Exploring Attitudes Towards Digital Supply Chain Transformation in Large Business and SMEs

1.1

Key findings

• SMEs are less likely to prioritise adopting digital supply chain technologies than large businesses. Policy makers and technology suppliers should be targeting these businesses with messaging on the benefits and importance of digitising supply chains, as well as sharing best practices, in order to increase uptake.

• Above all, businesses are looking to enhance efficiency and automation by digitising their supply chains. When bidding for new projects, technology suppliers should ensure that proposals clearly demonstrate how digital supply chain solutions can achieve this objective. 

• Insufficient skilled professionals is one of the most common barriers to digital transformation when it comes to supply chains. Companies can overcome this by outsourcing projects to technology providers that will also help to fill any skills gaps their organisation may be experiencing.

• Large businesses may not be dedicating sufficient budget to achieving their digital transformation objectives. Supply chain teams and technology suppliers would benefit from focusing on proving the business case for digital supply chain technology including driving value.

• System integrators, software vendors and technology consultancies are all in a good position to educate businesses about digital supply chain solutions as they are viewed by companies as the experts. These companies should be proactively engaging with businesses of all sizes to demonstrate the benefits of digital supply chain technology to increase uptake. 

• SMEs are currently less likely to be developing digital supply chain technologies in house and therefore may be more open to outsourcing. Technology providers can help these businesses to plug any skills gaps they may be experiencing and should take care not to overlook smaller businesses when planning their marketing strategies.

• Both large businesses and SMEs are eager to adopt AI. When putting together proposals for digital transformation projects, technology suppliers should therefore be sure to demonstrate the business case for integrating AI into digital supply chains solutions, as well as showing how it can drive value.

1.2

Business priorities

• SMEs are less likely to be prioritising digital supply chain transformation

According to the findings, adopting digital supply chain technologies is high on the agenda for many large organisations. In fact, seven in ten (70%/351) respondents from large businesses say this is a priority¹ for their organisation, while just 8% (40) of respondents in large businesses say it is not a priority² for their organisation. Adopting new digital supply chain technologies (33%/165) is a top priority for large businesses along with improving market reputation (34%/170) and reducing costs (34%/170).

Figure in %. Data from large manufacturers

Respondents in SMEs are less likely to state that digitising their supply chain is a priority for their organisation. Three in five (60%/301) say that this is the case, while almost a fifth (19%/95)² say this is lower down their company’s to do list. The findings also show that adopting new digital supply chain technologies (17%/85) is less likely to be cited as a top business priority for SMEs than reducing costs (45%/226), increasing brand awareness (38%/191), improving market reputation (26%/131) and enhancing customer satisfaction (26%/131).

Data from SME manufacturers

1.3

Supply chain transformation priorities

• Enhancing supply chain efficiency and automation tops the list of supply chain priorities

The findings reveal that almost all large businesses surveyed have one or more top priorities when it comes to digitally transforming their supply chains. In fact, just 1% (5) say they don’t have any current supply chain top priorities.

Enhancing efficiency and automation (47%/236), building resilience against disruptions (44%/221), and developing a more sustainable supply chain (39%/196) are most likely to be cited by large businesses as top priorities. However, strengthening supplier collaboration (15%/75) is lower on the agenda when it comes to the use of digital technologies in relation to supply chains. 

On the other hand, SMEs surveyed are slightly less likely to be prioritising supply chain digital transformation, with 14% (71) saying they don’t currently have any supply chain top priorities. That said, over two in five (44%/221) of these businesses are looking to enhance supply chain efficiency and automation, while a third are prioritising building resilience against disruptions (33%/166), developing a more sustainable supply chain (33%/166) and improving visibility and traceability (33%/166).

Data from large manufacturers

The findings reveal some regional differences in attitudes. For example, respondents in SMEs surveyed in the South (48%/47) and the Midlands (46%/40) are most likely to say that enhancing efficiency and automation are their current supply chain top priorities when it comes to the use of digital technologies. However, respondents in the North are most likely to say that this is building resilience against disruptions (40%/32).

1.4

Barriers to digital transformation

• Digital transformation plans are hindered by insufficient resources

The findings show that businesses of all sizes are facing similar challenges when it comes to adopting digital supply chain technologies. In fact, respondents in both large businesses and SMEs are most likely to say that the most significant barriers hindering digital transformation in their organisation are existing processes (Large – 32%/161, SMEs – 26%/131), resources (Large – 31%/156, SMEs – 28%/141) and work culture (Large – 29%/146, SMEs – 27%/136). 

