Companies with Next-Generation Supply Chain Capabilities Achieve 23% Greater Profitability, Shows New Research from Accenture

Rhea-AI Summary

A recent study by Accenture reveals that companies with advanced supply chains are 23% more profitable than their peers. These leading firms are six times more likely to implement AI and generative AI across their supply chains, resulting in significant additional business value. The report, which analyzed 1,148 companies across 15 countries and 10 industries, found that 'Leaders'—the top 10%—achieved 23% higher margins and 15% better shareholder returns between 2019 and 2023, compared to their peers.

Leaders invest heavily in advanced technologies to enhance supply chain efficiency, agility, sustainability, and resilience. Despite these gains, the report highlights a widespread lack of supply chain maturity, with an average score of just 36%. This score varies significantly by country and industry, indicating a pressing need for many companies to adopt modern technologies to stay competitive.

Positive

• Companies with mature supply chains are 23% more profitable.
• Leaders achieved 15% better shareholder returns between 2019 and 2023.
• Advanced technology investment enhances supply chain efficiency, agility, sustainability, and resilience.

Negative

• Average supply chain maturity score remains low at 36%.
• Significant disparity in supply chain maturity across countries and industries.
• Many companies are still using outdated supply chain technologies, risking competitiveness.

Market Research Analyst

The research from Accenture highlights the substantial profitability and shareholder return advantages enjoyed by companies with highly mature supply chains. Companies with advanced supply chain capabilities achieve 23% greater profitability and 15% better returns to shareholders. This suggests that investing in next-generation supply chain systems offers significant financial benefits.

Advanced supply chains leverage AI and generative AI for autonomous decision-making and continuous improvement. This promotes efficiency, agility, sustainability and resilience. Firms that extensively adopt AI can respond quickly to changes, innovate faster and reduce time to market for new products. However, only a small percentage of companies, just 9%, use such technologies widely. This indicates a considerable growth opportunity for companies that are lagging.

From a retail investor’s perspective, companies that prioritize and successfully implement advanced supply chain technologies could be seen as more resilient and adaptive in an increasingly complex economic landscape. This translates to potential for steady financial performance and long-term growth. However, investors should seek evidence of ongoing investment and practical implementation of these technologies before making any decisions.

Financial Analyst

The findings from Accenture indicate a pronounced correlation between supply chain maturity and financial performance. The top 10% of companies, or 'Leaders', recorded significantly higher profit margins and returns to shareholders than their peers. Specifically, leaders reported profit margins of 11.8% compared to 9.6% for other companies over a four-year period. This data suggests that investment in supply chain technologies like AI provides a substantial competitive edge.

For investors, these findings emphasize the importance of evaluating a company's supply chain strategy when assessing its long-term financial health. Firms that are classified as leaders in supply chain maturity are not just performing better financially; they are also likely more prepared to handle economic volatility and supply chain disruptions. This preparedness can translate into more stable and predictable earnings, which is a key consideration for long-term investment.

While the potential upside is clear, investors should also consider the costs and challenges associated with implementing advanced supply chain technologies. The transformation requires significant capital investment, talent acquisition and a cultural shift within the organization. Failure to successfully navigate these challenges could lead to wasted resources and missed opportunities.

Analysis also reveals alarmingly low supply chain maturity among many organizations with limited ability to benefit from AI and generative AI as a consequence

NEW YORK--(BUSINESS WIRE)-- New research from Accenture (NYSE: ACN) finds that companies with the most mature supply chains are 23% more profitable than their peers. These leaders are six times as likely to use AI and generative AI widely across their supply chains, which allows them to generate additional business value.

Leaders with more mature supply chains deliver stronger financial performance, shows new research from Accenture (Graphic: Business Wire)

For the report, “Next stop, next-gen,” Accenture analyzed 1,148 companies across 15 countries and 10 industries. It defines supply chain maturity as the extent to which companies have supply chain capabilities that use generative AI, advanced machine learning and other evolving technologies for autonomous decision-making, advanced simulations and continuous improvement. These capabilities enable companies to adapt more readily to changes as they happen and adopt other new technologies seamlessly as they emerge.

The report shows that “Leaders”—the 10% of companies scoring highest on the maturity scale—achieved 23% higher margins than their peers (11.8% vs. 9.6%) between 2019 and 2023. At the same time, they delivered 15% better returns to shareholders (8.5% vs. 7.4%).

“Leaders are investing heavily in increasingly sophisticated technologies—especially AI and generative AI—to build the next generation of supply chain capabilities,” said Max Blanchet, Accenture’s global strategy lead for supply chains and operations. “These capabilities are essential to reinvent supply chains for efficiency, agility, sustainability and resilience. They enable leaders to move beyond traditional supply chain drivers consisting of cost, quality and delivery, which is causing many supply chain vulnerabilities and inefficiencies today and in the future.”

