Is your board and C-suite still regularly knocking on your door? Unfortunately, the answer is “no” for many supply chains. As stakeholders have acclimatized, heightened disruption has become old news and stakeholder focus has moved on.
Two Diverging Paths — Which One are You On?
This year’s Future of Supply Chain Survey shows increased recognition in strategic importance of supply chain to the C-suite seems a blip rather than a trend. The proportion of organizations reporting perception as equally strategic to peer functions spiked to 56% in 2020 but has reverted to pre-2017 levels at 47%.
But, there is hope. In a small group of high-performing supply chain organizations, 72% are viewed as strategic partners versus only 45% of lower performers. What is it that they do differently? To answer that question, this year’s future of supply chain report provides a roadmap to reinvention by comparing what these groups do today and how they plan to evolve over the next three-to-five years. Where can you help create competitive advantage and become a more strategic partner and where must you excel to avoid falling behind?
Choose Your Future — High-Performing Supply Chain Organizations Light the Way
In 2022, Gartner identified four supply chain reinventions based on supply chain leader priorities — reinventions that remain critically important to focus on now: commercial innovation, achieving sustainability outcomes, real-time decision execution, human-centric work design. The drivers used to identify the four themes last year have not changed and they remain aligned to top board priorities; this year we turn to understand progress and recommend how to prioritize action.
Supply chain leaders continue to see the importance of these reinventions, yet we find a lack of progress in critical areas:
- Customers enabled by the supply chain to get their own jobs done are twice as willing to repurchase as customers who were satisfied. Yet, only 23% of supply chain organizations’ commercial innovation focuses on enabling customers.
- Engaging in circular economy activities is important to 75% of supply chain leaders. Yet, in support of achieving sustainability outcomes, only 19% believe they have sufficient capabilities.
- Closing the gap between the time spent making a decision and then executing that decision is a focus for 96% of supply chain leaders. Yet, on average, only 7% have real-time decision execution.
- Labor shortages are a top challenge for 60% of supply chain organizations and the 2023 top board of directors’ priority is the workforce. Yet, one-third of supply chain organizations lack an effective employee value proposition to attract, retain and engage the needed talent based on human-centric work design.
Two Considerations — Can You Create Competitive Advantage and Where Must You Avoid Falling Behind?
All supply chains can look both within each reinvention and across all reinventions to prioritize supply chain resources. The proportion of high versus lower performers with capabilities operational today and plans to have them operational in three to five years, suggests:
- Across all reinventions:
- Commercial innovation and achieving sustainability outcomes are must-dos in the next three-to-five years requiring excellence to avoid competitive disadvantage.
- Real-time decision execution and human-centric work design provide competitive advantage opportunities on all time horizons — today, five years and beyond — with accelerated progress.
Within each reinvention there are specific areas where accelerating plans allows you to pull ahead and where excellence in execution is a must to avoid falling behind. The capabilities outlined in the report are not the supply chains of today — few have adopted the practices. In five years, 80% to 90% of supply chains plan to adopt these practices. These are the supply chains of the future. This is where your peers will be reinventing.
Use this report to guide your prioritization over the next three to five years. We have outlined where to focus, the key challenges supply chains expect over the next three to five years and recommended best practices to achieve each reinvention. Follow those recommendations to position your organization as one of the most high-performing and strategically important supply chains of the future.
The insights matter for all supply chains — high or lower performers. High performers must ruthlessly prioritize and accelerate critical investments amid cost pressures to maintain performance and strategic importance. Lower performers must adopt these practices more urgently than high performers to evolve into strategic partners.
Are you a strategic partner today? If not, then what are you going to do to become one? And if you already are one, what are you going to do to stay that way?
To take a deep dive into this topic, Gartner members can review the Supply Chain Executive Report: The Future of Supply Chain 2023.
Senior Director Analyst
Gartner Supply Chain
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