More than 40% of firms said cost is the biggest inhibitor in adopting digital technologies, in terms of technical set-up, training and ongoing support, according to a report.
The report, published by CIPS and University of Melbourne, found over 95% of firms had adopted at least one digital technology for their procurement and supply practice, with cloud computing, big data and internet of things (IoT) leading the way.
Procurement and supply chain professionals cited cost-effectiveness factors as the primary benefit of using digital technologies (19%). This was followed by real-time capability (18%), agility and transparency (17%).
“As a result, managers will do well to justify these costs in terms of the short and long-term benefits of adopting technology,” the report said.
Security is a concern for procurement professionals when implementing technology, which must be fully addressed when producing the business case for digitalisation.
Other challenges stated included a lack of organisation-wide coordination and working processes, and resistance to change.
Malcolm Harrison, CIPS group CEO, said: “Industry 4.0 is the buzzword of our age as businesses and organisations scrabble to get ahead in the digital race. But take a step back and look at why digital is becoming so important and you’ll realise that investment in technology is not enough.
“There are vast digital capability gaps in all sectors so training and developing understanding is a crucial first step. Then being able to align digital transformation with business needs, involve all key departments in the planning and finally justification of ROI, means that digital supply chain transformation has a greater chance to succeed.”
Daniel Samson, professor and co-editor in chief of operations management research at the University of Melbourne, said: “While the new digitalisation technologies promise a lot, we advise executives to not get caught in the hype of IoT, AI, blockchain etc, but rather to consider your whole business model and operations strategy first, and from that context to then carefully choose a technology strategy.
“We have seen these technologies lead to everything from cost reduction to speed and service improvements when they are implemented correctly, and nothing but frustration and wasted effort and expense when they are poorly deployed.
“Firms and their executives cannot ignore these sweeping changes in potential capability, because competitors will be moving the competitive frontier forward through their use. A holistic socio-technical approach will lead to a rethink of what people can do best and what technology can do best in your organisation.”
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