Survey: Supply chain leaders continue improvements
![Supply chain](jpg/supply_chain71a0.jpg)
The overwhelming majority of supply chain leaders said they faced challenges in the past year, and virtually all of them took steps to improve operations.
According to a new survey from McKinsey & Company, 95% of supply chain leaders surveyed said they faced footprint challenges during the past year, and 100% reported that they took actions to make their supply chains more flexible, agile and resilient. This figure is a 3% increase from the last survey conducted in 2022.
To provide increased flexibility and proximity to the final market, 66% of supply chain leaders said their companies brought suppliers closer to their main markets, a 34% increase from 2022, driven mostly by the automotive and consumer industries. Four in 10 (42%) of companies said they made moves to nearshore production, a 25% increase year-over-year. A similar number (44%) of respondents said their companies increased backup production sites in the past year, up from 22% in 2022.
While half (50%) of supply chain leaders said their supply chains are dependent on another region, 64% said their organizations took steps to regionalize their supply chains in the past year. Nine in 10 (89%) indicated plans to redesign their networks to reduce dependency on other regions with focus on Western Europe and Southeast Asia.
Optimizing inventory levels (68%) in the coming three years emerged as a top priority for supply chain executives. McKinsey found that supply chain leaders are unsure how inventory management strategies will evolve. In the next three years, 22% of organizations plan to increase inventory; 29% of organizations plan to revert back to lower inventory levels; 24% of organizations plan to keep inventory constant; and 26% of organizations plan to reduce inventory below pre-pandemic levels.
While more companies are showing a willingness to invest more in technology to make their supply chains less vulnerable and more flexible, one problem McKinsey noted from its survey is that nearly all of them are facing a shortage of qualified staff. Nine in 10 (92%) of supply chain leaders report having insufficient talent to operate digitally enabled supply chains and none report improvement in the talent deficient in the last 12 months.
Digital investments and talent must go hand in hand. While a strong digitization trend continues for 71% of supply chain leaders, talent is only slowly catching up. In the 2022 survey, 1% of companies had stated that they had sufficient in-house digital talent. That number increased to 8% this year.
McKinsey’s survey reveals that IT implementation is an ongoing process for many companies. More than two-thirds (68%) of supply chain leaders expect risk to remain a board-level topic, yet 63% of organizations have none or only minimal transparency into their tier-one suppliers. A similar number (67%) of supply chain leaders planned to improve supply chain visibility between 2022-2025, yet only 30% completed implementation in the last 12 months.
More than three-fourths (76%) of the survey respondents implemented advanced planning tools, while 52% of companies experienced difficulties with adoption due to the quality of supply chain planning data.