„SUPPLY CHAIN MANAGEMENT IN TURBULENTEN ZEITEN“...sustainability Using data and AI to drive a connected supply chain and better customer experience Building up a conscious supply

WIR SIND INDUSTRIE

„SUPPLY CHAIN MANAGEMENT IN

TURBULENTEN ZEITEN“Mag. Thomas Pühringer, PwC

DI (FH) Markus Strobl, sparte.industrie

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PwC

Connected and autonomous supply chain ecosystems2025

PwCPwC

In this year’s global study we take a look at how Digital Champions have achieved Supply Chain excellence

Digital Supply Chain Study 2020 April 2020

5

The study looks at how leading companies have achieved Supply Chain excellence through

customer centric and autonomous supply chains using smart technologies and solutions

What are the key

characteristics of a next

level supply chain and

which capabilities are

required to achieve it?

In which technologies are

Digital Champions

investing and what does a

state of the art supply chain

technology and IT

architecture look like?

Which benefits and

performance

improvements can be

realised through investing in

supply chain excellence?

What are the implications on

the supply chain

organisation, skills and

ways of working?

PwCPwC

For our Global Digital Supply Chain Study, we interviewed

>1,600 companies in 7 industries


6

33 countries(6 regions)

Sample size1,601 respondents

Targetcompanies7 key industrial sectors

Survey methodsComputer-assisted telephone interviews,

with PwC online interviews

Survey participantsC-Level and 2nd line management

Study datesOctober 2019 to January

2020

Engineering and

construction

Engineering

Construction

Process

industries

Chemicals

Paper and

packaging

Metals and

mining (materials)

Pharma and

medtech

Pharma-

ceuticals and

life sciences

Medtech

Automotive

Automotive

OEM

Automotive

suppliers

Electronics

Semiconductors

Business

electronics

equipment

Consumer

electronics

Retail and

consumer goods

Food and beverage

Retail

FMCG

Industrial

manufacturing

Industrial

machinery

Metal products

Aerospace and

defense

PwC

PwCPwC

The survey sample consists of 7 industry sectors


7

Industrial

manufacturing19.9%

Automotive 15.4%

Retail and consumer

goods15.0%

Pharma and

medtech

14.7%

Electronics 14.6%

Process

industries14.5%

Engineering and

construction5.9%

At least 140 interviews

per major sector, which

include 18 subsectors

Q3. Which industry sector best represents your company? Base: 1,601 companies

PwC

More than 33 countries across the globe participated in this year’s study


8

This PwC report is based on quantitative research consisting of interviews conducted between October 2019 and January

2020 with 1,601 senior executives from companies in 33 countries across EMEA, the Americas and APAC. Global survey

results were weighted by country GDP to provide a balanced view.

• Australia

• Austria

• Bangladesh

• Belgium

• Brazil

• Canada

• China

• Denmark

• Finland

• France

• Germany

• India

• Indonesia

• Italy

• Japan

• Mexico

• Middle East*

• Netherlands

• Poland

• Portugal

• Singapore

• South Africa

• Spain

• Sweden

• Switzerland

• Turkey

• UK

• USA

* Multiple countries included

PwCPwC

Digital Supply Chain maturity index methodology


9

Distinct survey approach

Survey questions designed with

carefully selected factors.

You can’t do everything

For each index dimension, at least 80% of all

possible activities must be implemented in

order to reach a full score.

Clear index construction

0–100-point range.

Cumulative index

The more integrated a business and more

broadly it implements advanced supply chain

capabilities, the higher the index value.

I

F

N

C 75-100 Digital SC Champions

50-74 Digital SC Innovators

25-49 Digital SC Followers

0-24 Digital SC Novices

Point range

Digital SC

Champions

9%

Digital SC

Novices

8%

Digital SC

Innovators

40%

Digital SC

Followers

43%

Supply chain maturity levelsApproach

Implementation of advanced supply

chain capabilities max 25 pts. (Q9b)

Implementation of advanced

software solutionsmax 25 pts. (Q13)

Overall performance impacts max 15 pts. (Q9c)

Demonstrated

revenue impacts max 10 pts. (Q19)

Digital Supply Chain Maturity Index = 100 pts.

