This topic gets asked once in a while-

It's often said wars are won with men not material, but WWII is not one of those wars. From the outset, the Italians were woefully unready to engage in large scale industrial warfare. War -any war- requires intense planning, and ideally long prep times if resources are not abundant. Italy did not have abundant resources; neither steel, or energy, or a large auto industry to turn to. Not only did Italy produce the least amount of steel among the western powers, but its cost of production was also higher than any other power. Now compound this with an immature auto industry (FIAT) with little desire to produce tanks at no profit for the government, and had little expertise with armor designs, and even if they were enthusiastic about armaments, they lacked the expertise to keep up with the rapidly evolving arms race during the war. They had a hard enough time building 7 ton tanks like the L/6 40, building a serious medium tank equivalent to the Sherman was beyond their means, although the P.40 was at least on paper, similar in ability. These same limitations abound across all areas of Italian war industry except small arms, most importantly in engine design- rather sad considering they made some lovely airframes, but in WWII, speed kills and Italian airpower lacked just that.

I really can't emphasize enough that the Italian armaments were totally unfit to wage war against the British. What makes this all worse, the Italian army had not been planning a war against the British during the early inter-war years, instead (logically) they had been planning a war against their enemy Yugoslavia. They planned for future wars to be fought in the alps, where their traditional enemy: the hated Austrian, dwelled. I don't have my books at hand, but as I recall the army didn't seriously begin planning for a war against the French/British until late '38, well past when a nation with such limited resources should have started. The Italian army did not sit idle, it had done a number of exercises practicing for a war against its enemies, just not the right one.

Much criticism is often laid upon Italian army leadership, full of old reservists, or half-hearted monarchists or incompetent fascist officers placed in command for political reasons. Well, two of those are true, but frankly every army suffered from these same problems- especially the British, their primary enemy. Death by Design highlights the abysmal state of British preparation in the 30's, (particularly tanks), Alan Brooke's memoirs are rife with criticisms of his own "small-brained" generals. The difference between the two is the British had enormous resources -and time- to correct their faults, and the Italians had nothing.

There are often arguments that the Italians were backwards thinking, I think most of them understood their army and its abilities, and they thought about the war in terms rational to that. However, judging from their plans in the 30's, if anything, they were quite forward thinking; they very much understood the importance of tanks, they spent the 30's trying just to motorize the army, and the late 30's attempted to mechanize at breakneck pace when it became clear, after their own exercises, that mechanization was the future. The difference between those two terms is that motorization is the conservative approach; you integrate motors into your existing army structure. Mechanization, is the radical doctrinal restructuring of your armed forces to use tanks, planes and trucks. Unfortunately, many documents from those times don't survive, and there was this odd habit of papers being written and not attributed to any specific person. It's hard to say which officers were in what doctrinal camp.

But see, you can't snap your fingers and just mechanize, or even motorize, they had to make do with 2nd rate... 5th rate armaments. There was no money, no means. Much is often said about Italian emphasis on man over machine, but this position is the one you have to take when you are totally inferior in equipment. In my opinion, this was a bit of theatrics from the fascist government that sounded just right to old guard generals, and fit in nicely with fascist national ideals. I think, yes, they really deluded themselves into thinking iron hearts would triumph over iron machines. And to be fair, the quality of Italian soldiery was well respected by both the Germans and the British, but good soldiery doesn't beat adequate soldiery with lots of material.

Its often noted that the Italians performed better under German command, but that doesn't necessarily make Italian generals bad, only that the German leaders were better. What isn't noted however is that by the time the war in NA was just about totally run by the Germans, there had been reforms done for the Italian forces. I can't remember the exact phrase, but "more guns less men" or something alike that. Substantial restructuring, improving equipment, etc. The Italians were fast learners, but it didn't matter because they and their German allies were vastly out gunned.

Mussolini's reach exceeded his grasp. The secret to Italian failure is they never had a chance to begin with. The disaster in Greece might have been avoided with better planning, defeat in Africa was probably unavoidable because of the lack of modern means.

They expended themselves fiscally fighting the Spanish civil war, they pursued a stupid policy of autarky when their empire couldn't possibly provide all the needed coal and iron for industry. They had no stockpile of war material because they spent it all on Spain, had no money to replace it, and didn't really envision a war with the British until it was too late to start seriously preparing. But those are failures of the political leadership. IMO, the failures of Italian military leadership were rooted in material shortcomings.

Referenced material: Iron Arm, the Mechanization of Mussolini's army. Death By design, and Alan Brooke's war diaries.

You might be interested in this older answer by u/kieslowskifan which goes into a lot of detail about the run-up in the war and the leadership issues before and during the conflict.