Research Summary. As the life-blood of any company, supply chains are an ever-important cog in the gears. However, lack of visibility and supply chain disruptions continue to be an ongoing issue, especially now. How have the COVID-19 pandemic and globalization affected supply chains? Well, according to our extensive research:
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Only 6% of companies report full visibility on their supply chain. 69% of companies do not have total visibility.
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38.8% of U.S. small businesses experienced supply chain delays due to the COVID-19 pandemic.
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The global supply chain market size value is $15.85 billion
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The global supply chain market is expected to experience a CAGR of 11.2% from 2020 to 2027.
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90% of global merchandise is shipped by sea.
For further analysis, we broke down the data in the following ways:
Trends and Predictions | Inventory Management | Disruption
Benefits of Good Supply Chain Management Statistics
Given that supply chains are an important part of any functioning company, it’s important to understand the effects of a good or bad one. Optimal supply changes can save time and money, as well as reduce disruptions and delays. Here are the facts:
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Reducing supply chain costs from 9% to 4% can double profits.
Supply chains have a huge impact on company profits, so optimization and cost reduction is always valuable. This is especially true for Industrial Suppliers, where the average supply chain cost is 13.2%, while the best companies have managed to optimize this number to 7.9%. That’s a 40% savings.
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57% of companies believe that supply chain management gives them a competitive edge.
And 70% believed that supply chains are a key driver for quality customer service. That means that a majority of companies are aware of how important supply chains are.
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Supply chains provide higher company growth through a wider selection of customized, reliable, sustainable, and delivered as rapidly as possible products.
These factors play a key role in growth, and here’s how much demand rose from each factor: wider selection (71%), customized (76%), reliable (73%), sustainable (69%), and rapid delivery (76%).
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The most common Key Performance Indicator (KPI) used for supply chain monitoring is daily performance at 40%.
Daily performance is the highest, but these KPIs also contribute to supply chain optimization: cost reduction (35%), production service rate (29%), inventory turn (28%), and production time (27%).
Supply Chain Industry Trends and Predictions
Despite the COVID-19 pandemic, the supply chain market has been growing steadily, and it is expected to continue growing. Much of this can be attributed to technology and globalization. Here are some insights our research uncovered:
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The global supply chain market is expected to experience a CAGR of 11.2% from 2020 to 2027.
That means a market value increase from $15.85 billion in 2019 to $37.41billion in 2027. And, this number has continued to hold, despite the pandemic.
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The Transportation Management System (TMS) is expected to have a CAGR of 11.7% from 2021 to 2028.
That’s an increase from a market value of $120.70 billion in 2021 to a predicted $261.89 billion in 2028.
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The Global Logistics Automation Market has the highest CAGR of any supply chain market, at a predicted rate of 12.4%.
As of 2020, the Global Logistics Automation Market size was $50.9 billion. However, this size is expected to experience a CAGR of 12.4%, meaning it may grow to $82.3 billion by 2026.
Inventory Management Statistics
Inventory management is an important part of maintaining an optimal supply chain, but there’s a big difference between small business management and massive corporate management. According to our research:
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Only 22% of companies have a proactive supply chain network.
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43% of small businesses don’t track their inventory.
And 21% report that they “don’t have inventory.” However, of those who do track inventory, the most common method is inventory through accounting software like Quickbooks, at 24% of small business owners.
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67.4% of supply chain managers use Excel spreadsheets as a management tool.
And this number only rises with experience, as around half of new investors use it, while over 75% of late majority managers do.
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On average, U.S. retail operations have a supply chain accuracy of only 63%.
This can result in significant delays and re-stocking issues. For example, 34% of businesses have shipped an order late due to selling a product that wasn’t in stock.
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Due to the COVID-19 pandemic, the estimated value for out-of-stock items in 2020 was $1.14 trillion.
Which is a stark contrast to the $626 billion of overstock items, meaning out-of-stock items were double the value. This same trend was especially prominent in grocery stores, where out-of-stock items were worth five times more than overstock items.
