To respond promptly to continuous market changes it is necessary to have an effective system for monitoring the “state” and performance of the company Supply Chainand the Italian companies they seem to be aware of this need. 80% of end-user enterprises applies specific KPIs to evaluate the performance of its supply chain but only 33% of the sample measures a sufficient number of technical and economic KPIs and 11% demonstrates a high degree of maturity with a dedicated system capable of effectively tracking all signals, even weak ones.
Supply Chain, only 1 in 10 companies has a complete monitoring system
In the evolution of the configuration and planning processes of Supply Chain is the role of digital is crucial, but at a technological level in Italy there is still little diffusion of advanced tools, with the majority of companies not even adopting technologies that have been available for decades such as MRP, DRP or Advanced Planning and Scheduling and continues to operate manually on spreadsheets linked to locally available data.
These are some research results of the Supply Chain Planning Observatory of the Polytechnic of Milan presented during the conference “The evolution of planning in the Supply Chain: where we are today and what the future scenarios are”. One of over 50 different research lines Digital Innovation Observatories of the Polytechnic of Milan which address all the key issues of Digital Innovation in businesses and public administration.
“In the evolution of Supply Chain planning, Italian companies still have a long way to go – states Andrea Sianesi, Scientific Director of the Supply Chain Planning Observatory -. The research reveals a distance between the possibilities currently offered by technology and codified managerial knowledge and the actual practices of companies. There is a lack of data culture and end-to-end design of the application flow, together with optimization models that are still limited due to the great complexity of management and a certain ‘cultural resistance’ to change. Some trajectories followed by digital development have not helped: if technological fundamentals are widely available, other technologies like artificial intelligence (AI and GenAI) they are increasing the distance between announcements and application reality.”
PoliMi research
“Today talking about a digital Supply Chain means consider not only a technological path, but also an organizational one, to introduce new skills in companies for re-designing and continuously adapting processes in relation to the growing capabilities of technology – he declares Alessandro PeregoScientific Manager of the Supply Chain Planning Observatory -. To be competitive in an uncertain scenario, today, Italian companies are not enough to be innovators in product, design, technology or quality, they need to become ‘expert navigators’ in the global waves of value chains, with the best digital tools and the best skills”.
The maturity of the processes Supply Chain Planning – More than 50% do not measure performance comprehensively enough, but simply evaluate technical performance indicators, such as punctuality and completeness. Only 30% measure a sufficiently complete number of technical and economic KPIs to capture both strong and weak signals, i.e. those that can only be perceived from within the organization. Among these, 19% only take into consideration the most urgent problems.
Data that testify to a relatively limited degree of maturity of many Italian companies in knowing the “state of health” of their supply chains. Furthermore, a certain limited maturity also emerges when it comes to adopting adequate technological tools that allow, in an initial phase, the collection of data and, subsequently, the interpretation of the same as a support for strategic decisions.
The roles
The 54% of SMEs and 67% of large companies have roles dedicated to supply chain planning, a modest difference that is explained by the greater financial and organizational capacity of larger companies, as well as a greater awareness of the importance of such roles. Conversely, approximately one fifth of SMEs in the sample (21%) do not recognize still the need of roles dedicated to supply chain planning; in large companies, this lack of recognition is much less widespread (9%), indicating greater management maturity. The absence of such roles in some organizations may indicate a low organizational maturity or even be the effect of resistance to change.
“These findings suggest that large businesses they need formal supply chain planning to manage their greater complexity and optimize costs and resources – declares Roberto Cigolini, Director of the Supply Chain Planning Observatory -. In SMEs, instead, supply chain management is less structured and depends less on formal roles. Therefore, the priority attributed to these roles can naturally be different: for large companies it is essential to maintain competitiveness and efficiency, while for SMEs it may not be an immediate priority”.
Digital
The Italian end user companies show considerable resistance in adopting advanced digital tools for Demand Planning, Production Planning, Inventory Planning and Transportation Planning processes. Most still do not adopt tools that have been available for decades to support supply chain digitalization, such as MRP, DRP or Advanced Planning and Scheduling, but continue to operate manually on spreadsheets linked to locally available data. Even globally, according to external sources, still 73% of companies use spreadsheets for supply chain planning, while the 53% of companies relies on traditional APS systems, as well as supporting spreadsheets and only 13% use more advanced software.
According to the survey conducted during the research, 39% of large companies and 18% of Italian SMEs use forecasting systems based on data imported from transactional systems, using algorithms specialized for the company’s sector or developed locally. In the production planning process, those who use dedicated tools drop to 27% of large companies and even 6% of SMEs, with the rest of the sample relying solely on experience or spreadsheets. Stressful situation also for inventory management: almost half of companies rely on spreadsheets, a third use business intelligence packages and a small share (11% of SMEs and 22% of large companies) adopt more complex tools with variable rules over time for inventory levels. Among large companies, only 10% use statistics and data analysis applications that process information also from external sources for simulation and optimization in the choice of management models and related parameters. Around a quarter of companies use spreadsheets for transport planning, while only a minority rely on more sophisticated tools.
“Digital technologies represented a crucial element for supply chain planning,” he says Giovanni Miragliotta, Director of the Supply Chain Planning Observatory, “but their true value emerges when they are integrated in a coordinated manner and used in a mature way, within a broader management strategy that also embraces organizational change and the redesign of planning processes . Only in this way can they make a contribution to effectively address current and future challenges, taking advantage of opportunities of digital to create resilient and agile supply chains”.
Risk identification – Just over a quarter of Italian end user companies have a structured process for identifying risks and defining mitigation protocols. However, only just under 10% of these extend the process to all critical suppliers and just 3% use a structured and proactive process in which the different sources of risk are analyzed through the integration of data from different sources. 42% do not have any structured process for risk management and rely on the experience of those responsible for managing the most complex scenarios for business activity.
Review and redesign of the Supply Chain
Half of the companies in the sample do not use any type of dedicated tool for supply chain redesign, but rely on the experience and sensitivity of their managers. This figure reaches almost 60% in SMEs and is an indication of a widespread reduced ability to forecast and adapt to the changed global economic and geopolitical context. Among those with formalized review and redesign processes, about a third are SMEs and large companiesi relies on analysis and evaluation tools – developed internally or by external specialists – to understand the impact of major strategic decisions, regardless of whether or not a periodic or continuous process exists. When considering higher levels of maturity, the 15% of large companies relies on more complex simulation tools for scenarios (what-if) and optimization, a value that is halved (7%) in the case of SMEs.
