Early signs indicate, at least in markets such as the U.S. that are emerging from widespread restrictions, that a booming economic recovery may be under way. This reflects C-suite sentiment expressed to Gartner in our 2021 CEO Survey where some 60% of CEOs and senior business executives told us they were anticipating an economic boom either this year or next.
What differentiates the initial stages of recovery in 2021 compared to other recent post-recession environments, and in particular our most recent global recession of 2008-09, is a combination of:
- Consumers with trillions in additional savings. Since the pandemic began, estimates indicate the equivalent of 7% of annual economic output has been saved in the U.S., while U.K. savings total 6% of gross domestic product and eurozone savings are at 5%.
- Governments showing an increased willingness to spend post downturn. In the U.S., the Biden administration has signed into law the $1.9 trillion American Rescue Plan. In Europe, a EUR 1.8 trillion stimulus package to rebuild post-COVID-19 was agreed in December.
- Emerging business confidence. This is reflected by high levels of unfilled job openings in countries loosening COVID related restrictions and the fact that quarterly U.S. venture capital deal value was the highest on record in Q1-2021.
Typically, given this potential booming economic environment, we would expect CEOs to be asking their supply chains to lean in and drive growth as their top priority. Instead, we’re seeing CEOs tasking their chief supply chain officers (CSCOs) to focus on optimizing supply chain operations. A large number are explicitly targeting costs and increasing supply chain resilience. (See Figure 1).
This reflects a sentiment I’m hearing from our clients — the C-suite sees significant growth opportunities globally but recognizes that the world may be operating at dual speed for some time yet while a market perceived to be doing well today could face new emerging challenges. Impacts are already being felt whether via the recent pandemic-related lockdowns in key markets such as India and Bangladesh, product shortages in the semiconductor industry, ongoing global sea freight disruption or challenges hiring warehouse workers in North America.
Boiling it down, CEOs want their supply chains to first ensure business continuity and sustainable margins and then strive to capture business growth.
So, when your supply chain is ready to start the pivot toward growth, where in the world should you anticipate your business will look for it? With politicians bickering over trade rules and different countries experiencing varying societal pathways through the pandemic, demand for goods and services is in high geographic flux. CSCOs in multinational businesses must anticipate that their CEOs will try to adjust the geographic portfolio mix of revenue sources during these turbulent times.
Placing more sales and supply effort into countries with strong economies, or at least those expected to rapidly emerge from the pandemic and reducing it in those with ongoing challenges can help improve the overall sales outcome and its predictability. So where do CEOs expect to see the greatest growth opportunities and potential drags on growth in 2021 and 2022? Figure 2 provides insight.
Whether your business is striving for growth or simply looking for business continuity and stable margins, supply chain organizations must recognize the opportunity presented to them. The current volatile environment presents an opportunity to further elevate the supply chains position in our organizations and across the broader ecosystem.
Gartner Supply Chain