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Joerg_Wilke1
Associate
Associate

Supply chain solution vendors will tell you their product will change your world. Exponents of one new technology or another will wax lyrical about theoretical use cases. But how can you tell what will really work when it comes to digital supply chain initiatives?

We wanted to find out. So, over the last few years, we’ve been conducting a rigorous study among supply chain professionals into what succeeds, what fails, and why.

The results are quite surprising – and extremely valuable. As it turns out, the reality of applying new and maturing technologies to real-life supply chain use cases is quite different than what most professionals in the field would expect.

Why you can rely on this study

The research was conducted by a joint business and academic team from SAP Business Consulting and Kühne Logistics University, meaning it’s pragmatic, rigorous, and objective.

The study is based on numerous confidential interviews with supply chain professionals across a range of industries who spoke frankly and in detail about the digital initiatives they led.

It’s not often we get to hear about failures – and even success factors are often closely guarded secrets – but our study includes the good and the bad. Use these insights to avoid others’ mistakes and apply their winning strategies.

The project is a sequel to an earlier study carried out in 2014. It reveals the evolution of practice in digital supply chain as technologies have matured, hype cycles taken their course, and the pressure on supply chain professionals intensified.

Most of the projects we examined were carried out at a time of global supply chain disruption due to the pandemic, wars, energy cost instability, and an unpredictable market. In other words, any initiative that survived these stress tests can be expected to succeed again.

What worked, what didn’t, and why

One of the most significant findings that we didn’t expect was that success or failure doesn’t seem to be a function of what technology is used or which use case it’s applied to.

Experiments in unmanned vehicles, using robotics, and on cloud-to-edge use cases all worked. The only technology that failed in all cases was blockchain. All the others had decidedly mixed results: Projects involving digital platforms and business networks, the IoT, 3D scanning and printing, and uses of standard software were mainly successful. Most projects using augmented reality and digital twins failed.

What actually seems to determine success or failure has more to do with the environment within the business and how the project is managed.

Barriers and success factors

Organizations struggled when they used immature technologies and underestimated the complexity of the use case for those technologies. Problems arose when the existing IT infrastructure wasn’t ready to support an advanced technology. Unresolved minor challenges, such as not having a consistent data model, caused roadblocks, too. The ongoing shortage of people skilled in the new technology was also a hurdle.

As digital supply chain initiatives evolved between the two studies, organizations became much more pragmatic, business-like, and less ambitious – with good reason. Following the hype and having unrealistic expectations was never going to work. What determines success comes down to sound business common sense.

In the first place, there must be a business need. The project has to focus on doing something that can actually add value to the business. Projects that focused on improving fulfilment reliability, minimizing supply chain disruption, or adding immediate value to the customer were generally deemed successful.

The scope of the project should not be not too ambitious – success was more likely when the topic was more mundane. This includes the use of standard software platforms for collaborating with partners, integration with ERP or MES, or implementing an enterprise-wide data model to serve as a foundation for AI or advanced analytics.

Next, there has to be a sound business case and a rapid return on investment. This in turn helps ensure other managerial factors, such as winning the commitment of senior management in your own company as well as in your partners’ organization, and running the project with proper change management practices.

The final key success factor centers on organizational readiness. If a digital supply chain initiative is to succeed, the organization needs to already have in place an IT infrastructure capable of supporting it, along with sufficient numbers of people skilled in the new technology being used.

Why you need to read the full research report

As you can tell from this short account, there is no silver bullet in digital supply chain. There’s no single use case or technology you can count on to succeed; no hard and fast reasons why your project might fail. You need to understand the nuances.

Our report allows you to learn from the experience of others. Reading it can help your business avoid their mistakes and emulate their successes. The insight you will gain from the practical experience of other supply chain professionals may even help you derisk your own digital supply chain investments, deliver a rapid return on investment, and add value to your business.

Download the research report now.