Implementation of AI max 10 pts. (Q9d)

Demonstrated

cost impacts max 15 pts. (Q19)

PwC

Quantitative research has been complemented by in-depth interviews with leading companies


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Connecting local and

global supply chain

experts from different

functions to drive

innovation and

sustainability

Using data and AI to

drive a connected

supply chain and

better customer

experience

Building up a

conscious supply

chain ecosystem

(incl. factory,

warehouse and

distribution)

Making the vision of

an autonomous

supply network a

reality

Living the connected

enterprise --

integrating suppliers

and customers

Driving innovative

business models

through

next-level supply

chains

PwC

PwC

Digital Champions in 2025: Successful in connected and autonomous supply chain ecosystems


11PwC

The visionTomorrow's supply chains will be connected and self-

orchestrated ecosystems: >80% of Digital Champions

describe their supply chain focus as external integration

or end-to-end orchestration

Operating model developmentMastering tomorrow’s supply chain challenges through

the next level supply chain organisation and capabilities:

To excel in a constantly changing environment, companies

need to develop a flexible organisation with a digitally

empowered and upskilled workforce

Closed loop and integrated planningNext-level planning is synchronised real-time with execution, integrates

supply chain partners and enables continuous optimisation: 72% of

Digital Champions have implemented end-to-end supply chain planning; they

are also taking the next step towards closed-loop planning

Smart logistics flows Smart logistics is the key savings driver and a growth lever in the

connected supply chain ecosystem: Digital Champions rate smart logistics

as their top supply chain priority. Smart logistics account for more than 50% of

overall supply chain cost savings

The benefitsInvestments into supply chain

excellence pay off: Digital Champions

achieved savings of 6.8% p.a. in supply

chain costs, along with a 7.7% revenue

increase

AI in supply chain managementArtificial intelligence is accelerating

supply chain improvements and will

become the new norm: Digital Champions

have clearly identified the areas where AI

brings value and use AI 2-3 times more

extensively than Digital Novices

Supply chain transparency and

sustainability Supply chain transparency sets the stage and is a

catalyst for greater sustainability: >50% of Digital

Champions say that supply chain transparency is a high or

top priority

Dynamic supply chain segmentation Dynamic supply chain segmentation enhances

customer centricity and continuously balances service

levels, costs and margins: 73% of Digital Champions

have already implemented segmentation and report a

strong positive impact on their business

Digital

Champions in

2025: Successful

in connectedand

autonomous supply

chain ecosystems

PwC


12PwC

The vision

Tomorrow’s supply chains will be connected and self orchestratedecosystems

PwC

Our vision of a connected and autonomous supply chain ecosystem


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Future supply chain operating model

Financial and payment flows

Supply chain

transparency and

sustainability

Dynamic supply chain

segmentation

Closed loop integrated

planning and execution

Smart logistics

flows

Artificial intelligence

Connected and autonomous

supply chain ecosystem

Physical flow Informationflow

B2B &B2C

Distribution

Customer

Manufacturer

Supplier (tier1,2,3)

PwC

Supply chain integration maturity

Leading companies go beyond functional efficiency towards an end-to-end orchestrated supply chain ecosystem


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• End-to-end orchestration is

autonomous, data driven, highly

automated

• External collaboration extends

beyond company walls and

includes both suppliers and

customer networks

• Internal integration overcomes

functional silos within the

company and secures cross-

functional collaboration

• Functional efficiency

focuses on the improvement

of each function and their

related KPIs

Q8. Which statement best describes your supply chain today?

Moving from linear supply chains to networked ecosystems

Achieved functional efficiency or

internal integration

Achieved external integration

or end-to-end orchestration

2% 19%

62%

36%

81%

0%

Still working in silos

All Companies Digital Champions

PwC

Winning capabilities enable the set up of the future supply chain ecosystem


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Winning capabilities of the future supply chain ecosystem

Supply chain transparency and sustainability: Multilevel data flow and

seamless connection of all data across the supply chain covering product 360°,

supply chain 360°, customer 360°, finance 360°, a fully transparent and

sustainable supply chain, reusing materials and extending the life cycle of

finished products and services, integration of suppliers and other partners

Closed loop integrated planning and execution: End-to-end planning from

customers to sub-suppliers covering short and longer term time horizons and

integrating financial and volume plans, continuous balancing of demand and

supply, direct connection to execution activities, collaborative workflows and

automated decision-making through advanced analytics

Smart logistics flow: Multimodal inbound and outbound transportation,

automated warehouses, effective transportation management systems and

warehouse management systems, optimised and dynamic distribution

footprints, omni-channel order management, B2B2C/ B2C delivery models

Dynamic supply chain segmentation: Established segmentation strategies

and execution options to support key business requirements, which analyse

consequences on the parameters service, margin, cost and inventory. Makes

supply chains flexible enough to be segmented again for each customer order,

as well as reconfigurable in response to market conditions and product specifics

Artificial intelligence, building on advanced data analytics:

Leveraging fully connected data networks and AI along the supply

chain to provide improved demand forecasts through demand

sensing. Detecting patterns based on the use of machine learning

within the supply chain and triggering appropriate measures in

response, which ultimately enables a fully autonomous supply

chain and effective optimisation decisions

Key enabler

Mastering tomorrow’s challenges through next- level supply

chain organisations and capabilities: To make the future

supply chain ecosystem a reality, and overcoming the hurdles

that arise along the way, will mean making substantial changes -

especially in employee mind-set, true transformation upskilling

and innovative processes and ways of working.

