Executives investing in sustainability and AI-driven supply chains

Blue Yonder has released the results of its 2024 Supply Chain Executive survey, which polled global supply chain executives on their businesses’ experiences with supply chain and logistics strategy and operations over the last year. Overall, the overwhelming majority (84%) of global businesses report experiencing supply chain disruptions within the last year. In the U.S., that number was in line at 85%, down slightly from 87% in 2023 and 88% in 2022.

“Supply chain disruptions are still a major challenge for businesses,” said Andrea Morgan-Vandome, Chief Innovation Officer, Blue Yonder. “With a majority of global organisations reporting disruptions in the last year, it’s clearer than ever that we need innovative technology solutions to respond to those disruptions and enable businesses to adapt with lasting resiliency.”

Companies Still Face Challenges Operating Supply Chains Due to Disruptions and Rising Costs

Supply chain disruptions are still impacting businesses around the world. Over the last year, disruptions were driven primarily by the lack of availability of raw materials (48%), extended delivery times from material suppliers (47%), lack of labour (44%) and lack of availability on shipping vessels (41%). Globally, the most common results of supply chain disruptions are delays for customers (42%), stalled production (42%), and loss of compliance with new regulations (39%). Within the U.S., a plurality (43%) of respondents reported that supply chain disruptions resulted in delays for their customers, down from 52% in 2023 and 58% in 2022.

Inflation has been a primary concern among supply chain executives in recent years and impacts numerous business areas. This year, 36% of U.S. organisations cited cost of materials as the area most impacted by inflation (down from 43% in 2023). On a global scale, respondents reported transportation (38%) and cost of materials (34%) as the business areas most impacted by rising costs.

The combination of disruptions and inflation has resulted in lower profit margins for many businesses. Most organisations (60%) in the U.S. reported decreased profit margins over the last year, the highest percentage of any of the regions surveyed. Globally, 46% of organisations’ profit margins fell amid rising costs.

Supply Chain Executives Focus on AI and Sustainability Investments

In response to these challenges, many supply chain executives are pursuing strategic investments – particularly in AI and sustainability. Nearly 8 out of 10 global organisations (79%) increased their investments in supply chain operations, and only 4% reduced investments. Globally, 51% of companies invested more than $10 million in supply chain investment. In the U.S., these investments are growing at a quick rate, with 49% of organisations investing more than $10 million in supply chains, compared to 38% in 2023 and 24% in 2022. For 48% of global organisations, sustainability is the key area of investment, followed by AI-based technology (41%), developing new strategy (40%), additional workforce (39%), and digital transformation (37%).

The U.S. leads global sustainability investment, with 55% (up from 42% in 2023 and 43% in 2022) of organisations focused on improving efforts in that area. This is compared to 27% for UK companies, 49% for DACH countries, and 46% for France/BENELUX. For U.S. organisations, the key areas of focus for maximising sustainability throughout the supply chain are improving transportation efficiency (59%), reducing waste and excess (57%), and improving supplier sustainability and reporting (53%).

“It’s encouraging to see the upward trend of sustainability investment in the U.S. over the last two years,” said Saskia van Gendt, chief sustainability officer at Blue Yonder. “This trend is reflective of increased global demand for improved sustainability, especially in the U.S., where sustainability hasn’t been as much of a key focus compared to other regions.”

“Only 2% of respondents identified sustainability as their primary role within their company, but sustainability still rose to the top as a key investment,” said van Gendt. “This is likely a signal that supply chain roles are increasingly responsible for driving the sustainability of the overall business.”

As the second-most common supply chain investment, AI has been widely adopted by organisations around the world. Over half of global organisations are applying AI to supply chain planning (56%), transportation (53%), and order management (50%). And amid the rise of generative AI, most global organisations (80%) have implemented this technology in their supply chains at some level, whether fully (12%), partially (33%) or piloted (35%). Generative AI is also having an overwhelmingly positive impact: 91% of global organisations find generative AI to be effective in optimising supply chain processes and decision-making.

“Companies are realising the power of AI and generative AI on their supply chains. This technology is changing the way companies plan their supply, react to changes in demand, and pivot through disruptions. To truly digitally transform your supply chain means incorporating AI to stay ahead and meet your business objectives,” said Morgan-Vandome.

Supply chain investments continue to drive efficiencies for businesses. In the U.S., 61% of organisations reported improved efficiencies because of supply chain investments, compared to 54% in 2023. Supply chain investments are also driving expanded market share in the U.S. (39% in 2024, 21% in 2023), increased revenue growth (38% in 2024, 39% in 2023) and fewer disruptions (41% in 2024, 42% in 2023).