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Supply Chain Graphic of the Week: Digitization of the Supply Chain is Low on CEO Priority List

 

Supply Chains Not Getting Much Digitization Investment, Even Though It Would Have the Biggest Impact on Growth and Profits

Feb. 16, 2017
SCDigest Editorial Staff

SCDigest is still working on a detailed definiton of what digitization in the supply chain is all about.

The reality, from our view, is that it means everything and nothing in many cases, being defined as Internet of Things, robotics, analytics and more - very hard to get your arms around.

 

But what is very easy to understand is the chart below, from a recent report on digitization of the enterprise by McKinsey, which shows in what areas companies are putting their primary effort/investment in digitization.

 

 

Wow. Supply chain digitization, whatever it means, is barely on executives' radar, cited as the top priority by just 2% of respondents.

 

But McKinsey argues that view may lead to missing real opportunities.

 

Among these different areas, McKinsey's analysis shows that "The biggest future impact on revenue and EBIT [earnings before interest and taxes] growth, is set to occur through the digitization of supply chains. In this dimension, full digitization contributes two-thirds (6.8 percentage points of 10.2 percent) of the total projected bump to annual revenue growth and more than 75 percent (9.4 out of 12 percent) to annual EBIT growth."

 

It adds that "The question, it seems, is whether companies are overlooking emerging opportunities, such as those in supply chains, that are likely to have a major influence on future revenues and profits."

 

Well, that sounds like good news, even if what digitization means is still a bit vague. The report may clear some of that up, which you can find here.

 

Any Feedback on our Supply Chain Graphic of the Week? Let us know your thoughts at the Feedback section below.

 

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