As companies navigate an increasingly complex and competitive landscape, the role of supply chains has evolved dramatically. Consumer expectations are increasing and the modern supply chain has undergone significant adjustments in response, becoming more flexible, responsive and innovative. But if supply chains are to meet ever-growing customer demands and market dynamics, there is one problem that needs to be solved, and that is how to increase productivity.
Companies have been trying to make their supply chains more efficient and productive for years. For example, giants like Amazon have revolutionized their networks with advanced technology and fast delivery services. But despite these efforts, limited progress has been made in overall supply chain productivity. A recent Gartner report shows that while there has been a slight increase in productivity from 40% in 2019 to 41-44% today, this increase is not large enough to increase the overall value of the supply chain. This stagnation carries the risk of inefficiency, increased waste and frequent disruptions, and reinforces the need for supply chains to become more efficient.
As demand for faster, more reliable supply chains grows, companies that fail to improve productivity risk being left behind. A more productive supply chain isn’t just about cost savings; it’s about creating systems that are resilient and respond to unforeseen challenges – whether that’s a global pandemic or a cargo ship blocking a vital trade route. Building more productive, adaptable and flexible supply chains for future generations is not just an opportunity; it’s a necessity, and that building process starts with focusing on a few key areas.
CEO and co-founder of Dexory.
Increasing employee involvement
Employees are the cornerstone of driving productivity in any business, but investing in the workforce means so much more than just retaining staff: it means increasing employee engagement and motivation to help increase their production.
When it comes to supply chain productivity, it is crucial that employees have time for innovation and upskilling. It allows them to develop new skills, adapt to changing technologies and bring new ideas to streamline processes and improve overall efficiency. This investment in employee growth not only improves individual performance, but also drives collective progress in supply chain operations, leading to a more flexible and resilient system.
One way to ensure employees have the time to focus on this growth and development is to invest in the right technologies to free up their time. Recent statistics show that almost three-quarters of warehouse workers are more likely to take a lower-paying job with a company that offers advanced technology to make their jobs easier and allow them to develop other skills. These statistics highlight a shift in employee priorities, reflecting a trend toward valuing technology support, career development, and improved working conditions. It highlights the importance of investing in employees if you want to create a more dynamic, skilled and motivated supply chain team.
Balancing technology with effective governance
While companies must ensure they leverage the benefits of advanced technology to improve supply chain productivity, they must also effectively monitor and risk manage the technology being implemented. In other words, supply chains must find a sense of balance between technology and governance. While technology, like AI tools and robotics, promises significant productivity gains, it also introduces new challenges around data integrity, security and ethical use.
A recent forecast indicates that 30% of generative AI projects could be abandoned by 2024 due to issues with the balance between innovation and governance. It highlights how crucial it is for companies to develop robust governance frameworks that evolve alongside technological advances to ensure data is protected, ethical standards are adhered to and productivity gains are sustainable.
By establishing clear guidelines and monitoring mechanisms, companies can fully leverage the power of technologies. For example, AI can support predictive analytics and real-time visibility, streamline processes, reduce inventory costs, and make data-driven decisions that increase supply chain agility and ultimately productivity.
Prepare for future productivity
Looking ahead, the path to a more productive supply chain is filled with both challenges and opportunities. Fluctuating demands, driven by digital transformation, market volatility and geopolitical disruptions, require robust and flexible supply chains.
Future-proofing supply chains involves more than just adapting to current trends, but also anticipating and preparing for future disruptions. This could mean investing in scalable technology platforms, fostering a culture of continuous improvement, and building networks that quickly adapt to changing circumstances.
As organizations continue to face rapid technological advancements and evolving workforce dynamics, embracing next-generation productivity strategies will be critical. It is time to make changes now to secure supply chains for years to come.
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