While only 9% of all companies use AI and generative AI widely across their supply chains, substantially more leaders already do (37%) compared to just 6% of their peers. Leaders are also expecting to see significant benefits. They are eight times as likely to reduce the time it takes to develop and launch new products by 30%, 8.5 times as likely to develop eco-friendly products, and six times as likely to improve the efficiency of engineering resources by 30%.

However, the bigger picture painted in the report is alarming. While the average supply chain maturity score has jumped by more than 50% between 2019 and 2023, the average score across all companies remains low, at just 36%. It varies across industries and countries—from 22% in Mexico to 52% in Japan, and from 31% for consumer goods companies to 40% for aerospace and defense firms.

“If we compare supply chain maturity to the evolution of navigation—from following the stars to driving semi-autonomous vehicles—many of us are still running supply chains on a mix of paper maps and first-generation satnavs,” said Melissa Twining-Davis, Accenture’s global operations lead for supply chains. “The next-generation capabilities that exist, such as generative design to develop products, highly automated facilities to produce them, and advanced analytics and machine learning to predict supply roadblocks, are just at the beginning. The reinvention potential ahead is massive.”

According to the report, these are the supply chain capabilities companies need to be competitive in today’s economic context. They no longer operate in a time of stable economic growth and frictionless globalization. This means the old supply chain levers, such as global low-cost sourcing and specialized factories in low-cost locations, aren’t sufficient anymore.

Max Blanchet added: “Reinventing supply chains requires the ability to, for example, monitor suppliers up to the fourth and fifth tier in near-real-time to anticipate risks, change the production on short notice, and simulate the entire lifecycle of a product. Next-generation supply chains will autonomously adapt to change and be sustainable by design. Companies with supply chain maturity scores of 25% or lower—almost one in three companies—must act fast to catch up. Otherwise, there is a real risk they won’t survive in today’s new economic and industrial context.”

Explore the report in Accenture’s thought leadership app, Foresight, and get a personalized feed of recent latest insights, data, case studies, blogs and more. Download the app at http://www.accenture.com/foresight.

About the research

The “Next stop, next-gen” research is based on a survey conducted October 2023 among more than 3,000 supply chain executives in 1,148 companies. Respondents were from the following countries: Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, South Korea, Spain, Sweden, United Kingdom, United States. Their companies were from the following industries: Aerospace and Defense, Automotive, Chemicals, Consumer Goods and Services, High Tech, Industrial Equipment, Life Sciences (Pharmaceutical), Metals and Mining, Oil and Gas, and Utilities.

About Accenture

Accenture is a leading global professional services company that helps the world’s leading businesses, governments and other organizations build their digital core, optimize their operations, accelerate revenue growth and enhance citizen services—creating tangible value at speed and scale. We are a talent- and innovation-led company with approximately 750,000 people serving clients in more than 120 countries. Technology is at the core of change today, and we are one of the world’s leaders in helping drive that change, with strong ecosystem relationships. We combine our strength in technology and leadership in cloud, data and AI with unmatched industry experience, functional expertise and global delivery capability. We are uniquely able to deliver tangible outcomes because of our broad range of services, solutions and assets across Strategy & Consulting, Technology, Operations, Industry X and Song. These capabilities, together with our culture of shared success and commitment to creating 360° value, enable us to help our clients reinvent and build trusted, lasting relationships. We measure our success by the 360° value we create for our clients, each other, our shareholders, partners and communities. Visit us at www.accenture.com.

Copyright © 2024 Accenture. All rights reserved. Accenture and its logo are trademarks of Accenture.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240708776537/en/

Jens Derksen

Accenture

+49 175 57 61393

jens.derksen@accenture.com

Source: Accenture

FAQ

What did Accenture's new research find about supply chain maturity?

Accenture's research found that companies with advanced supply chains are 23% more profitable and 15% better at delivering shareholder returns.

How much more likely are companies with mature supply chains to use AI?

Companies with mature supply chains are six times more likely to use AI and generative AI widely across their supply chains.

What is the profitability difference between leaders and their peers?

Leaders, the top 10% of companies in supply chain maturity, are 23% more profitable than their peers.

What are the key benefits of advanced supply chain capabilities?

Advanced supply chain capabilities lead to higher efficiency, agility, sustainability, and resilience.

How does supply chain maturity vary by country?

Supply chain maturity scores vary from 22% in Mexico to 52% in Japan.

What is the average supply chain maturity score found in the research?

The average supply chain maturity score found in the research is just 36%.

How much better are shareholder returns for companies with advanced supply chains?

Companies with advanced supply chains deliver 15% better shareholder returns.