77% of organizations plan to invest $100k or more in supply chain technology in 2022
According to a new executive survey, companies that invested in integration technology to improve supply chain and organizational agility reaped significant financial gains in 2021. Business leaders from one in five companies (19%) stated that increased agility resulting from such investment drove $3,000,000 or more in additional revenue in 2021.
For 50% it was at least $1,000,000, and for three out of four (73%), it was at least $500,000 – proving that integration technology, given its direct impact on both overcoming supply chain disruption and driving business growth, should be a top strategic priority among business executives.
The survey was conducted by Dimensional Research, Inc.
What Happened in 2021
Not surprisingly, for two-thirds (68%) of respondents, the pandemic was the greatest external threat to their business, followed by supply chain disruption (44%), with both proving particularly damaging to business partner relationships.
But the result of these damaged relationships? A steep price had to be paid. Some 90% of companies said they replaced or terminated at least one business partner in 2021, citing supplier problems (60%), manufacturing problems (50%), and shipping problems (44%). Additionally, forty-eight percent (48%) of businesses suspended or terminated two or more lines of business in 2021.
While problematic trading partners were removed by executives from their business operations, some companies were able to take advantage of the situation. A large majority (81%) of the companies surveyed added two or more new lines of business in 2021. These new lines of business required making changes to their ecosystem, including the addition of new trading partners (sales channels), digital marketplaces, or direct-to-consumer models (eCommerce).
To manage such sweeping changes to their business ecosystems, all largely driven in response to external disruptions like the pandemic, sluggish supply chains, cybersecurity threats, labor shortages, or inflation concerns, 71% of companies invested $100,000 or more in supply chain technology in 2021.
Integration Tech is Top Investment Choice
The top investment made by executive was in integration technology. Nearly six in ten executives (59% of those surveyed) invested in integration technology as their primary method to respond to disruptions threatening their business. This was followed by 53% who invested in back-office applications (e.g., ERP, CRM, WMS, TMS solutions) and 45% who found new trading partners (suppliers, customers, shippers).
Companies’ proactive investment strategies benefited their organizations in two interrelated ways. First was a focus on enabling partner changes in both new and existing lines of business. The second was having the business agility to implement those new lines of business and handle any related supply chain issues.
Both approaches were adopted to mitigate continued pandemic effects and supply/demand issues, and 99% of those surveyed concluded that their business revenue increased as a result of the added agility stemming from these investments, reporting they saw improvements in customer satisfaction, company growth, profits, and business resilience.
“The global pandemic and supply chain disruptions continued to plague business in 2021. Such challenges had a direct impact on key business relationships, but also created opportunity for companies to rethink their strategies and invest more astutely in supply chain integration technology,” said Tushar Patel, chief marketing officer with Cleo. “Our survey shows an agile supply chain starts with flexibility and control at the integration layer. By proactively ensuring that their integration strategies complement their other technology investments, companies win -- both in terms of revenue generation and improved relationships with their ecosystem partners.”
Given that disruptive threats look to continue into 2022 and beyond, 77% of companies plan to invest $100,000 or more in supply chain technology in 2022. And 91% say agility remains a key initiative for their company going forward.
“Over the next twelve months, we expect forward-thinking executives to continue to make the necessary supply chain technology investments to drive business agility – with integration investments leading the way. It really will become a conversation about table stakes.” continued Patel.