Making it happen

PwC

PwC


16PwC

The benefits

Investments into supplychain excellence pay off

PwC

Benefits from investments into advanced supply chain capabilities last year

Investments into advanced supply chain capabilities pay off and supply chain has become a significant value contributor


17PwC

Q19. What revenue and cost benefits did you gain last year from your investments in advanced supply chain capabilities? Base: 1,601 companies

~8%Additional revenue fromSC investments reached7,7% during the last financial year.

~7%Digital Championsachieved significant savings of 6.8% on supply chain costs in the last financial year.

Where are new revenues coming from? We

see investments into supply chain resulting

in new business models, new customer

channels with higher customer centricity,

as well as faster delivery capabilities –

leading to additional product and service

revenues.

Digital Champions have achieved

significantly greater cost reductions

relative to their overall supply chain costs in

the last financial year due to their

investments. Compared to Digital Novices,

the cost benefits achieved by Digital

Champions are twice as high.

Re

ve

nu

eb

en

efi

tsC

os

tb

en

efi

ts

7.7%6.3%

3.6%

3.3%

5.9%6.8%

>2X

>2X

All Companies Digital ChampionsDigital Novices

PwC

Payback period (in years) by industry sector

The average payback period of investments into supply chain capabilities is less than 2 years


18PwC

1.8The payback period (inyears) of investing into advanced supply chain capabilities is on average less than twoyears.

Payback period (in years) by region

1.9

1.6

1.8

3.0

1.3

1.7

2.2

1.9

Average

Process

Manufacturing

Pharma

Retail/consumer

Electronics

Automotive

Engineering

1.3 APAC

2.0 EMEA

2.3 AMERICAS

PwC

Investments into advanced supply chain capabilities as % of total supply chain costs

Companies will continue to heavily invest in building up advanced supply chain capabilities


19PwC

Q17. How much did your company invest in advanced supply chain capabilities, including costs for people, process, data and IT/technology, as a percentage of your

total supply chain costs last year, and how much do you expect to spend in five years (FY2024/25)? Base: 1,601 companies

>9%Digital Champions will

continue to invest more

than 9% of their supply

chain costs to further

strengthen their supply

chain capabilities.


7.4

%

9.1%7.9%

In 5 years

Last year 4.5%

11.8%10.8%

Digital Champions

invested twice as much

as Digital Novices into

building their supply chain

capabilities last year,

including enhancements to

both physical and digital

infrastructure and people-

related expenses.

PwC

Investments into advanced supply chain capabilities also boost supply chain performance


20PwC


13 turnsDigital Champions have

automated and streamlined their

supply chain. 82% achieve >12

inventory turns p.a., versus only

30% of Digital Novices.

93%Digital Champions achieve 93%

OTIF due to better supply chain

transparency, data management

and dynamic forecasting.

Average inventory turns performance (#)

Last year

82% of Digital Champions report >12 inventory turns annually,

while only around a third of Digital Novices achieve that level of

performance. Their focus is on lead time and throughput

optimisation via automation and smart processes.

Among regions, EMEA is the clear laggard: 51% of firms report

12 turns or better, against 76% for the Americas and 72% for

APAC.

84% of Digital Champions report >90% on time in full delivery

performance, while only 12% of the Digital Novices achieve that

level; major contributors are better supply chain transparency,

data availability and dynamic forecasting.

Average on time in full (OTIF) performance (%)

Last year

13.212.2

9.7

92.8%87.2%77.9%

Q20. Please provide us with the number of inventory turns your company achieved last year

(FY2018/2019) Base: 1,601 companies

Q21. What level of performance did you achieve last year (FY2018/19) for on time in full

delivery (OTIF) to request? Base: 1,601 companies

PwC

Advanced supply chain capabilities cumulate to significant qualitative and quantitative benefits


21

Ben

efi

ts

Digital Novices Digital Followers Digital Innovators Digital Champions

• Improved quality

• Greater market share

• Improved planning and decision making

• Improved employee productivity

• Accelerated time to market

• Improved profitability

• Increased customer satisfaction

• Decreased costs and higher efficiencies

• Improved sustainability and reduced waste

• Effective risk

management

• Better asset

utilisation

• Increased

revenues

OTIF

Inventory turns

Greater cost reductions

Increased revenue

• As companies achieve higher supply chain

maturity, multiple benefits add up to a

higher level of cost efficiency, supply chain

performance and increased product/service

revenue.

• Digital Novices focus on improving general

planning and decision-making, enhancing

quality, and gaining higher market share

against competitors.

• In addition, Digital Champions optimise

their assets, manage supply chain risks

effectively and increase revenue by

realising new business models.

