Resilience and risk in supply chains: How to limit disruption and drive transformation

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

As companies explore how better use of technology can help improve supply chains, efforts to build resilience and reduce risk have lagged behind other initiatives. Just 34% of operations leaders in our 2023 Digital Trends in Supply Chain Survey cited increased resilience as one of their top objectives when investing in supply chain technology. In addition, 86% agreed or strongly agreed that their company should invest more in technology to identify, track and measure supply chain risk.

The findings track with our experience that many companies either find the concept of resilience too vague or take for granted that their supply chains have adequate digital capabilities to maintain operations during delays and other obstructions. In addition, many don’t recognize that risk mitigation by itself isn’t a business continuity plan, and that investing in resilience better enables you to “look around the corner” versus simply responding to immediate threats.

The vast majority of operations leaders aren’t prioritizing resilience in supply chain tech investments

Q: What are your top priorities for the next 12-18 months? (Rank up to 3 from 13 choices; percent who selected this as the top priority.)
Q: Which of the following are your main objectives when investing in technology for your supply chain? (Rank up to 3; percent who selected this as the top objective.)
Source: PwC 2023 Digital Trends in Supply Chain Survey: base of 305

How companies are building resilience and managing risk in supply chains

Increasing resilience trails other priorities and objectives

When asked about their priorities in the next 12-18 months, only 23% of survey respondents chose increasing responsiveness and resilience among their top three. By comparison, more than half picked increasing efficiency (58%) and reducing costs (54%) as top priorities.

That tepid response is understandable considering many supply chain leaders have been putting out fires after recent disruptions, but shifting your resilience strategy from short-term risk mitigation to long-term stability is critical for growth. Driving growth was the most commonly named top objective of supply chain technology investments at 53%, but only 34% said increasing resilience — suggesting many executives aren’t connecting resilience to growth.

Industries vary on increasing resilience as a main objective of supply chain tech investments

Tech, media and telecom

Health industries

Energy, utilities and resources

Business services

Industrial products

Consumer markets

Q: Which of the following are your main objectives when investing in technology for your supply chain? (Rank up to 3; percent who selected ‘increase resiliency’ as a top 3 objective)
Source: PwC 2023 Digital Trends in Supply Chain Survey: base of 305

Confidence in speed and agility varies

Most respondents (81%) said their company can quickly change its supply chain to reduce possible disruptions. A large majority (89%) also think their technology investments have allowed them to make faster decisions to manage disruptions. Within those responses, though, senior and upper managers have more confidence than managers who are closer to the front lines. That calls into question how realistic some executives are when it comes to the time it takes to adapt manufacturing facilities and the supply chain to broader shifts in the business environment.

The survey also revealed splits when it comes to challenges with managing risk in the supply chain. While only a little more than half of senior management and owners and upper management said communication of risks was a minor or major challenge, seven out of ten directors, team leaders, managers and supervisors thought so. Similarly, 63% of senior management and owners and 61% of upper management said training regarding risks was a minor or major challenge, compared to roughly three-fourths of directors, team leaders, managers and supervisors.

Q: To what extent do you agree or disagree with the following statements about resiliency in your supply chain? (Response to ‘Strongly agree’.)
Source: PwC 2023 Digital Trends in Supply Chain Survey: base of 305

Using technology to better identify and manage risks

Within their supply chains, companies on average are investing in multiple technologies and solutions to help manage risks, but nothing is seeing widespread commitments. Among several technologies and solutions referenced in the survey, only planning and forecasting was selected by more than half of respondents.

Considering the investments to date, it’s not surprising that most operations leaders agreed that their companies should invest more in technology to identify, track and measure supply chain risk. And with the array of solutions and current fragmented market, it’s understandable that many companies and executives are struggling with how they can better manage risks in their supply chain.

Q: What technologies are you investing in to manage risks in your supply chain? (Select all that apply.)
Source: PwC’s 2023 Digital Trends in Supply Chain Survey: base of 305

Where you go from here

Is your company ready to be smarter in using technology to reduce risk and help improve resilience in the supply chain? Consider these actions as potential next steps.

Pivot from short-term risk mitigation to long-term stability. Current disruptions should be managed, of course, but supply chains are less likely to thrive with a crisis-to-crisis approach. Determine what changes to operations networks and supply chain footprints should be made now to allow the long lead times required to identify and close organizational gaps in supply chain capabilities.
Find the right global-regional balance. Geopolitical and policy shifts, which sometimes occur rapidly, can challenge long-established networks with choke points, delays and other inefficiencies. Assess where you can be proactive and insulate your operations with more geographic diversity in sourcing and distribution.
Include impairment planning in supply chain decisions. Broader trends also can impact specific assets in your supply chain — not only disrupting them but affecting their remaining useful life and value to your organization. Anticipating these impacts can minimize the risk of wasted capital.
Build R&D and product development capacity to fuel growth. The rise of connected products and services brings a new dimension to the skills and capabilities needed in supply chains. Determine which elements of your supply chain can benefit from increased investment in innovation instead of just short-term efficiency.
Embrace AI … without losing the human element. Artificial intelligence and machine learning already have improved agility and responsiveness in supply chains, but in many cases they’ve yet to become integrated into business planning. Refine your AI/ML strategy with the goal of leveraging both the technology and your teams — with digital upskilling as needed — in managing supply chain risks.

Explore more 2023 survey insights

PwC’s 2023 Digital Trends in Supply Chain Survey Resilience and risk in supply chains Sustainability in supply chains Webcast: 2023 Digital Trends in Supply Chain

Supply chain digitization in manufacturing Supply chain digitization in consumer markets Supply chain digitization in energy, utilities and resources Supply chain sustainability in energy, utilities and resources Supply chain digitization in health, pharma and life sciences Supply chain digitization in tech companies

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Matthew Comte

Operations Transformation Leader, PwC US

Carla DeSantis

Operations Transformation, Partner, PwC US

David Wright

Operations Transformation, Principal, PwC US

Brian Gilbert