Pace of supply chain transformation needs to step-up to meet disruptive trends - says new PwC Global ‘Reinventing Supply Chains 2030’ study

Increasing frequency of severe supply chain disruptions expected to 2030

Nearly half (46%) of survey respondents believe that there will be an increasing frequency of severe supply chain disruptions to 2030.  The widespread upheavals in global supply chains are forcing business leaders to fundamentally transform their business models. However, just 8% of industry leaders (champions) have fully transformed their supply chains to meet disruptive trends.   This is according to PwC’s Global Reinventing Supply Chains 2030 study published in Ireland today which surveyed more than 1,000 supply chain executives around the world, including in Ireland, about the key supply chain trends and developments across all major industries. The study findings reveal that geopolitical crises, climate change and technological advancements are the main factors causing continuous disruptions that constantly destabilise global supply chains. 

An overwhelming majority (92%) of all survey respondents admitted that their supply chains are not fully ready to support service orientated business models or offer sustainable solutions to customers.  

External shocks are the ‘new normal’. The study highlights that business leaders feel pressured to rethink their entire supply chain concept to make it more adaptable, sustainable and intelligent – essentially building "thinking" systems that learn and evolve. Their plans include increasing transparency, integrating AI and robotics and collaborating with all stakeholders to identify and resolve issues more quickly. However, according to the survey, only a minority of companies have fully transformed their supply chains to succeed in these endeavours. 

At the same time, over half (52%) of all respondents surveyed said that they have initiatives ongoing to manage an increasing frequency of severe supply chain disruptions. 

Just 4% have fully adapted their supply chains for evolving technological advances (champions: 27%).  A further 50 percent of all companies surveyed have such initiatives ongoing.  The most successful transformations are characterised by end-to-end integrated approaches but are very complex and, according to the champions, require advanced skills, technologies and new ways of working. Additionally, a clear vision and roadmap, resource capacities and employee commitment are essential. 

The study results show that there is tremendous uncertainty over how to deal with increased competition from fully integrated end-to-end supply chain systems. Only 8% of companies consider their supply chains to be fully ready for increased competition from fully integrated end-to-end supply chain systems (Champions 29%).  Furthermore, 50 percent of  champions rate this trend to be important in the short and long term.  

Successful transformation has immediate impact on competitiveness

Transformation is an opportunity to create value: the survey reveals that champions expect cost reductions of 19% and revenue increases of 16%. If companies harness the effects of the upheaval correctly, they can become resilient and gain a competitive edge. 

Áine Brassill, Supply Chain and Operations Transformation Partner, PwC Ireland,  said: “The report highlights that the pace of transformation of supply chains to manage the onslaught of future disruptions needs to quicken. The industry leaders or champions are setting the example.  According to the report, market turbulence will continue to impact supply chain performance, requiring serious interventions to avoid operational downtime, higher costs and loss of revenue.  Continuous disruptions are the 'new normal.' Companies must, therefore, take steps to completely rethink their supply chains.   Adaptability, sustainability, and a new cognitive ecosystem are key.  Companies need to move to more service-orientated, sustainable and circular supply chain models to be competitive.”

Regionalisation of supply chains becoming more popular

The survey reveals that four out of ten (40%) global companies have initiatives underway to regionalise their supply chains.  At the same time, a large majority (83%) of champions consider it crucial to relocate supply chains to manage future disruption.  28% of European companies say that relocation is very important now and will be even more important in the future.  The impacts of the ongoing polycrisis, stemming from geopolitical conflicts, climate change consequences, rising costs and prolonged inflation, are keeping supply chain executives on their toes.  

Few have adapted supply chains to be more ESG-compliant 

Companies must comply with ESG regulations (such as CSRD and pending new EU Supply Chain Regulations), which are growing in scope and complexity and are posing new challenges.  More than 40% of surveyed companies recognise that making their supply chains more ESG-compliant is highly disruptive now and in the future. 

However, only 12% of all companies reported that their supply chains have been fully re-modelled to be ESG compliant (63% for the champions). This means that they have largely implemented key capabilities like ESG-driven circular network design and ESG supply chain planning.  A further 65% of all companies surveyed have such initiatives ongoing. 

Over half (51%) of champions said that supply-chain wide visibility and transparency is a foundational capability for ensuring ESG compliance. 

Áine Brassill continued: “Legislators globally are tightening regulatory requirements while consumers are increasingly expecting companies to push their environmental and social efforts.  These trends are giving strong impetus for new more sustainable supply chain models and competitive environments.” 

Growing talent and workforce scarcity  

A quarter (25%) of respondents believe that severe talent and workforce scarcity will increasingly disrupt supply chains by 2030, up from 15% in 2024. 

However, just 4% of companies say that they have fully transformed their supply chains by automating tasks and reskilling workers (champions: 19%).  Half (50%) of champions reported that low-touch and automated order management and fulfilment is the most important capability to bypass workforce shortages.  It isn’t just highly skilled and digital talent that is in short supply. Leaders are also worried about filling jobs in logistics and transport. This is particularly relevant in Ireland where a number of Irish companies have highlighted the challenge of finding staff - particularly in warehousing and transportation.  

AI to have a positive impact on supply chains  

Overall, 39% of responding companies believe that Artificial Intelligence (AI) will have a positive long-term impact on their supply chains. 65% of champions said that AI is already having a big impact.  Artificial Intelligence (AI) is a key technology in supply chain transformation. Surveyed champions are already using AI in supply chain planning, logistics, order management and risk management to anticipate disruptions and respond quickly. 

Mark McKeever, Director, Procurement & Supply Chain Practice, PwC Ireland concluded: “Supply chains are under enormous strain.  Globally we are witnessing the largest supply chain overhaul in decades.  But although a small percentage of companies are wholly transforming their supply chains to meet disruptive challenges, many companies remain in the early stages. 

“Supply chain transformation is a complex challenge that must happen alongside daily business operations. Consequently, supply chain managers often make only minor adjustments. However, marginal improvements in quality or service are not sufficient - a more comprehensive approach is required.  There are no shortcuts towards a competitive supply chain.”

“In Ireland, with our proximity to US and European markets together with our strong foreign direct investment ecosystem, there is a clear opportunity from a developing trend of companies looking to nearshore elements of their supply chain activities.  A key enabler, of course, will be to ensure that Ireland has the appropriate infrastructure to allow this to happen.” 

About the survey

The survey was carried out in early 2024 amongst 1,011 supply chain managers and senior executives from 28 countries around the world including Europe, the Middle East and Africa, the Americas and Asia Pacific.  The respondents included many global companies with significant operations in Ireland. Indeed, a number of the executives surveyed are based in Ireland.

‘Champions’ are defined as leaders in supply chain management in terms of supply chain maturity.  Champions have reinvented supply chains to be adaptable, sustainable and cognitive by broadly implementing capabilities and technologies to master disruptive trends.