New data from Blue Yonder shows that 55 percent of U.S. executives noted that sustainability would be a key investment area for 2024, compared with 48 percent of organizations globally.
Saskia Van Gendt, Blue Yonder’s chief sustainability officer, said that though the U.S.’s interest in sustainability is a welcome sight, it likely comes as the country tries to play catch up to other regions.
“The way I interpreted that was almost a lag. We’ve seen, in Europe in particular, that there’s been consistent investments over the past 10 years, and we saw in Europe, at least, with the respondents that their sustainability and investments were staying the same as previous years, whereas in the U.S., we saw an increase,” Van Gendt said. “I think that’s [because] the U.S. is catching up to what’s been happening in Europe. We see things like the California regulations, kind of copying some of the European regulations, being key drivers for businesses for increasing those investments.”
In the U.S., supply chain executives have three top-of-mind areas of focus where sustainability is concerned: improving transportation efficiency, reducing waste and excess and improving supplier sustainability.
Van Gendt said those goals align with what consumers have indicated they find important.
“One of the things that was consistent between this survey and our consumer survey was the focus on waste reduction and more efficient transportation in particular. That felt nice, that there’s a consistency from where consumers are oriented [and] the kind of companies that they want to be shopping with and where those companies have focused their priorities,” she said.
In order to tackle those goals, U.S. organizations have beefed up their investment in going green. Blue Yonder’s data shows that the proportion of U.S. organizations that consider sustainability a “key area of investment” is up 13 percentage points from 42 percent of U.S. organizations last year.
For many organizations, artificial intelligence and other emerging technologies have begun to aid sustainability pushes. Blue Yonder’s data shows that 41 percent of organizations globally place AI-based technology as an investment priority this year, making it the second-highest category for investment behind sustainability.
Van Gendt said she sees an opportunity for organizations to use that technology for good—already, some organizations have started to use AI for inventory forecasting, allocation, transportation management, risk assessment and more.
Simultaneously, though, organizations building and deploying AI models need to be cognizant of their environmental ramifications, she noted.
“There’s a ton of opportunity with AI, and that’s where a lot of companies are focusing their investments,” Van Gendt told Sourcing Journal. “From a sustainability standpoint, I think what we’re really focused on is, how do we make sure that we’re harnessing the sustainability benefits that are achievable through AI that will not be overshadowed by the sustainability impacts from increased data cloud usage and the energy and water that’s associated with the cloud itself. We’re very mindful that we need to make sure that we’re maximizing the benefits and not just increasing data usage that would erode those benefits in the long run.”
Already, more than half of global organizations indicated they are using AI and machine learning (ML) for supply chain planning. And 80 percent of global organizations have already begun piloting or implementing generative AI into their supply chains, though adoption is slightly lower in the United States.
Even though about eight in 10 organizations are actively using generative AI, nine in 10 organizations believe it will be effective in optimizing supply chain processes and decisioning, the data shows.
Among organizations that have already adopted generative AI, many have started to see improvements in their key performance indicators around customer service and cost savings—46 percent and 45 percent of organizations, respectively.
Andrea Morgan-Vandome, chief innovation officer at Blue Yonder, said she expects investment and interest in AI will only increase over the course of the rest of the year.
“AI adoption will continue to grow at a rapid pace in the supply chain with companies looking to drive efficiencies, reduce risk and take advantage of otherwise hidden opportunities,” Morgan-Vandome told Sourcing Journal. “As it relates to generative AI specifically, we expect to see a shift toward vertical-specific and role-specific AI agents. Whether it’s a software developer or a supply chain planner, we predict everyone will have an AI agent they can work with to help them throughout their entire day.”
But despite the promise ahead, supply chain professionals continue to feel the pain of disruptions and delays. Eighty-five percent of U.S. respondents indicated that they faced supply chain disruptions over the course of the last year, which is close to the proportion of executives that said the same in 2022 and 2023.
Worldwide, four main factors contributed to disruptions: raw materials, extended delivery times from suppliers, lack of labor and lack of availability on shipping vessels. Based on March data from the International Air Transport Association (IATA), air cargo shipments have increased year over year, as has cargo capacity. Freight capacity has increased at a fraction of the rate air cargo capacity has increased at, the IATA further noted.
It seems supply chain executives could be feeling the pain of more expensive shipments. According to Blue Yonder, 60 percent of U.S. organizations reported decreased profit margins. Globally, 46 percent of supply chain executives said the same, with 38 percent of executives citing cost of transportation and 34 percent pointing to cost of materials as reasons for those margin troubles.
Morgan-Vandome said the continued costs and issues associated with supply chains globally can, in part, be addressed with technology.
“Supply chain disruptions are still a major challenge for businesses,” Morgan-Vandome said in a statement. “With a majority of global organizations reporting disruptions in the last year, it’s clearer than ever that we need innovative technology solutions to respond to those disruptions and enable businesses to adapt with lasting resiliency.”
