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To stay ahead, supply chains must be agile and resilient. EY research reveals key challenges and a push for autonomous, tech-driven systems.
Supply chain leaders in the future will confront a pivotal moment as they reckon with the need to build resilience and agility, reassess operating models and accelerate digital investments, balance costs and reallocation, and ultimately move toward global visibility and an autonomous supply chain.
EY professionals conducted extensive research with nearly 350 senior supply chain executives. The key themes and insights that emerged offer a clear picture of the challenges and opportunities that await as supply chain leaders re-evaluate and transform how they get their products to market.
The top five challenges for supply chain leaders include:
1. Limited visibility across supply chain functions
Supply chain visibility is the top challenge for businesses, as highlighted by the EY research. Widespread disruptions have forced companies to rethink their approaches, moving from rigid and linear systems to agile, networked ecosystems. Emerging technologies like AI and advanced analytics enhance visibility by enabling end-to-end transparency across networks, allowing participating organizations to synchronize operations through joint decision-making. Strategic partnerships play a crucial role in this transformation, fostering improved communication and collaboration with suppliers and manufacturers. Integrating autonomous vehicles, advanced robotics and strategic partnerships further boosts resiliency and efficiency, shaping the future of supply chains.
2. Modernizing the supply chain through tech and digital
According to EY research, a significant portion of companies often rely on rudimentary tools like emails and spreadsheets to communicate internally and with supplier networks. To transition to the future of supply chains, it is crucial to integrate supply chain functions and establish functional excellence using cloud-based tools and digital analytics. Collaboration across the entire organization, including finance and commercial functions, is essential to compete in the marketplace. The future of supply chains involves companies optimizing and automating their internal and external supply chain ecosystems, enabling better responses to demand and supply signals and driving significant improvements in efficiency and performance.
3. Addressing labor or skills shortages
In the future of supply chains, executives will face the triple threat of generative AI (GenAI) altering job roles, changing consumer expectations and global disruptions. As artificial intelligence (AI) integration accelerates, traditional roles are being redefined, necessitating new skill sets focused on adaptability and technological fluency. Upskilling the workforce is crucial to close the growing skills gap and ensure that the benefits of supply chain investments are realized. Investing in leadership development is also essential, as leaders must guide the technologically advanced supply chain workforce. Organizations must adopt a human-centered approach to transformation, emphasizing adaptive and leadership skills through personalized learning experiences to stay competitive in the evolving supply chain landscape.
4. Reducing costs within the supply chain
Continuous cost reduction is essential for promoting resilience and competitiveness in the marketplace. With 70% of operating costs typically tied to supply chains, effective cost management is crucial for long-term success. Key areas to review for supply chain cost reduction include sourcing, product complexity, network strategy, planning synchronization and operating model design. Addressing these areas with process discipline, data reliability and the right technologies like AI and advanced analytics is essential. Strategic partnerships and upskilling the workforce are also critical for the future of supply chains, achieving sustainable cost reductions and transforming supply chains into agile, networked ecosystems.
5. Deploying AI and GenAI within supply chain functions
GenAI is poised to revolutionize the future of supply chain management by enhancing efficiency, accuracy and decision-making. Key application areas include demand forecasting, prototyping, error detection, production planning and last-mile delivery optimization. However, challenges such as data security, talent procurement and legacy system integration must be addressed. Successful GenAI implementation can transform supply chains into agile, data-driven ecosystems, offering significant financial and operational benefits. As GenAI evolves, it will reshape business processes and the future of work.
What is the next big thing in supply chains?
According to EY research, by 2035, supply chains are expected to become mostly autonomous, driven by a convergence of leading-edge technologies such as GenAI, autonomous vehicles, advanced robotics and collaborative technologies. These innovations will significantly enhance coordination, decision-making and responsiveness across the supply chain. Autonomous vehicles, including self-driving trucks, warehouse robotics and drones, will revolutionize logistics and inventory management.
GenAI will enable real-time scenario simulations and automated decision-making, while other AI-driven optimization technologies will streamline production and handling processes. Achieving this futuristic vision requires overcoming traditional operational practices, integrating supply chain functions and establishing a network-based ecosystem. Supply chain executives must lead this transformation by standardizing processes, improving data quality, driving supply chain integration and collaboration efforts, and adopting new technologies that deliver significant business value.