While supply chains tend to make big headlines when they break down, there is relatively little coverage of what they’re doing well. Digital transformation—the strategic integration of multiple technologies—provides a good example of the enormous strides that today’s supply chain organizations are making. Driven by goals like improving quality, boosting customer service, gaining real-time access to data and strengthening cyber security, organizations are maturing their approach to digital transformation at a dizzying speed.
APQC recently surveyed 310 supply chain professionals to discover the latest trends related to digital transformation in supply chain. In this article, we compare our latest findings to those of our 2022 survey to highlight five important things you should know about digital transformation right now. As we explain what’s changed, we also provide insight into what it means for you.
1. Implementation and Adoption are Now Widespread
More than a quarter of our respondents (27%) have now completed their digital transformations and are sustaining their gains through continuous improvement. Only 16% of organizations could say the same in 2022.
The number of organizations with full scale adoption in progress also increased by 13 percentage points, from 24% of respondents in 2022 to 37% in 2024. These gains are accompanied by corresponding decreases in the percentages of organizations that are piloting digital transformation projects (down eight percentage points) or planning digital transformation (down 10 percentage points).
What it Means for You
If you haven’t started your digital transformation yet, you are officially behind the curve. Nearly all of your peers and competitors (96%) are at least carrying out pilot projects at this point.
2. Organizations are Maturing Toward Cross-Functional Leadership
As organizations progress toward more mature phases of adoption, we find that they are also maturing their approach to leadership for supply chain digital transformation. In 2022, we found that supply chain leadership was the most common leader of digital transformation (47% of respondents), followed by a dedicated digital transformation team (42%) and data management team (41%).
As adoption progresses, a majority of our respondents now indicate that their IT (67%) and supply chain leadership teams (57%) are taking charge of digital transformation. This collaboration is sometimes supported by data management teams (46%), dedicated digital transformation teams (40%), and the project management office (26%). Participation from all of these groups is up from 2022, reflecting a more balanced, all-hands-on-deck approach to digital transformation for supply chain.
What it Means for You
Effective digital transformation requires the right leadership to blend technical knowledge and business insights. Aim for collaborative, cross-functional leadership that goes beyond supply chain to include a wide range of stakeholders who can help drive execution.
3. Organizations are Focused on Data Management
“Digital transformation” is such a common phrase that we find it worth asking what organizations are actually including in their digital transformations. For nearly half of our 2022 respondents (44%), digital transformation mostly meant implementing or upgrading their enterprise resource planning system (ERP), followed by implementing advanced analytics (34%), and AI and/or cognitive computing (33%).
APQC
What it Means for You
Even the best technology won’t do your supply chain much good if the data it uses is inaccurate, incomplete, or missing. If data management is not a top priority for you, it needs to be.
4. Cost and Integration are Top Barriers
Digital transformation requires significant investments of time, personnel, and especially money. The cost of implementation was the top barrier for our 2022 respondents and remains the top barrier today for nearly half of respondents (48%).
As organizations continue to implement new tools for supply chain, the question of how these tools will interact or “talk” with enterprise systems and other technologies is becoming increasingly urgent. While integration challenges were previously the sixth most-common barrier to successful digital transformation, they are now the second-most common barrier (42% of respondents).
What it Means for You
- Digital transformation is an investment in your organization’s future. Cost may feel like a barrier, but a failure to keep up with your competitors will be more costly in the long run.
- Many organizations are struggling with how to integrate new technologies into their supply chains. Make integration an explicit part of your transformation roadmap and plan for it so you’re not caught off guard.
5. Resistance to Change Has Decreased
Employee resistance to digital transformation is far less of a barrier in 2024 than it was in 2022. While about a quarter of respondents previously identified employee resistance as one of the most common barriers, it is now one of the least common (15%). More common barriers to digital transformation today include security and governance concerns (38% of respondents), technology capability limitations (38 percent), and a lack of skills to use new systems and processes (37%).
What it Means for You
- With increased levels of disruption, many organizations are focusing on addressing security concerns in their supply chains as part of their digital transformations.
- While employee resistance to change has decreased, it’s still critical to have a strong change management plan to ensure resistance does not re-emerge as an obstacle to your supply chain’s digital transformation.
The race for digital transformation is already in full swing. Benchmarking your supply chain against our findings is a good way to assess where you stand relative to your peers and competitors.
Many supply chain organizations have moved from piloting and planning digital transformation to maturing, applying lessons learned, and sustaining improvements. Activities like ERP implementation is now “table stakes” for competing at all, while true competitive advantage comes from AI and other emergent technologies. Laggards, meanwhile, are becoming increasingly visible to employees, suppliers, and customers.
