Energy and utilities supply chain digital transformation: PwC

Insights from PwC’s 2023 Digital Trends in Supply Chain Survey

Energy, utilities and resources operations executives and management teams report higher levels of investment and adoption of supply chain technologies than other industries. Yet they also appear to be less satisfied with results so far, according to PwC’s 2023 Digital Trends in Supply Chain Survey. While these leaders say technology is helping them make faster decisions and supply chain moves that reduce disruptions in long-prioritized areas such as resiliency, the overall payoff is less certain. In fact, 98% of industry respondents say technology investments are not yet fully delivering expected results, a rate that’s higher than in all other industries.

Q: If your investments in supply chain technology have not fully delivered expected results, please indicate the main reason why. (Percentage reflects those who selected a response other than 'Not applicable. Our technology investments in supply chain technology have delivered expected results.')
Source: PwC 2023 Digital Trends in Supply Chain Survey: base of 50 energy, utilities and resources (EUR) respondents

Three reasons your supply chain digitization efforts may not deliver results

Certainly, if implementation efforts are still in progress, you may need more time to know if your investment will pay off. Still, our survey suggests that other underlying and broader issues may be keeping many energy, utilities and resources companies from achieving expected benefits. If you think your organization is struggling with some of these common missteps, there are certain actions you can take next:

#1. There’s a mission, but not everyone’s aligned on the vision

While executives in most other industries say budget constraints are the biggest challenge related to digitizing the supply chain, leaders in the energy, utilities and resources sector point to something less straightforward. For 44% of respondents, there isn’t a clear understanding of the business and technical capabilities needed to successfully digitize. This was cited as the top challenge, at a percentage nearly double that of most other industries. Yet with the energy industry reporting higher levels of investment and adoption of supply chain technologies than others, why are leaders feeling this way? It may indicate a disconnect or lack of alignment in one of these areas:

Q: What are your biggest challenges related to digitizing your supply chain? Top response shown.
Source: PwC 2023 Digital Trends in Supply Chain Survey: EUR base of 50

Collaboration: Supply chain and operations leaders may not always be as involved as they should be — and likely want to be — in developing the business case for new technologies, defining objectives or determining what’s in or out of scope.
Measurement: There could be a lack of discussion or agreement on what success looks like. This could mean failing to establish what’s needed and by when, key performance indicators and how technology effectiveness will be measured.
Selection: If your company coordinates software and technology selection without evaluating enterprise-wide needs, those making the selection may opt out of obtaining certain functionality applicable to the supply chain, like advanced procure-to-pay components, among others.

What you can do

Secure your seat at the table. Reach across organizational and leadership silos early on so that supply chain and operations are part of technology and other enterprise-wide strategy discussions. Demonstrate the importance of your involvement by helping the organization connect the dots between supply chain challenges, business risks and C-suite priorities.
Begin with the end in mind. Supply chain digitization conversations should focus first on outcomes, not technology. Decide what your supply chain function and broader enterprise need to achieve and how you’ll measure success. This can help narrow the focus on the technologies you should prioritize and for what purpose.

#2. A digital upskilling disconnect

Many recognize the need for upskilling, especially in areas related to sustainability. For 84% of the industry leaders surveyed, a lack of digital skills is the top challenge to integrating environmental, social and governance (ESG) into the supply chain. But digital upskilling still may not be a high enough priority. Only 20% of respondents named the digital upskilling of employees among their top three priorities. In fact, it falls well behind other priorities, including increasing efficiency and automating processes and analytics (notably, all areas that could benefit from a digitally upskilled workforce).

Q: What are your top priorities for the next 12-18 months? (Please select and rank up to three options out of 13 provided.)
Source: PwC 2023 Digital Trends in Supply Chain Survey: EUR base of 50

What you can do

Prioritize your people. Investments in technology can only go so far without investing in the people who will use them. Providing your workforce with the proper tools, coaching and support can help increase the benefits of your tech investments. This should include enabling enterprise ESG upskilling to support growing needs and close training gaps.
Maintain momentum. It’s important to plan for and create an environment for lasting success far past technology implementation. This includes recognizing obstacles to change adoption, such as change fatigue or a risk-averse culture that may inhibit adaptability for energy, utilities and resource companies. Consider these four steps to make your next technology transformation more successful.

#3. New technologies but antiquated processes

Energy, utilities and resources executives report higher levels of adoption of several key emerging technologies, with much more investment planned for the next two years. The top focus area — a cloud-based common data platform — is likely the result of industry efforts to move large enterprise resource planning and enterprise asset management systems to cloud. We’re also seeing signs that some more transformative initiatives may also be in the works, from blockchain pilots to AI-enabled “control towers” that combine traditional supply chain planning data with real-time visibility updates from carriers and suppliers.

But with so many of those surveyed saying they haven’t achieved expected results yet, it may be important to consider if some are implementing new technologies without changing existing ways of working. In this industry, processes can be deeply ingrained — and often for good reason. However, as technology changes, those tried and true practices may need to change as well.

The industry’s robust technology adoption can go even further

EUR

All industries

Cloud-based common data platform

%

Internet of things / connected devices

%

Artificial intelligence / machine learning

%

Robotics / robotic process automation

%

Blockchain

%

Augmented reality

%

Drones

%

Q: To what extent have the following technologies been adopted by and/or applied within your supply chain operations? (Percentage reflects ‘Limited adoption’ and ‘Full adoption.’) Showing 7 out of 10 available options.
Source: PwC 2023 Digital Trends in Supply Chain Survey: All base of 305, EUR base of 50

What you can do

Don’t retrofit your existing processes. To achieve more effective results from your supply chain digitization efforts, consider adapting your process to the new technologies rather than the other way around. Taking this approach can help you eliminate existing inefficiencies, reduce manual process and avoid the need for high levels of customization.
Build for adaptability. Prioritize building a technology infrastructure that’s flexible enough to adapt as needs and challenges change. This is particularly necessary in the energy, utilities and resources industry, which is facing unprecedented change. Companies should treat the current state as the new reality — one that may call for a new formula for success.