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Logistics professionals fail to scale digital projects as they spread focus too thinly

Supply chain departments are struggling to scale digital pilot projects due to a lack of focus, a new study suggests.

The survey by Capgemini found that while the average organisation has 29 digitisation projects in the idea, proof-of-concept (POC) or pilot stage, only 14% had succeeded in moving beyond this stage.

Interestingly, the organisations that had succeeded in scaling projects had an average of 6 projects at POC stage while those that failed had an average of 11 projects.

As well as the difference in focus, the report revealed that those companies which succeeded had clearer procedures in place for evaluating the success of the projects.

Eighty-seven percent of companies that had successfully scaled said they had a clear procedure in place to evaluate success and 75% had guidelines for prioritising projects, compared to 24% and 36% respectively amongst those which had not succeeded.

The report assessed a number of initiatives in terms of their pay-off compared to ease of implementation. It found that the most valuable projects were order processing using robotic process automation, placing smart sensors in containers to monitor product conditions, inventory monitoring, spare part management using 3D printing and updating and maintaining connected products.

It also found that ROI from procurement and supply chain initiatives averaged 18%, ahead of 15% and 14% for HR and IT initiatives respectively.

With this in mind, it is unsurprising that 50% of respondents considered digitisation of their supply chains to be one of their top three corporate priorities. Seventy-seven percent said supply chain investments were driven by the desire for cost savings, while 56% cited increasing revenues and 53% supporting new business models.

Commenting on the report, Rob Burnett, CIO of Global Supply Chain & Engineering at GE Transportation said it was “important to maintain a sharp focus on priority projects to get the ball rolling. There should be a wider appreciation that less is more.”

Dharmendra Patwardhan, head of the digital supply chain practice for business services at Capgemini, said: “While most large organisations clearly grasp the importance of supply chain digitisation, few appear to have implemented the necessary mechanisms and procedures to turn it into a reality.

“Companies are typically running too many projects, without enough infrastructure in place, and lack the kind of focused, long-term approach that has delivered success for market leaders in this area.

“Digitisation of the supply chain will only be achieved by rationalising current investments, progressing on those that can be shown to drive returns, and involving suppliers and distributors in the process of change.”

The researchers surveyed supply chain executives from 1001 organisations between April and May 2018, with 80% of respondents reporting over $1 billion in revenue in 2017. They also interviewed senior supply chain executives.

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