Q18. What are the key benefits that you are gaining from your increased investment in advanced supply chain capabilities? Base: 1,601 companies

PwC

PwC

Investments into advanced supply chain capabilities enable next level supply chains


22

Connected and

autonomous

supply chain

ecosystem

From... ...To

Siloed supply chain functionsOrchestrator of end-to-end

connected supply chain ecosystems

Planning not connected end-to-endSynchronised, closed loop,

end-to-end planning

Singular availability of dataOne single data source of truth that

is available to all stakeholders

Backward looking and manual

decision making

Forward looking, data and

AI based decision making

Fixed set of supply chain configurationsDynamic and efficient supply

chain segmentation

Serving traditional business modelsEnabling innovative business models

and accessing new customer channels

Gradual, low range cost improvementsStep change in service levels, costs

and flexibility

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Key capabilities

Supply chain transparency sets the stage and is a catalyst for greatersustainability

PwC


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Supply chain transparency makes it possible for companies to track what is actually happening across the supply chainecosystem

360° supply chain data network capturing supply chain

data and their relationships end-to-end

Near real-time track and trace including dynamic

ETAs and proactive alerting

End-to-end traceability and chain of custody of products

End-to-end supply chain visibility (e.g.

inventory, capacity, planning)

Cost-to-serve visibility down to transactional level

Smart and AI enabled control tower enabling end-to-end

collaboration, optimisation and automated decisions

Physical flow Informationflow

B2B & B2C

Distribution

Customer

Manufacturer

Supplier (tier1,2,3)

PwC


26PwC

Supply chain transparency is a key differentiator of tomorrow’s supply chain ecosystems

55%Of Digital Champions consider

supply chain transparency as

a top priority

More than half of Digital

Champions see supply chain

transparency – from materials to

customers and back – as a highly

important capability of a connected

supply chain ecosystem.

Implementation of supply chain transparency Application of AI in supply chain transparency

Q9b How would you characterise your advanced supplychain capabilities today? (Top 2 box: those

reporting partially to fully implemented) Base: 1,601 companies

Q9d. How would you characterise your advanced supply chain capabilities today? For

which capabilities are you applying AI,ML, or deep learning? Base: 1,601 companies

28%

62%

14%

23%

43%

17%

• Digital Champions have already invested in

gaining transparency of their supply chain

• More than twice as many Champions have

implemented supply chain transparency.

• Digital Champions have understood the benefits

of AI in supply chain transparency

• 4 out of 10 Digital Champions are applying AI to

generate transparency and make better and

more automated decisions.

55%

23%4%

All Companies Digital ChampionsDigital Novices All Companies Digital ChampionsDigital Novices

What are your priorities for implementing each of these capabilities? (Top 2

box: those reporting high / top priority) | Base: 1,601 companies

PwC

Digital Champions are well on their way towards achieving the next level of supply chain transparency – proactive value chain orchestration


27

Level of supply chain transparency

Q10. In which areas, if any, do you currently have supply chain transparency? Base: 1,081 companies

Increased sophistication of transparency

• Digital Champions have come almost twice

as far as all companies when it comes to

gaining visibility over their supply chain

• Now it is time to take the next step and

enhance this visibility with intelligence, for

example by enabling proactive alerts and

automated decisions

• Digital Champions have already started to

embark on the journey to implement more

sophisticated elements of supply chain

transparency such as near real-time

visibility of supply chain information through

a control tower (e.g. a “digital twin”) and full

end-to-end supply chain orchestration

using an AI enabled control tower and

automated decision making


47%

12%

68%

35%

Product content

visibility

Digital twin of

the supply chain

Financial

visibility

13%

Near real-time

logistics visibility

49%

AI enabled

control tower for

orchestration

84%

36%

62%

2%

PwC

PwC

Scale matters – large companies have greater transparency of their supply chain


28

Level of supply chain transparency

Q10. In which areas, if any, do you currently have supply chain transparency? Base: 1, 081 companies (Companies implementing transparency)

Increased sophistication of transparency

• Large firms have more visibility than

small firms

• Far more firms with >$ 5B revenue

have a digital twin of the entire supply

chain

• However, large firms are also just at the

beginning of the journey towards

proactively orchestrating the value

chain through an AI enabled control

tower

Product content

visibility

Near real-time

logistics visibility

19%16%

AI enabled

control tower for

orchestration

28%

Financial

visibility

Digital twin of

the supply chain

16%

72%

56% 54%

2% 0%5%

$100 to $999M >$ 5B

PwC

PwC

Digital Champions focus on integration with customers and suppliers to ensure transparency across the entire supply chain


29PwC

Q9b How would you characterise your advanced supplychain capabilities today? (Top 2 box: those reporting partially to fully implemented)

Base: 1,601 companies


Enabler

One of the key enablers applied by

Champions for integration is Artificial

Intelligence. AI-driven tools make it

possible to dynamically optimise and

configure connections and integration

with customers and suppliers (24%)

One typical area of application for AI is

using an advanced analysis to provide

recommendations for the optimal level

of integration with value chain partners,

covering options from a pure

opportunistic transaction towards full

integration into business processes.

