Supply chain shocks dampening investment, says Capgemini

Ongoing supply chain problems are stymying corporate investment levels, a new report by the Capgemini Research Institute shows. 

Disruption in the supply chain is seen as the top risk to business growth for 89% of organisations, ahead of rising raw material prices (79%) and the energy crisis (64%). 

Supply chain resilience is a key priority, with 43% of businesses planning to increase investment in this area, while 39% intend to increase investment in technology, to reduce costs and drive business transformation.

Priority areas include enabling supply chain agility, transparency and visibility, and also the diversification of supplier bases, production, and transportation partners.

Diversification strategies include onshoring and near-shoring, to place production bases closer to demand, the regionalising of supplier bases, and widening the manufacturing base to reduce reliance on a single geographic region. 

Western European countries plan to invest more in supply chain diversification, whereas APAC countries are looking more to supply chain technologies.

The report also reveals that, in the past 12-18 months, more than half (53%) of organisations have cut their environmental spend, and that only 33% plan to increase investment here in the next 12-18 months – even though this represents a small share of overall investment.

Businesses in the US and China plan to increase investments (41% and 53% of organisations respectively) over the next 18 months, but the  figure is lower for Europe.

Inflation sees demand for sustainable products falling 

Nearly three-quarters (74%) of executives say customer demand for sustainable products and services has declined, because many customers are unwilling to pay a premium for ‘greener’ products, services, and solutions in the current economic climate.

For the study, the Capgemini Research Institute surveyed 2,000 senior executives from organisations with more than US$1bn in annual revenue, across 15 countries, in November and December 2022.

Capgemini CEO Aiman Ezzat says: "Global business leaders are focusing their investments on the areas that will continue to drive their business transformation. 

“They should seize the opportunity that technology offers, not only to make their business more efficient, sustainable, and resilient, but to enable long-term growth opportunities. 

“Investing in the talent able to deliver on value chain transformations is also key, but without sacrificing overall employee experience. 

“These areas of investment are vital for organisations to not only weather the uncertain environment but to emerge stronger and more resilient in the future.”

About Capgemini Research Institute

The Capgemini Research Institute is Capgemini’s in-house think-tank on all things digital. The Institute publishes research on the impact of digital technologies on large traditional businesses. The team draws on the worldwide network of Capgemini experts and works closely with academic and technology partners.