Distributor Tech Investments Fail to Meet Supply Chain Challenges

Companies have invested in new business systems β€” but their spending largely failed to protect inventories.

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In an effort to combat the effects of the COVID-19 pandemic, a majority of distributors and manufacturers invested in new business systems to manage order requirements and control inventory.

But those efforts, a newly released poll shows, largely fell short.

SYSPRO, a provider of enterprise resource planning software, on Tuesday released findings from its latest global research survey, which reflected severe disruptions to the global supply chain with long-lasting implications for industry. In the past two years, according to the poll, 70% of companies experienced supply chain disruptions, and 60% were unable to communicate with suppliers and customers in real time β€” often leading to failed deliveries.

Those problems were partly due to pre-pandemic tech investment and outdated business models, and companies sought to make short-term investments to mitigate the impact of the pandemic. Nearly two-thirds of businesses invested in systems to address orders and inventories, and nearly 70% percent considered digitalization.

Just 29% of respondents, however, committed to a full-fledged digitalization strategy.

In addition, although nearly half of businesses invested in sensors and IoT networks, just 20% spent resources on data analytics tools β€” which are needed to gain insights from the data collected by smart systems β€” and just 5% looked into the artificial intelligence and machine learning technologies needed to realize long-term benefits.

SYSPRO analysts said the results were emblematic of a β€œdisconnect” across the supply chain related to technology investment, particularly between internal spending and external communications. Less than half of new business systems allowed manufacturers to effectively collaborate with suppliers and customers, and less than one-quarter of companies included external collaboration as part of their digital strategy. Only 18% invested in business systems to improve external collaboration.

What’s more, fully half of respondents chose not to invest in any systems at all.

"What we are seeing now is a knock-on effect of supply chain disruptions,” SYSPRO Chief Product Officer Paulo De Matos said in a statement. β€œIt won’t matter how businesses try to up their game internally, if they are unable to communicate effectively with their external ecosystem and respond to shifts in the supply chain, businesses may fall behind.”

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