Proactive supply chain management means that the end-user is always able to address shifts in supply or demand before they become critical. The fact that fewer than a quarter of companies operate this way was exposed as a big vulnerability during the pandemic.
Supply Chain Disruption Statistics
Supply chain disruptions can wreak havoc on small businesses and massive corporations alike. But just how strong are the effects of supply chain disruptions? Here’s what we found:
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Globally, 12% of retailers reported heavy supply chain disruptions due to COVID-19.
This is a surprisingly low number, as 32% of global retailers reported that they experienced little disruption. However, maintaining stock items was a much bigger issue, as 28% of respondents underwent shortages and out-of-stocks and tried to find alternative sourcing options.
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Between 2019-2020, overall supply chain disruptions increased by 14%.
In 2019, there was an average of 3,700 supply chain disruptors. However, this number increased to 4,200 in 2020.
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Supply chain disruptions can cause a massive 62% loss in finances.
And other aspects of business that can be hit hard by supply chain disruptions include logistics and reputation, which see an average 54% hit.
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The #1 cause of global supply chain disruptions is mergers and acquisitions at 66%.
And other common causes of supply chain disruption include extreme weather (41%), factory fire (37%), and business sales (33%).
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The #1 cause of U.S. supply chain disruptions is unplanned IT outages at 68%.
And other common causes of supply chain disruption include adverse weather (62%), loss of talent (51%), cyber-attacks (50%), and fire (44%).
Supply Chain Statistics FAQ
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A supply chain is a valuable network connecting a company to its suppliers. This enables the company to produce its products. Supply chains can include things like other people, entities, information, and resources. Overall, the term “chain” represents the process of creating the product that will ultimately be purchased by a customer.
As shown by these statistics, supply chains play a crucial role in effective business management. Supply chain disruptions can cause finance losses of 62%, and reducing supply chain costs from 9% to 4% can double profits.
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What are the supply chain steps?
Generally speaking, the supply chain steps are as follows:
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Original source of or extraction of raw materials
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Refining raw materials into basic parts or resources
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Assembling parts and resources into finished products
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Products being purchased by consumers
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Shipping finished products to consumers (if business is online)
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How do I improve my supply chain?
There are many ways to improve your supply chain. After all, 43% of small businesses don’t even track their inventory. To improve your supply chain, we recommend the following actions:
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Track your inventory using an online program such as Quickbooks or Excel.
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Create a supply chain council that allows for communication, goal setting, and management within your supply chain.
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Build positive relationships with your suppliers.
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Identify possible risks and disruptions so you can prepare ahead of time.
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Improve logistics and reduce carbon emissions through green initiatives.
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How much is the supply chain industry worth?
The supply chain industry is worth $15.85 billion. It’s expected to grow with a CAGR of 11.2% from 2020 to 2027, despite the COVID-19 pandemic throwing a wrench in the industry. This CAGR would put its value at $37.41 billion in 2027, over double its value just seven years earlier.
In addition, the Transportation Management System (TMS) industry is worth $120.7 billion and is expected to see a CAGR of 11.7%, bringing its value up to $261.89 billion in 2028. While this industry isn’t only concerned with supply chains, it does play a large part in them.
The Global Logistics Automation market is a significant part of the supply chain industry, and it’s also expected to grow. Its CAGR is even higher than these other two industries’ at 12.4%, likely growing from $50.9 billion in 2020 to $82.3 billion in 2026.
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What are the four major elements of supply chain management?
The four main elements of supply chain management are procurement, operations, distribution, and integration. These elements work together to ensure no stoppage along the supply chain.
Procurement, also called purchasing, is the first element of supply chain management, and it involves purchasing the tools, equipment, and materials the company needs to make its products. The employees in charge of this area need to balance purchasing enough to keep operations humming, but not so much that they waste money.
Operations are the element of supply chain management that makes sure everything is running as efficiently as possible. The people who work in this area may create and improve processes, handle employee work schedules, or monitor for quality to avoid setbacks.
