The increasing complexity of procurement and supply chain management is eroding the C-suite’s confidence. According to a new report by supply chain consultancy Proxima, 86% of CEOs see resiliency issues in their supply chain.
Proxima’s annual 2024 Supply Chain Barometer report found that CEOs are attempting to address these concerns by reorganising critical supply chains and leveraging technologies like AI. However, significant challenges persist.
“It’s fair to say that the complexities of global supply chains continue to have CEOs around the world scratching their heads. The results of this year’s Barometer show that business leaders are spending more and more time tackling supply chain challenges, reflecting the multiple challenges to address,” Simon Geale, Executive Vice President and Chief Procurement Officer at Proxima, commented.
Regionalisation, AI, and capex
Proxima’s report is based on a survey of 3,000 CEOs in the UK, Europe and the US. The survey explores how business leaders are responding to geopolitical, economic and environmental supply chain issues. This year’s results reveal that complex supply chains continue to be redesigned and reconfigured. Increasingly, globalisation continues to give way to regional, “friendly” trading zones.
Large organisations were found to be focusing more on offshoring. Notably, they were focusing less on onshoring (25% below overall). CEOs in Europe were more likely to be looking at onshoring supply chains than those in the UK and US.
AI adoption remains a major source of investment, attention and, for many organisations, frustration. Functionally all (over 99% of) CEOs are considering the technology for their supply chains. An overwhelming majority (82%) also said they are planning new AI initiatives this year. However, the staggering amount of money being spent on AI isn’t expected to start delivering returns immediately. Just 22% of CEOs said they expect significant impact within the immediate future. Instead, they indicated that there is significant “hype” around the technology but limited adoption in real terms. Nevertheless, the money keeps coming.
More generally — whether because of their uncertainty or in spite of it — CEOs said they would be paying more attention to supply chains this year. Despite easing inflation and stable markets, 96% of CEOs are dedicating equal or more time to supply chain issues in 2024, compared with 2023. Geopolitical tensions are pushing leaders to navigate uncharted global dynamics with no end in sight.
Human rights and the climate crisis cast a shadow over supply chains
In a continuation from last year, over two thirds of CEOs (70%) said they are concerned about the potential for human or labour rights issues in their supply chain. This comes just a few weeks after child labour was found in the supply chain of fast fashion giant SHEIN.
Concern was found to be highest among the utilities (78.2%), manufacturing (77.1%) and retail (75.4%) sectors.
There was also a consensus among the CEOs surveyed (99%) that there are barriers to decarbonizing supply chains. However, a consensus does not exist on which barrier is biggest. The largest barrier remains the complexity of the work (29%). However, the other response options carry nearly the same weight for CEOs. These included cost, access to skills, and access to data). The leading barrier in larger organisations is the lack of access to required data, at 30% in contrast to the 22% average for all organisations.
Geale added that it was “Perhaps most worrying… that concerns around human rights issues persist, but the findings also shine a light on just how multifaceted the decarbonization conundrum is. What is for sure is that amongst other priorities like right-shoring, and investing in AI, there is a very definite focus on cost reduction in the 12 months ahead.”