Implementation of customer and supplier integration

33%

59%

6%

Digital Champions put a strong focus on supply chain integration – 55% see integration of their supply chains with

suppliers and customers as a top priority.

• Almost 3 out of 5 Champions

operate their supply chains in

integrated ecosystems with

customers and suppliers.

• More than 50% of Digital

Champions see a very large

impact from advanced

integration

PwC


30PwC

Technology is a key enabler to gain supply chain transparency

Technology choices

Q22. What are the biggest challenges your supply chain faces in the next five

years? (Select up to three) Base: 1,601 companies

32%Investing into supply chain transparency

also sets the foundation to get a better

handle on achieving a circular and

sustainable supply chain – which is the top

supply chain challenge for Digital

Champions (32%) over the next 5 years.

72%Technology is a key enabler, Digital

Champions are way ahead in this

race. 72% of Digital Champions

have implemented technologies to

gain transparency across their

supply chain compared to only

13% of Digital Novices.

• When implementing supply chain transparency and control

tower solutions, 87% of Digital Champions and 76% of all

companies rely on standard software solutions – the highest

share of standard solution usage across all supply chain

technologies.

• Almost all Digital Champions (97%) have already made a

technology vendor decision, compared to 84% of all

companies.

• From all companies that already made a decision, 84% work

with SAP, E2open, Infor Nexus, JDA or One Network.

Q13. Are you developing the technologies in-house or do you rely on standard software?


PwC

Blockchain is spurring interest, but hasn’t yet gained much traction


31PwC

5%of all companies and 27% of

Digital Champions have already

implemented Blockchain

There’s clear interest in exploring the possibilities, especially from Digital Champions

• 70% of Digital Champions have either already begun piloting blockchain solutions (37%) or are planning to do

so within the next five years (33%)

• That compares with around half of companies overall (49%) who are piloting blockchain or expressed interest in

doing so

There’s still a great deal of uncertainty about the best way to pursue such initiatives though

• 64% of companies overall haven’t yet decided whether to develop a solution in-house or purchase standard

software, far more than for any of the other software-based supply chain technologies

• Our experience suggests that for many companies, there are also still challenges involved in developing a

clear business case for blockchain.Q13. Are you developing the technologies in-house or do you rely on standard software? Base: 1,601 companies

PwC


32PwC

Continental is on the journey of making the vision of an autonomous supply chain network a reality

Continental Automotive expects to connect all systems, with data stored in the cloud and information

shared in real-time with all relevant users

Decisions will be optimised using big data and artificial intelligence.

Transparency and visibility are an important part of this evolution. That includes real time connectivity

during transport and integration with internal and external business partners.

A Control Tower will autonomously monitor and steer the whole supply network, making it possible for

Continental Automotive to proactively orchestrate its highly complex activities.

Example

Digital twin of the supply chain and using a cloud solution for its material supply flows. Intelligent

algorithms enable the company to quickly and proactively identify whether material supply failures could

cause bottlenecks. Advantages include:

The lead time needed to provide information in the event of possible delivery disruptions is

significantly shortened – from days to hours.

The solution facilitates integrated risk management for component supply and serves as a fully

integrated interface between Continental and its suppliers

PwC


33PwC

Key capabilitiesNext-level planning is synchronised in near real-time with execution, integrates value chain partners and enables continuous optimisation

PwC

Next-level planning is synchronised real-time with execution and enables continuous optimisation


35PwC

Financial planning (revenue and cost)

Supply chain planning

Product

portfolio

planning

Capacity

planning

Material

requirements

planning

Production

planning

Inventory

and

replenishme

nt planning

Distributio

n planning

Demand

sensing

and

planning

Sales and

marketing

planning

Strategic

Tactical

Operational

• Sales growth and

targets

• Location expansion

plans

• Assortment plan

• Statistical forecast

• Seasonal demand

and promotions

• New products and

phase outs

• Point of sales

data

• Demand sensing

• Alerts and

deviations vs.

plan

Plannin

g

horizon

s

Top down

planning

Bottom up

planning

Manufacturer

Customer

B2B &B2C

Distribution

Supplier

(tier1,2,3)

Execution

PwC


36PwC

Digital Champions

are well ahead in

closed loop

integrated planning

and execution -

more than 7 out of

10 are partly or

fully deploying

end-to-end

planning

48%of Digital Champions consider

end-to-end planning as a top

priority

Almost half of the Digital

Champions (48%) rate planning as a

high or even top priority. That’s a

sharp contrast to the sample

overall, where fewer than one out of

every five companies sees end-to-

end planning as a high or top

priority.