Distribution is getting the product where it needs to go on time, whether that’s a store or the online customer’s front door. This requires streamlined shipping and logistics processes, which some companies handle themselves, and some pay third-party organizations.
The final element of supply chain management is integration, ensuring that the other three elements work together seamlessly.
This can involve everything from creating better communication systems to restructuring the company so that everyone who works on the supply chain management process is working together as a team instead of in separate departments.
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What are the major supply chain issues?
The major supply chain issues are transportation costs, accurate inventory counts, and timely pickup and delivery.
Since the COVID-19 pandemic, transportation costs have gone up thanks to backlogging, worker shortages, and high fuel prices. As a result, many businesses struggle to keep costs down in this area both for their customers’ sake and their business’.
Another ever-present supply chain issue is ensuring that companies have enough products to satisfy their customers, but not so much that they’re wasting it or tying up an unnecessary amount of money in inventory.
This issue is exacerbated by the fact that just 22% of companies have a proactive supply chain, which means just 22% of companies can shift to meet supply and demand changes before they cause too many problems.
Furthermore, 43% of small businesses don’t track their inventory, which makes it difficult, if not impossible, to accurately serve their customers.
The third major supply chain issue is timely pickup and delivery. This is especially true for the many companies that hire third-party shipping companies, as they can’t control when they fall behind or make a mistake.
Products or materials not getting where they need to go on time causes a ripple effect that can disrupt the supply chain for a significant amount of time.
Conclusion
At a market size value of $15.85 billion, supply chains are an important part of what makes any big or small business tick. 57% of companies believe that supply chain management gives them a competitive edge, and they’re right. Something as simple as reducing supply chain costs from 9% to 4% has the potential to double profits.
However, supply chain management and optimization are low, especially among small businesses. Only 6% of companies report full visibility on their supply chain, while 43% of small businesses don’t track their inventory. This can lead to more supply chain disruptions, costing a massive 62% hit to finances.
With that in mind, effective supply chain management is a crucial part of improving business. Companies should work to improve their supply chains for the benefit of their customers and their bottom line.
Sources:
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GEODIS. “Supply Chain Worldwide Survey.” Accessed on September 7th, 2021.
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United States Census Bureau. “Census Bureau’s Small Business Pulse Survey Reveals Delays From Domestic, Foreign Suppliers.” Accessed on September 7th, 2021.
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Allied Market Research. “Supply Chain Management Market Statistics: 2027.” Accessed on September 7th, 2021.
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Logistics Bureau. “Reducing Supply Chain Costs.” Accessed on September 7th, 2021.
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Supply Chain Management Review. “Five Ways to Drive Growth Through Your Supply Chain.” Accessed on September 7th, 2021.
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Grand View Research. “Transportation Management Systems Market Report, 2021-2028.” Accessed on September 7th, 2021.
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Research and Markets. “Outlook on the Logistics Automation Global Market to 2026 – Industry Analysis and Forecasts.” Accessed on September 7th, 2021.
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Wasp Barcode Technologies. “State of Small Business Report.” Accessed on September 8th, 2021.
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SupplyChainDive. “Two-thirds of companies consider Excel a supply chain system.” Accessed on September 8th, 2021.
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IHL Group. “Disrupted Retail – How the Pandemic Exposed Retail’s Hidden Inventory Distortion.” Accessed on September 8th, 2021.
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RetailNext. “CEO Retailer Pulse #2.” Accessed on September 8th, 2021.
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ISM. “A Historic Year for Supply Chain Threats, Even Without COVID-19” Accessed on September 8th, 2021.
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BCI. “BCI Supply Chain Resilience Report 2017.” Accessed on September 8th, 2021.
Author
Chris Kolmar is a co-founder of Zippia and the editor-in-chief of the Zippia career advice blog. He has hired over 50 people in his career, been hired five times, and wants to help you land your next job. His research has been featured on the New York Times, Thrillist, VOX, The Atlantic, and a host of local news. More recently, he's been quoted on USA Today, BusinessInsider, and CNBC.