However, there are some differences between the barriers faced by large businesses and SMEs. For example, respondents from large businesses are more likely than those in SMEs to say their talent pool (27%/131 vs 19%/95) is holding them back. However, respondents in SMEs are more likely to be struggling due to a tech-averse workforce. Almost one in five (18%/90) of these respondents say their workforce is afraid of new technology, while just one in nine (11%/55) of those in large businesses say the same. Furthermore, over a fifth (22%/110) of respondents in SMEs say concerns around the threat of AI are a significant barrier to digitally transforming their supply chain, while just one in seven (14%/70) of those in large businesses say the same.

Data from SME manufacturers

“I’m all for innovative ideas, new technology to make supply chains seamless. We want to explore the technology side and be ahead of the game but we need to make sure we have the right tech to be able to trust it.”  

“We want it to be personalised to our company’s needs rather than going to a company and saying ‘here are five things we need. You tick two of the boxes’. Three boxes are not ticked. We still need the other three boxes to be ticked. We need to go elsewhere and source it or do it ourselves manually. So it’s just being able to make sure it’s personalised to our company needs rather than a tool that’s generic, and anyone can use.”

Director, London

The top barriers to digital transformation vary according to region. Respondents in large businesses surveyed in the South are most likely to cite existing processes (31%/21) and availability of data (31%/12) as the most significant barriers. However, those in the Midlands are most likely to say that resources (32%/25) are their main barrier and the highest percentage of respondents in the North say work culture (31%/21) is the main thing holding them back.

Meanwhile, respondents in SMEs in the South are most likely to say existing processes (29%/28) are hindering progress, those in the Midlands are most likely to say this is due to concerns around the threat of AI (30%/26). The highest percentage of respondents in the North say work culture (27%/21) is a main barrier to transformation.

1.5

Digital transformation budgets

• Businesses are not investing sufficiently in digitalising their supply chains

According to our research, large businesses surveyed are more likely to have a dedicated budget specifically allocated for the adoption of digital supply chain technologies than SMEs (67%/336 vs 54%/271). The findings reveal that on average¹ large businesses with a dedicated budget for digital transformation allocate £53,263.37 to achieving this objective. 

On the other hand, on average¹ SMEs surveyed have an annual budget of £40,197.24 allocated to the adoption of digital supply chain technologies. Initially, it appears that SMEs have less sufficient budgets dedicated to digital transformation. However, when taking organisations’ sizes relative to their annual budgets into account, the findings indicate that it is in fact larger businesses that are not investing enough into digital supply chain technologies. This idea is supported by further findings that show respondents from large businesses are less likely than those in SMEs to say they are satisfied with their company’s level of investment (63%/316 vs 82%/412).

Data from large manufacturers

“The challenge is getting all these courier firms into one portal for our in house software to pull it together and then extract it into our CRM, so we can see it in full on the big screen here. At the moment we’re pulling in and inputting it manually.”

“If we went for something like salesforce or sap we could automate it but the cost is so prohibitive because they’re more for larger enterprises. Because we’re in a much smaller business, every penny makes a difference. The cost of borrowing has gone up. So it’s something we can’t budget into this year’s requirements, so we won’t be won’t be having this year.” 

Director, London

Respondents in large businesses are most likely to say inefficiencies and delays (47%/236), the loss of their competitive advantage (41%/206), failure to mitigate supply chain crises (39%/196) and increased vulnerability to disruptions (37%/186) are the consequences of not dedicating adequate funds to adopting digital technology in respect of supply chains. Meanwhile, respondents in SMEs also cited inefficiencies and delays (42%/211), loss of competitive advantage (38%/191) and increased vulnerability to disruptions (28%/141) among their top consequences. However, higher overall supply chain costs (27%/136) also feature.

Looking across the regions, there are some differences in opinion when it comes to the consequences of not having the right budget allocated to the adoption of digital supply chain technologies. For example, respondents in large businesses in the North (40%/27) are more likely than those in the South (25%/17) and the Midlands (21%/16) to think that higher overall supply chain costs are a consequence of not having adequate budget for supply chain transformation.

