, the supply shocks of the past few years illustrated that a broader approach for collaboration and data sharing is needed to achieve true transparency, sustainability, and resiliency.
Increased Focus on Sustainability
Supply chain companies are faced with increasing pressure to become more environmentally responsible and sustainable. Nearly half of this year’s survey respondents say they face increased influences to adopt a more sustainable supply chain.
“As leaders, we must drive transparency and coordinate change across the end-to-end supply chain as we work collaboratively to reduce Scope 3 emissions and move toward the circular economy,” said Paxton. “Sustainability will become a key competitive advantage for in the future. Investments in sustainability and transparency help reduce risk exposure and build loyalty with customers and employees alike.”
According to the survey, the top focus areas for sustainability are electrification at 40%, natural resource management at 29%, water usage at 27%, and transition to renewables at 27%.
“Embracing circularity, reducing environmental impacts, regenerating nature, and embedding equity should all be coded to their DNA and driven from the top down for them to be successful,” said Wanda Johnson, specialist leader, Deloitte Consulting.
The findings of the 2023 report are based on survey responses from over 2,000 manufacturing and supply chain industry leaders from a wide range of industries at the end of 2022. Eighty-three percent of respondents hold executive-level positions such as CEO, vice president, general manager, department head or engineering management.
Participating companies range in size from small to large, with 74% reporting annual sales of more than $50 million, and 8% reporting $1 billion or more.