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04/25/2022

The biggest supply chain risks are…

Dan Berthiaume
Senior Editor, Technology
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Supply chain executives face a number of serious issues.

A new survey reveals what is keeping supply chain executives up at night.

Sixty-eight percent of 244 surveyed supply chain officers see supplier operational issues as a major risk (24%) or moderate risk (44%), according to the PWC Digital Trends in Supply Chain Survey 2022.  

Other leading risk areas included securing raw materials from suppliers (64%: 27% major, 37% moderate) and insufficient diversification of supplier base for critical supplies (62%: 43% major, 19% moderate). Also:

  • Inability of suppliers to respond to technical challenges (60%: 19% major, 41% moderate);
  • Insufficiently localized supply chain (59%: 19% major, 40% moderate); and
  • Supplier financial health (58%: 21% major, 37% moderate).

Respondents also report internal supply chain issues. The survey reveals that 80% of digital supply chain investments are falling short of expectations. In addition, almost six in 10 (58%) respondents are seeing higher than normal supply chain employee turnover, while 23% say they struggle to develop and retain the “digital native” talent needed to transform supply chains. Another 23% say they struggle to respond to the rapidly evolving environmental social governance (ESG) legislative and regulatory frameworks in relevant jurisdictions.

Other significant findings from the survey include:

  • While respondents focus on supply chain basics like increasing efficiency and managing costs, PwC analysis suggests they are missing value creation opportunities in digitization, sustainability, and transformation.
  • A majority of respondents cite multiple supply attributes as moderate or major risks, yet few see increasing the number of suppliers, transforming procurement practices or increasing responsiveness and resilience as priorities, which PwC classifieds as a significant disconnect.
  • In digitizing their supply chains, respondents say they need the most help stretching their budgets, but having the right talent and the right technology are issues as well.
  • Many companies — 58% of respondents — are seeing higher than normal supply chain employee turnover, and only 23% fully agree that they have the necessary digital skills to meet future goals. Most also expect to make changes to their operational systems in the next year. 
  • Responding to regulatory changes and identifying supplier risks are top ESG challenges, but fewer respondents are focusing on ESG reporting and metrics.

Survey: Retail ‘winners’ remedy supply chain issues
A recent study shows that retailers with exceptionally high sales growth are more likely to take steps to address current supply chain issues. According to “Managing Through Disruptive Times with Data Driven Speed and Adaptability,” a new survey of predominantly U.S.-based retailers from RSR Research and Relex, 76% of retail “winner” respondents with comparable store/channel sales growth above the industry average of 4.5% say strategic placement of inventory throughout the supply chain to better fulfill customer needs provides a “big opportunity” to address supply chain issues in the next 12-18 months. Only 29% of other respondents cited this strategy.

Similarly, 63% of winners and 49% of other respondents said better understanding (and reacting to) unplanned events that drive a dramatic change in customer behavior are a big opportunity to address near-term supply chain challenges. Sixty-one percent of winners and 40% of other respondents said better understanding the dramatic changes in customer preference and “path to purchase” are a big opportunity, while 61% of winners and 44% of others mentioned optimized omnichannel order fulfillment to improve profitability.