Data from SME manufacturers

1.6

Seeking help

• Businesses are seeking guidance and support with their digital transformation plans

The findings show that large businesses and SMEs have similar preferences when it comes to where they turn for advice and support in digitising their supply chains, albeit with a few notable differences. Large businesses surveyed are most likely to seek help from systems integrators (40%/201). On the other hand, just a quarter (25%/126) of respondents from SMEs say this is where they turn when in need of support.

Meanwhile, almost two in five (39%/196) respondents in large businesses say they seek help with digitising their supply chain from software vendors and over a third (36%/181) say they turn to technology consultancies. SMEs surveyed are also most likely to turn to technology consultancies (37%/186) and software vendors (32%/161). However, supply chain management (29%/146) is also a preferred source of support.

Data from large manufacturers

According to the findings, large businesses surveyed are more likely to turn to industry associations and research groups than SMEs (33%/166 vs 22%/110). Both large businesses and SMEs are least likely to seek support and advice on digitising their supply chains from current customers or partners. However, SMEs surveyed are more likely to say they turn to this group than large businesses (18%/90 vs 9%/45).

“I think upskilling our staff is beneficial for us, because it shows that we care about employees. I don’t want to go out and reach out to get more people to look after that new technology side of things. But if we do need an expert to come in because we can’t do it in house, then we reach out to someone to come in and do a six months program with us, get them to train our current staff, training two or three people internally with permanent contracts. And then that way they can develop their skills and in the future take it forward.”

Director, London

1.7

In-house development

• SMEs may be more open to outsourcing digital transformation projects

“We use AI, we use IoT, we use blockchain technology. We are introducing AI technology into our operating and manufacturing processes. We’re always looking at ways of introducing cutting edge technology to kind of streamline our process and increase productivity and efficiency. We’re not a technology company. We’re about manufacturing processes and industrial engineering. We have to get outside expertise to help us onboard and integrate the tech into our current practices.”

 “Some people at the company are wary of it. Some people don’t like technology. We got people working here for 34 years, and they don’t like adopting new technology. They’re set in their ways of working. ‘This works. Why do you want to change it?’ So we’re training the mindset of people who are comfortable with the status quo. But at the end of the day this increases productivity and makes sure jobs are secure. There’s no time for redundancy, and we’re growing and expanding. we’ve not laid off any staff in the last five years.”

Director, West Midlands

Data from large manufacturers

Nine in ten (90%/452)¹ large businesses surveyed develop digital supply chain technologies in house. Respondents from these organisations are most likely to say they do this because they can integrate more effectively with existing systems and processes (38%/191), because they haven’t found an existing technology/external provider that meets their requirements (32%/161) and because it’s more cost effective (31%/156).

SMEs are less likely to say they develop digital supply chain technologies in house. Two thirds (66%/331) say they do this, with just over three in ten (31%/156) saying this is because it’s more cost effective, while just 22% (110) do this because they already have a team with the knowledge and expertise to take this on.

1.8

Digital supply chain technologies

• Businesses are interested in adopting AI for predictive analytics and optimisation

The research reveals that respondents from both large businesses (46%/231) and SMEs (42%/211) are most likely to say that their organisation is most interested in adopting artificial intelligence (AI) for predictive analytics and optimisation. Large businesses are also most likely to be considering robotics and automation for warehouse management and fulfilment (37%/186) and blockchain for enhanced traceability and transparency (35%/176).

Data from all manufacturers

On the other hand, cloud-based solutions for data storage and collaboration (40%/201) and the Internet of Things (IoT) for real-time tracking and monitoring (31%/156) are also most likely to have piqued the interest of SMEs surveyed. Overall, the findings indicate that large businesses have more appetite for adopting digital technology as part of their supply chain. In fact, just 2% (10) of respondents in large businesses say there aren’t any digital supply chain technologies that their organisation is most interested in adopting, while one in five (20%/100) of those in SMEs say the same.

“Because the price of goods varies so much, we need to make sure that there’s human intervention. If it’s done automatically, there might be a mistake, for example, it might purchase raw materials at a higher cost than a person would choose.”

“When you’re dealing with a Northern European country, you can pretty much guarantee that the goods will be of the quality that they’ve said it is, and that the count will be correct as well. However, what we do find is that from other countries, sometimes you get short changed and sometimes the goods aren’t up to scratch. Because it has to be physically checked. We haven’t got a scanning machine that you could scan up and down on the pallet and check that the goods are what they say they are. I don’t know whether that’s possible. Maybe it is.”

Commercial Director, East of England