The report, The digital supply chain’s missing link: focus, says that while 50% of organizations surveyed for the report considered supply chain digitization to be one of their top three corporate priorities, 86% had failed to get projects beyond the testing stage because they did not prepare adequately.
Capgemini surveyed supply chain executives from more than 1,000 organizations across manufacturing, consumer and retail sectors. Around 80% of the organizations had revenues exceeding US$1 billion in FY 2017.
“While most large organizations clearly grasp the importance of supply chain digitization, few appear to have implemented the necessary mechanisms and procedures to turn it into a reality,” said Dharmendra Patwardhan, head of the digital supply chain practice for business services at Capgemini.
“Companies are typically running too many projects, without enough infrastructure in place, and lack the kind of focused, long-term approach that has delivered success for market leaders in this area. Digitisation of the supply chain will only be achieved by rationalising current investments, progressing on those that can be shown to drive returns, and involving suppliers and distributors in the process of change.”
The research finds that ROI on automation in supply chain and procurement averaged 18% compared to 15% for digital initiatives in human resources, 14% in IT, 13% in customer service and 12% in finance and accounting. According to the report, the average pay back period for supply chain automation is just 12 months.
However according to the report, many supply chain managers are getting nowhere near these returns as they fail to get digital projects off the ground.
Capgemini recommends that supply chain managers get boardroom approval for digital projects and to focus on key parts of the supply chain first.
Capgemini recommends a three step plan to prepare and execute a digital supply chain.
“Management buy-in is a huge part of identifying and investing in the digital supply chain projects that can really drive improvement,” said Rob Burnett, CIO of global supply chain & engineering at GE Transportation, which was featured in the report.
“Rather than simply a cost centre, the supply chain can be a source of innovation and efficiency for the whole organisation, but it’s important to maintain a sharp focus on priority projects to get the ball rolling. There should be a wider appreciation that less is more.”
The report mentions tier one automotive supplier Faurecia as an example of a company successfully digitising its supply chain as a key pillar of its Industry 4.0 initiative.
Its Columbus, Indiana, plant has production equipment and material handling systems which are networked together allowing a continuous data flow.
A key feature of the plant is the automation of material handling systems, which comprises 30 automated guided vehicles working alongside 17 three-axis robots. This enables loading and unloading and intralogistics of almost 4000 storage locations and can operate 24x7, according to the report.
Rene Deist, CIO at Faurecia, will be one of the keynote speakers at our forthcoming Future of the Supply Chain Summit in Atlanta. Find out more by clicking on the banner below.