Investment in US and European supply chains rising strongly in 2024

Average investment into supply chain improvement over the last year tops $10 million per company says research

Seventy-nine percent of US and European executives report that they are upping their investment into supply chain operations, compared to just 4% who are making cuts according to a survey by Blue Yonder.

Furthermore, the research says that 51% of businesses worldwide and 49% of American businesses have made supply chain investments exceeding $10 million.

Companies are prioritising investments into improving sustainability (48%), followed by AI-based technology (41%), new strategies (40%), new hires (39%), and digital transformation (37%).

Continuous supply chain interruptions

These investments come within a background of continued disruptions in global supply chains.

Supply chain disruptions were recorded by a sizeable majority of worldwide businesses — 84% — during the last year.

The top disruptions in the survey were shortages of raw materials (48%), longer delivery periods (47%) and low availability of labour (44%) and transport vessels (41%).

Supply chain incidents led to delays in shipments to customers for 42% of respondents and production halts for 42%.

However, the report notes that these disruptions are less severe than in previous years. In the 2024 survey, 43% of U.S. firms reported client delays, down from 52% in 2023 and 58% in 2022.

Inflation and cost pressures

Inflation is still a major worry across all sectors.

 The cost of materials was cited by 36% of US organisations, making it the most affected area, although this too is a decrease from 43% in 2023.

Globally, the areas most affected by inflation are transportation costs (38%) and material costs (34%).

Many businesses have seen their profit margins shrink as a result of these problems—increasing costs and disruptions.

Strategic use of AI and sustainability in investments

AI is now being used extensively in the supply chain industry.

AI is being used by more than half of international companies for supply chain planning (56%), transportation (53%), as well as extensively for order management (50%).

Since generative AI has become more popular, 80% of businesses have used it in some capacity, and 91% of them say it improves decision-making and supply chain operations.

Even though just 2% of respondents said sustainability was their main duty, its significance as a critical investment indicates that supply chain roles in promoting overall corporate sustainability are evolving.

Effects of investments in the supply chain

Investments are paying off, as 61% of American organisations reported increased efficiencies, up from 54% in 2023.

Furthermore, these expenditures are helping to boost revenue growth (38% in 2024 compared to 21% in 2023), decrease disruptions (41% in 2024), and gain market share (39% in 2024 compared to 21% in 2023).

comments powered by Disqus