Implementation of end-to-end planning Impact from end-to-end planning

Q9b. How would you characterise your advanced supplychain capabilities today? (Top 2 box: those reporting partially

to fully implemented) Base: 1,601 companies

Q9c. How would you characterise your advanced supply chain capabilities today? (Top 2 box:

those reporting large / very large impact) Base: 1,601 companies

All Companies Digital ChampionsDigital Novices All Companies Digital ChampionsDigital Novices

12%

43%

• Digital Champions have taken actions and

enhanced their planning approaches and

maturity.

• More than three times as many Champions

have implemented end-to-end planning

compared to all participants.

• Digital Champions are enjoying significant

benefits from their integrated planning

capabilities. 43% see large / very large positive

impact from end-to-end planning

• Planning maturity pays off for example in

improved volume flexibility

48%

18%2%

72%

21%1%

3%



PwC


39PwC

Technology is a key enabler for integrated planning

Technology choices

70%Technology is a key enabler,and

Digital Champions are way

ahead in this race. 70% of Digital

Champions have implemented

technologies to enable their end-

to-end supply chain

planning

When implementing integrated planning

solutions, 83% of Digital Champions and 63%

of all companies rely on standard software

solutions. Almost all Digital Champions (96%)

have already made a technology vendor

decision compared to 73% of all companies.

Of those companies that have already made

a decision, 73% work with SAP, JDA, Kinaxis

or OM Partners

Q13. Are you developing the technologies in-house or do you rely on standard software? Which technology partners are you focusing on?


Not Decided Yet

27%

No External Partners

10%

SAP IBP

25%

JDA

11%

OM Partners

6%E2Open

5%

Other

16%

PwC


41PwC

Key capabilities Smart logistics is the key savings driver and a growth lever in the connected supply chain ecosystem

PwC


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Smart logistics has

the highest priority

for Digital

Champions and

delivers significant

benefits


smart logistics a top priority

Every second Digital Champions (59%)

rates smart logistics as a top or high

priority capability – more than any

other capability area

Implementation of smart logistics

Q9a,b,c. How would you characterise your advanced supply chain capabilities today? (Top 2 box: those reporting high / top priority, partially to

fully implemented, large / very large impact) Base: 1,601 companies


• Implementing smart logistics is a non negotiable

move

• 82% of Digital Champions have implemented

smart logistics, giving it the highest

implementation rate of all named capability areas

59%

18%0%

32%

82%

0%

Every fourth Digital

Champions is applying AI to

boost performance in smart

logistics

50% of supply chain cost

savings can be attributed to

smart logistics



PwC


45

Scale matters – large companies have a higher degree of implementation when it comes to smart logistics

PwC

Implementation of smart logistics

$ 100 to $

999 million

25%

$ 5 billion +$ 1 billion –

$ 2.99 billion

$ 3 billion –

$ 4.99 billion

18%

29%

42%

Q9b How would you characterise your advanced supply chain capabilities today? (Top 2 box: those reporting partially to fully

implemented) Base: 1,601 companies

Large firms are 2x as likely to have implemented smart

logistics as small firms

>2X

PwC

The right technologies are key for becoming a smart logistics Champion


47PwC

Technology

choices

Integration with CRM

systems

Warehouse management

systems (WMS)

Transport management systems (TMS)

and logistics marketplaces

47%

78%

18%

55%

74%

17%

46%

88%

4%

• For TMS, most Digital Champions rely on standard software (71%) while nearly every second Digital

Champion’s WMS is a solution developed in house developed (42%).

• Learnings from the Digital Champions: IT maturity and reliability of master data is among the major

challenges Digital Champions are experiencing along their way.

88%of Digital Champions use Transportation

Management Systems and logistics marketplaces,

but only 4% of Digital Novices do so. There is a

significant “digital gap” between maturity stages

The right technologies are key. In order to implement

next level logistics, Digital Champions excel at

implementing and integrating advanced technologies

in smart logistics

Q13. To what extent have you implemented

the following software-based supply chain

technologies within your company?


PwC


48PwC

NOKIA is building up a conscious supply chain ecosystem (incl. factory, warehouse and distribution)

NOKIA is creating an end-to-end supply chain ecosystem, by integrating suppliers, carriers and customers

and ensuring end-to-end process visibility and traceability. To develop and continuously enhance the

“Future Eye” vision, a close cooperation among supply chain, R&D, production and sales is key to capture

improvement potentials, validate customer requirements and identify new business opportunities.

Conscious factory: By adding sensors to factories and connecting manufacturing and logistics assets,

Nokia is making it possible to gain visibility of activities in real-time.

Factory-in-a-box is a container-based portable factory line that is highly automated and includes a digital

twin. It can be deployed anywhere around the world and set up in hours.

