Representative Kinaxis survey shows that the main consequences of these risks for German companies are cost increases and delivery delays
Munich -- December 11, 2023 -- Over the next five years, more than a third of companies in Germany expect international conflicts (37%) and the resulting energy prices (37%) to have the greatest impact on their supply chains, closely followed by raw material shortages (32%). The technology sector (46%), the automotive and aviation industry (40%) and the manufacturing industry (38%) see the energy crisis as the greatest risk to their supply chains. In these volatile times, one in five companies consider their supply chains to be at risk (20%). This is the result of a representative survey conducted by global supply chain management provider Kinaxis among more than 200 supply chain managers in German companies with an annual turnover of at least 200 million euros.
Enormous impact with a simultaneous lack of transparency
Risks and disruptions have a significant impact on supply chains with consequences for the entire company: For almost every second company (49%), increased costs and delays in the delivery of products to customers (47%) have the greatest impact.
"Three out of four companies are confronted with disruptions in their supply chains several times a year or more, yet there is still a lack of transparency regarding the impact," says Martin Bilstein, Regional Vice President for the DACH region at Kinaxis. "When a disruption occurs, only one in three companies can identify all affected processes (38%), all affected business units (38%), all affected suppliers (38%) and all cost impacts (37%). Furthermore, only one in four is able to track the CO2 impact. Given the increasing pressure for transparent ESG targets and reporting, this is a remarkably low number of companies."
Real time is key
While 36 percent of companies state that they have a real-time overview of all departments and can immediately recognize which departments of their company are affected by an unexpected interruption, others struggle to gather information in a timely fashion with 33% of respondents stating that, siloed information takes several hours to capture and 28% needing several days to do so, further slowing the gap between impact and response.
Timely reactions are also still difficult: if there are longer delivery times in a region due to a natural disaster or a major maritime bottleneck - such as in the Suez Canal in 2021 - only around 13 per cent would be able to respond within a few hours. Time is of the essence when it comes to ongoing risks: while 41% of companies only aim to respond within two to three days, 39% already say that real-time is the key to responding to supply chain disruptions and offers them the best options.
Artificial intelligence becomes the biggest advantage
Artificial intelligence could become the biggest technological advantage for businesses, according to the survey, as 73 percent of supply chain executives believe AI will help mitigate surprises through proactive risk management.
"In order to be able to react quickly to crises, companies need to introduce robust processes," explains Bilstein. "This is where concurrent planning comes into play, which links each individual element in the supply chain with all other elements end-to-end. A change in one part of the chain triggers a corresponding reaction in the rest of the chain - and thus allows an overview of the current status and the consequences of changes in real time. The survey shows that acting quickly and making confident decisions based on the right data is still an issue for a majority of companies. Concurrent planning combined with AI, heuristics and optimization can help address this, ensuring supply chain managers are equipped to deal with today's challenging times."
The survey was conducted among 200 supply chain managers in German companies with an annual turnover of at least 200 million euros. The surveys were conducted online by Sapio Research in October 2023, using an email invitation and an online survey.
Kinaxis is the global leader in modern supply chain management. We serve supply chains and the people who manage them in service of humanity. Our software is trusted by renowned global brands to provide the agility and predictability needed to navigate today’s volatility and disruption. We combine our patented concurrency technique with a human-centered approach to AI to empower businesses of all sizes to orchestrate their end-to-end supply chain network, from multi-year strategic planning through down-to-the-second execution and last-mile delivery. For more news and information, please visit kinaxis.com or follow us on LinkedIn.
Source: Kinaxis Inc.
Jaime Cook | Kinaxis