The pressure never really lets up in the fast-paced world of fashion and consumer goods. Cost control, economic and political uncertainty, sustainability, labour and inventory management are common concerns for retailers, brands, manufacturers, wholesalers and their supply chain partners in 2024.
More than 300 survey participants shared their perspectives in the newly published CGS BlueCherry® 2024 Supply Chain Trends & Technology Report, representing multiple business types and corporate roles. Here is a summary of what they identified as the top business trends, challenges and improvement priorities for this year.
UNCERTAINTY RULES THE DAY
Businesses dislike unpredictability. Contentious politics, fiscal policy, wars and trade conflicts heighten risks, complicate planning and influence inflation, interest rates and consumer spending. Conversely, conflict resolution, peacemaking and decisive elections can also benefit business.
In 2024, uncertainty is a significant concern on multiple fronts. Over 90 percent of our survey respondents indicated that economic/political uncertainties are expected to be a supply chain challenge in 2024, yet only one-third perceive this as a “serious problem.”
Price/margin pressure ranked as the No. 1 supply chain challenge for 2024, rising from being the third greatest challenge last year. Forty-one percent of respondents stated that price pressure would be a “serious problem” in 2024, and another 46 percent expect it to pose a “moderate problem.” Therefore, it is no surprise that reducing costs is again considered the most critical improvement priority this year, as it was for 2023. Strategies to reduce costs include enhancing efficiency and productivity. Results also indicate that companies are implementing technology priorities to streamline and strengthen their operations, from concept to consumer.
There is also a valid reason for cautious optimism. U.S. inflation rates decreased in late 2023, but interest rates still render borrowing money and managing debt expensive. A September 2023 McKinsey survey of chief procurement officers found that 73 percent believe demand volatility will continue to challenge supplier relationships over the next five years.
After hastily complying with the Uyghur Forced Labor Prevention Act in 2022, many companies took a moment to regroup on the ESG front and addressed other issues in 2023. However, sustainability and social responsibility continue to demand their attention. Nearly half of CGS survey respondents consider ESG/Traceability a serious to moderate problem.
SUPPLY CHAIN CONFIDENCE RISES
A healthy majority of respondents are confident in their supply chain’s ability to support their 2024 business objectives, but many see room for improvement. Only one-fourth are “highly confident” in their supply chains. The majority, 67 percent, are “moderately confident.” Interestingly, that same proportion of our 2020 survey sample population had supply chain confidence heading into 2021, having managed to survive 2020.
That almost 70 percent of survey participants had solid supply chain confidence heading into 2021 was surprising. However, when we analysed survey results from preceding years, we observed a common thread: Companies were acutely aware of the need for greater supply chain visibility and collaboration dating back to 2017. The results also indicated meaningful technology investment in connected ERP, PLM and Shop Floor Control (SFC) systems, for example, to enhance supply chain digitalisation. These investments and strong supplier relationships paid off.
Yet when one problem eases, another takes its place. And what appears to be a positive development — a surge in demand — can also present a significant challenge. In the autumn of 2021, Covid’s bullwhip was beginning to unfurl. Supply chains felt the pressure to keep pace with surging demand. Perhaps this led to shakier confidence as respondents completed our survey in December 2021.
Analysing the results from the most recent years, it’s likely that those supply-and-demand fluctuations continue to influence confidence levels. Yet the results also indicate that the very same supply chain investments that helped businesses survive 2020 are assisting them in remaining competitive now.
Comparing the two most recent years, the percentage of survey participants who stated they are either “Highly” or “Moderately” Confident in their supply chains grew from 86% (2023) to 93% (2024).
Supply chain relationships reflect survey participants' growth opportunities, challenges and improvement priorities. Manufacturers are under pressure to do more — more efficiently while lowering costs and being flexible — no easy task. Buyers and sourcing teams must work on vendor relationships — collaborating more closely on realistic timelines and sharing risks/rewards by offering longer-term commitments. The common theme is that building trust and a reliable track record between those who buy and those who supply is a strategy for success.
FASHION GOES DIGITAL
A new “improvement priority” added to our latest survey, Digital Transformation (DX), clearly has the attention of industry leaders. It made a significant debut this year, with almost 40 percent of respondents stating it is “very important” and another 31 percent rating it “important.” 49% of retailers, manufacturers, wholesalers and eCommerce businesses view DX as one of their Top 3 improvement priorities for 2024.
These results reflect how digital processes, automation and robust analytics underpin success in every area of business growth. DX is instrumental to every other improvement priority ranked in our research. For instance, AI-driven analytical tools enhance the accuracy of consumer demand planning. Additionally, seamlessly integrated ERP, PLM and shop-floor control solutions improve supply chain efficiency, productivity and visibility.
Digital transformation has never been more essential to meeting customer expectations, increasing sales, improving efficiency, and capturing business opportunities. Uncertainty might be the new normal, but that doesn’t mean it has to pose an outsized threat that consistently keeps you awake at night.
The needle is moving forward for companies’ DX initiatives. The share of respondents who consider their efforts “best in class” remains a single-digit slice of the pie. However, there is a clear progression of businesses moving up the ladder. This is most evident in the eight percentage-point shift between those who regard their efforts as “average” versus “above average.”
Companies are serious about end-to-end supply chain digitalisation. It’s their No. 3 growth opportunity and No. 4 improvement priority. It’s also the fourth most important aspect respondents say buyers/sourcing teams and manufacturers should collaborate on to enhance 2024 supply chain performance. An impressive eighty-three percent of respondents have completed, started or are planning digital transformation actions to overcome 2024 challenges.
End-to-end supply chain digitalisation will assist retailers, brands, wholesalers and their suppliers in responding to the uncertainties, challenges and opportunities that 2024 brings. Digital processes and connectivity support greater speed, agility and flexibility in responding to trends. 70% of executives view digital transformation as a very important or important growth opportunity for 2024.
Supply chain partners agreed on one thing: It’s essential to embrace technology, automate processes and digitally connect their operations. These are master keys to greater visibility, transparency, efficiency, and cost control. It's a win-win all around!
To get more details and benchmark your business against peers and competitors, Get the Free Report. To learn how BlueCherry can accelerate your ability to overcome uncertainty, realise measurable improvements and capture more opportunities, phone +44 (0) 315 849 5491 or Visit the Website today.