Conscious warehouse: Communication technology is the backbone for Nokia’s “conscious warehouse”

and makes it possible to connect the entire warehouse with smart devices. A “warehouse-in-a-box”

solution, that will allow companies to flexibly place smaller, digitally enabled warehouses closer to

customers, to support specific country and project needs.

Conscious distribution: Allows real-time shipment monitoring and enables dynamic routing so Nokia can

react faster to changing conditions

PwC


49PwC

Key capabilities Dynamic supply chain segmentation enhances customer centricity and continuously balances service levels, costs andmargins

PwC


51PwC

Digital Champions have begun to transform their supply chains towards dynamic segments, flexibly tailored to customer needs and individual transactions

• One set of standardised

processes across all

businesses

• “Average fit” to business

requirements with

average service level

Supplier

Supplier 1

Supplier 2

Supplier 3

Supplier 4

Supplier 5

Supplier 6

CustomerSupplier CustomerDeliver DeliverMake MakeSource Source

Static segmentationNo

segmentationDynamic supply chain segmentation

Source 1 Make 1 Deliver 1



Customer 1

Customer 2

Customer 3

Customer 4

Lean

Agile

Reliable

One size fits all

Responsiveness

Deliv

ery

• Pre-defined set of processes along the supply chain with dominant

archetypes

• Flexible and dynamic combination of pre-sets to supply chain segments

• Best fit supply chain setup for diverse and changing business requirements

PwC


52PwC

Dynamic supply chain segmentation is a key capability that helps to boost overall supply chain performance


supply chain segmentation as

a priority

Dynamic supply chain segmentation is a

top priority among all advanced supply

chain capabilities today: across all

companies, every 4th considers supply

chain segmentation capabilities as a top or

high priority for improved supply chain

performance

Implementation of supply chain segmentation

Q9b How would you characterise your advanced supplychain capabilities today? (Top 2 box: partially

to fully implemented) Base: 1,601 companies

56%

24%9%


3 out of 4 Digital Champions have organised

their supply chain in segments.

40%

73%

13%

• Supply chain segmentation is a key capability for companies that follow a

structured approach to optimising their supply chains and their cost-to-

service proposition. We see a shift from a rather static setup of segments

towards dynamic, configurable setups that flexibly react to customer

and business requirements

• One of the key benefits from supply chain segmentation is dynamic

cost-to-serve optimisation, which 61% of Digital Champions are

successfully implementing.

• In order to harvest these benefits, many Digital Champions rely on AI,

including machine learning (41% vs. 24% of all companies) to

dynamically design and configure supply chain setups



PwC

Successful supply chain segmentation requires an advanced

environment to harness the full range of potential benefits


53

Q13. How would you characterise the implementation of the following software-based supply chain technologies today? Base: 1,601 companies


64%of Digital Champions

see a large impact

from supply chain

segmentation – they’re

realising more benefits

from supply chain

segmentation than less

mature firms

Digital Champions gain greater benefits from dynamic supply chain segmentation through a well-developed set of supply

chain capabilities

Key differentiators include

47%

36%

Procurement &

supplier platform

Smart warehousing

44%

29%

Automated order management

78%

42%

Integration with CRM

26%

78%

PwC


54PwC

TRUMPF is driving innovative business models through next-level supply chainsBack in 2009, TRUMPF began allowing customers to log in online and initiate the production process

digitally. In 2015, the company started inscribing a unique data matrix product code on every part –

similar to a three-dimensional QR code – using TRUMPF’s laser marking machines to make re-ordering

and identification easier. And since 2017, customers have been able to photograph the code with the

TRUMPF service app and place an order simply by uploading the image.

Each order triggers the company’s semi-autonomous production system, which independently determines

the priority of each order and automatically assigns it to the right machine with open capacity – under the

surveillance of the plant employees. These enhancements have significantly improved supply chain

performance. In comparison with 2009, the company has reduced its throughput time from four days to

just four hours, doubling capacity and at the same time increasing the service level from 40% to 97%.

Orders placed by 2pm are produced and shipped on the same day. The goal: provide service to

industrial customers for make-to-order parts comparable (or even superior) to what Amazon offers its

shoppers.

TRUMPF’s innovations are increasing transparency: the data matrix product code TRUMPF inscribed on

each part enables end-to-end traceability. And they are driving enhanced after-service performance as

well, by making it possible to monitor a tool’s usage remotely.

PwC


55PwC

AI in supply chain managementArtificial intelligence is accelerating supply chain improvements and will become the new norm

PwC

Digital Champions have already mastered Data Analytics and are using AI to supercharge supply chain capabilities


57PwC

Use an AI platform to supercharge supply chain

capabilities by developing and implementing AI use

cases that leverage various methodologies (e.g.

machine learning, deep learning, regression analysis)

Leverage all relevant data along the

entire supply chain – internal data across

the company, data from supply chain

partners and customers and publicly

available data

Establish a responsible and data driven

mindset by upskilling the supply chain workforce

towards citizen data scientists and democratise

access to data both internally across functions

and externally towards supply chain partners

PwC

Digital Champions use AI to turbo-charge key capabilities, fuelled by their ability to leverage external data


58PwC

70%of all companies use AI in at

least one area.

