Labor and skills shortage slow corporate dash toward digitalization

As companies continue to emerge from pandemic restrictions and cope with volatile economic conditions, a stubborn shortage of labor and skills is weighing down their efforts to settle on a “new normal,” a study shows.

One of the main victims of the labor pinch is digital transformation, which remains a popular goal—more than 93% of companies are actively engaged in that pursuit—but is hamstrung by the people/skills deficit, which is cited as the number one obstacle by 53% of firms, according to a survey from supply chain planning provider ToolsGroup and the Council of Supply Chain Management Professionals (CSCMP).

“The past two years have put a spotlight on the need for digitizing supply chain planning, and fortunately, more companies than ever are responding by stepping up efforts to transform their operations,” Caroline Proctor, chief marketing officer at ToolsGroup, said in a release . “The percentage of companies that are not pursuing a digital transformation strategy at all is, at 7%, the lowest we have measured so far. Our findings reveal increasing investments in software, automation, and people.”

Leaders surveyed in the third annual report are “extremely concerned” about external supply chain threats but lack the people needed to make transformation succeed, ToolsGroup and CSCMP said. Measured another way, respondents said their top growth investment for 2022 is “increasing recruitment and training efforts,” according to results from the survey of more than 300 supply chain professionals around the world completed between January and March.

Those results run parallel to the results of the same survey last year, which found that companies around the globe were striving to speed up their logistics digitization plans to meet continuing pandemic challenges, but nearly half of them were hindered in that process by a lack of the necessary technology skills among their employees.

However, there were also some large shifts over the past 12 months, as last year’s top objective–to keep up with evolving customer behaviors and expectations–has plummeted to number five in 2022. Following the top response about recruitment and training, other high- priority goals are developing better and faster reactions to unplanned disruptions (47%) and increasing supply chain resilience (also 47%).

Looking into the future, most companies started 2022 with a positive business outlook, but they remain extremely concerned about external factors that have impacted supply chain planning strategies in the last two years. The survey showed that the external concerns that most worrying respondents are: supply chain delays (25%), surging inflation (24%), and scaling fulfillment costs (19%).

“The survey results show that companies are charting a steady course toward digital transformation,” Mark Baxa, CSCMP’s president and CEO, said in a release. “As supply chain challenges become more frequent and intense, company leaders are increasingly focused on implementing solutions that can help them better manage risk, bypass skills shortage and become more resilient.”

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