Survey: CSCOs prepare for a precarious future with more investment in AI and automation

Chief Supply Chain Officers (CSCOs) rank sustainability as their third biggest challenge in the next few years, trailing only supply chain disruptions and technology infrastructure. To cope with these challenges, they are increasing investments in automation, AI and intelligent workflows. They also are reimagining their supply chain operations, reveals a survey by the IBM Institute for Business Value (IBV).

The IBV study “Own Your Transformation” unveils how CSCOs are navigating significant supply chain challenges brought on by a global COVID-19 pandemic, inflation, climate change and geopolitical events, and how they plan to future-proof their supply chains. For this study, IBV in cooperation with Oxford Economics interviewed 1,500 CSCOs and COOs from 35 countries worldwide and 24 industries. One third of them is based in Europe.

Key study findings show that:

CSCOs are embracing AI and automation technologies to provide interconnectivity with partners and suppliers and to enable sustainable operations and predictability.

Almost half (47%) of surveyed CSCOs said they have introduced new automation technologies in the last two years - an approach that can add predictability, flexibility, and intelligence to supply chain operations, and they’re using AI to help monitor and track performance.

Sustainability is both a challenge and a force for change.

When asked “What do you expect will be the greatest challenges for your organization over the next 2-3 years”, surveyed CSCOs gave the following ranking:

1. Supply chain disruptions: 51%
2. Technology infrastructure: 44%
3. Sustainability: 42%
4. Market shifts: 40%
5. Consumer demographics: 39%
6. Regulation: 38%
7. Diversity and inclusion: 37%
8. Tariffs and trade barriers: 36%
9. Capital raising: 36%

Sustainability is among the top priorities: CSCOs see it as their third biggest challenge in the next few years, trailing only supply chain disruptions and technology infrastructure. As a result, 52% place sustainability at or near the top of their priority list. The survey also shows that 50% of the CSCOs expect that their sustainability investments will accelerate business growth.

CSCOs also tell that they experience the most direct pressure for sustainability transparency from: investors (56%), board members (50%) and customers (50%).

‘The Innovators’ are modernizing their technology infrastructure

20% of respondents – which IBV calls ‘the Innovators’ - stand apart for accelerating their data-led innovation to prepare for a precarious future. This group is already outperforming peers on key metrics, including reporting 11% higher annual revenue growth.

They are:

• Integrating automated workflows across organizational functions and with their partners for real-time visibility, insights, and action (95% more than other CSCOs).
• Modernizing their technology infrastructure – 56% are currently operating on hybrid cloud, and 60% are investing in digital infrastructure to scale and deliver value.
• Extending their sustainability initiatives, creating new products and services. 58% see opportunities to improve customer engagement through sustainability imperatives.
• Focusing deeper on cybersecurity (nearly 20% more than other CSCOs).

Investment in AI and automation is crucial to navigate supply chain uncertainties and improve sustainability.

“To effectively combat the unprecedented supply chain stressors like inflation, it’s imperative that CSCOs focus on using analytics, AI and automation initiatives to build intelligent, resilient, and sustainable supply chains,” says Jonathan Wright, IBM Consulting Global Managing Partner, Sustainability Services and Global Business Transformation. “Automation and AI can enable CSCOs and their organizations to collect data, identify risk, validate documentation, and provide audit trails, even in high inflationary periods, while also managing their carbon, waste, energy and water consumption.”