• AI is the key enabler of the supplychain ecosystems of

the future. 70% of all companies are using AI to support

their supply chain capabilities in at least in one area.

• While companies across all maturity stages are now

investing in AI, Digital Champions are far ahead – they

are 2-3x more likely to be harnessing AI in a capability

than Digital Novices.

How companies apply AI to boost their supply chain ecosystem capabilities

Digital Champions have clearly identified the areas where AI brings value.

Q9d. How would you characterise your advanced supply chain capabilities today? For which capabilities are you applying AI, machine learning or deep learning?


24%

17%

End-to-end supply

chain planning

Supply chain

segmentation

Supply chain

transparency

33%

23%

Cost-to-serve

optimisation

Smart logistics

43%

13%

24%

41%

15%

41%

0%

27%

12%

3%

15%


3-4 out of 10 Digital Champions are applying AI to generate transparency and make

better decisions.

PwC

Implementation of an AI and Advanced Analytics platform is the foundation for AI based supply chain capabilities


60PwC

Level of implementation of AI and advanced analytics platforms

Q13. How would you characterise the implementation of the following software-based supply chain technologies today? Base: 1,601

companies

40%

52%

Digital Innovators

Digital Followers

Digital Champions

48%

63%

57%

27%

13%

All Companies

32%

44%

24%

38%

11%

29%

22%

n Not implemented n Piloted n Implemented

• Overall only 22% of all companies surveyed have already implemented an AI and

advanced analytics platform. While 40% of all companies have nothing in place yet, already

>50% of those plan to implement within the next 5 years.

• Digital Champions clearly excel, with 63% already having an AI and advanced analytics

platform implemented and are currently scaling the technology across the company (89%

having AI and advanced analytics platform currently partially implemented).

• Digital Novices are still taking their decision (52% having nothing implemented

yet) and experimenting with the technology.

Digital Novices

Leveraging standard software for AI and advanced analytics platforms

86%

61%51%

• Across all companies the trend is to use standard software like Microsoft, AWS or Google

to build anAI and advanced analytics platform(61%).

• Digital Champions already have far more clarity compared to all other companies what

there path is.

Q13. How would you characterise the implementation of the following software-based supply chain technologies today? Base: 1,601

companies


PwC


62PwC

Operating model developmentMastering tomorrow’s challenges throughnext level supply chain organisations and capabilities

PwC

Mastering tomorrow’s supply chain challenges through the next level supply chain organisation


64

Set-up cross-functional teams,

communities and supply chain

centers of excellence to drive advanced

capabilities by applying continuous

development and deployment approaches

Establish a self learning and

continuously improving organisation

through attracting digital talent and digital

upskilling of the supply chain workforce

Establish a state-of-the-art

technology backbone and embed

advanced analytics and IT into supply

chain to enable business-led transformations

by bringing business, processes, IT and

advanced analytics together

Establish new

collaboration models with

an extended partner

ecosystem to drive innovation

in the supply chain

Building blocks for the transformation towards a connected

and autonomous supply chain ecosystem

PwC

Innovating the supply chain through a continuous development and deployment approach


66PwC

Traditional approach Continuous innovation and deployment

Inn

ova

tio

n le

ve

l

Deployment across regions, divisions

Supply

chain vision

Training and roll-out

Wa

terf

all

de

ve

lopm

ent

Inn

ova

tio

n le

ve

l

Deployment across regions, divisions

Supply

chain vision

Ag

ile d

eve

lop

men

t w

ith

co

ntin

uo

us r

ele

ases Continuous deployment

PwC


67PwC

IKEA is connecting local and global supply chain experts from different functions to drive innovation and sustainability across the supply chain

Working in networks, where teams of experts collaborate across functional areas and geographies to

drive innovation

6 development networks (DNs) define innovation priorities

They cover the supply chain from production logistics and packaging to fulfillment of services

A combined Development Plan summarises the status quo and articulates a clear vision for the future

A comprehensive Roadmap detailing priority initiatives, avoiding repetition and leveraging synergies

across the development networks. Clear leadership, including two heads for each development network

and their executive-management sponsors

Robot picking of

heavy products

Biofuels on

container ships to

decarbonise

transportation

New capabilities and

business models for

a circular supply

chain

pwc.de

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© 2020 PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft.

All rights reserved. In this document, "PwC" refers to PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, which is a member firm of

PricewaterhouseCoopers International Limited (PwCIL). Each member firm of PwCIL is a separate and independent legal entity.

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