The Hackett Group Principal Robert Derocher talks with Associate Principal Joshua Nelson and Associate Principal Erin Blair discussed key findings from The Hackett Group’s 2022 Supply Chain Key Issues research, which details the priorities and challenges for supply chain organizations.
To begin, Erin identifies the biggest issues we saw in 2022. Given the supply chain disruption because of the pandemic, she finds it unsurprising that the top three issues related to managing these disruptions. The number one key issue was reducing supply risk, the second was enhancing product availability and finally improving supply chain agility and resilience. Fourth, Josh shares, was sound the area of digital transformation, in which companies hope to achieve better visibility across the supply chain. Fifth is around cost efficiency and companies are keeping their eyes on the bottom line. Improving sales and operations planning and integrated business planning was actually number one on the survey last year. It dropped down a bit on the list, likely because many companies have acted on this goal. The talent gap was also evident this year, across all functional areas.
As Hackett consistently conducts this survey every year, there is an interesting dynamic in observing what happens year to year. They saw the pandemic start to transform the priorities of executives. Companies are needing to mitigate risk and become more agile, all while keeping their eyes on the bottom line. They are no longer pursuing cost efficiency, though Josh predicts it may be an issue in the future. There are many different strategies companies are using to identify, mitigate and solve supply chain risk. First are supplier related strategies, including expanding supply base, multisourcing, leveling different geographies and having a backup plan in place. They are also doing regular evaluation of supplier risk. The third is around structural and operational changes, as companies look towards their entire network itself.
Josh then elaborates on the digital transformation goals represented in the study. There are a whole lot of small-scale deployments occurring as companies roll out new technologies on a small scale or pilot phase. The top three focus are data visualization, supply chain analytics and robotic process automation. People are using other technologies within the supply chain, such as AI and blockchain, but Hackett is focused on small scale deployments at this time. The study also considers the types of apps companies are investing in, in which sales and operation planning really rises to the top. We are moving away from the spreadsheet mentality and embracing more structure and automation.
In terms of what executives need to be planning for next, the survey shows that companies are expecting business activity to grow. One challenge is how to get employees enabled with technology and innovation to drive efficiency across the enterprise. Another developing area in 2022 is the outcome of inflationary economics. As wages and costs go up, companies will look to grow costs and be most efficient.
Moving into another year of supply chain disruptions, it is important the leaders first keep their focus on the customer and demand. Collaborating and communicating what is possible and what is not is key. They should also invest in business transformation widely and efficiently. Ensure you have the right people and skills to make use of these technologies. With digital technologies comes the need to upgrade skills within your organization. Finally, Josh urges companies to make efforts to return back to a sense of normalcy in their operating model by stabilizing cost and headcount.
- 0:53 – Welcome to this episode, hosted by Bob Derocher.
- 1:02 – Introduction to today’s episode topic.
- 1:37 – What were the top 5 issues we saw in 2022?
- 7:00 – How have these themes changed pre and post pandemic?
- 8:55 – How are companies managing supply chain risk?
- 10:52 – Digital transformation.
- 15:49 – What things do executives need to be planning for next?
- 18:44 – Recommendations for supply chain leaders leading into another year of disruption.
- 22:23 – Summary of the results shared today.