An executive tug of war is at play between the CEOs and CFOs of many publicly traded companies. Gartner’s annual CEO survey consistently shows business growth as the highest priority for top executives. More specifically, this means growing existing businesses while reinventing and pursuing new markets.
CFOs introduce natural tension with a desire for reliable earnings growth which, beyond new investments, may entail cost cutting and actions to lower enterprise risks. Many supply chain leaders would not be wrong for feeling like the rope in this contest.
Leading Supply Chains Do Both
Gartner’s latest Future of Supply Chain study highlights a divergence in how supply chain organizations are perceived by the C-suite. Organizations that have outperformed expectations in support of customers, new product launches, operational excellence, employees and sustainability goals (aka “high-performing organizations” in the figure below) are more often seen as equal business partners, as opposed to business enablers or simply cost centers to manage.
It is from this seat of influence that a balance between driving growth and managing risks is best accomplished. At this point, you may be thinking, “This all sounds great in concept, but how are these more advanced supply chains pulling it off?” In response, I’ll share some of the examples we are seeing across our COO/CSCO community, including some shared as part of Gartner’s Supply Chain Top 25 analyst education process.
Supply Chain as a Partner for Growth
Across industries, leading supply chain organizations have leveraged relationships, technology and new service models to retain and grow revenue with customers, old and new.
- A consumer products supply chain combined machine vision shelf signals and retailer sell-through data to ensure precision replenishment and maximize on shelf availability. Further upstream, this leader has made significant investments in DC and microfulfillment center automation to unlock rapid replenishment at scale across its entire product portfolio.
- A leading industrial supply chain has dedicated executive sponsors for critical customers that are always available for instant top-to-top communication. The company has also implemented end-to-end product visibility that allows for faster, more targeted customer issue resolution.
- A retailer created a robust circular supply chain for its consumer electronics offerings that includes the ability to accept and resell trade-ins and already-opened returns. In this model, old devices are repaired, refurbished, cleansed and ultimately resold as upcycled merchandise in the same stores where new devices are offered.
Supply Chain Mastering Risks
The supply chains I’ve highlighted as driving growth for their companies have also developed sophisticated risk management capabilities. For variety, I’ll highlight leading examples from other industries where supply chains have enabled rapid mitigation and recovery from existing disruptions, as well as the ability to anticipate and avoid future supply risks.
- Several high-tech original equipment manufacturers redesigned key products to leverage alternate bills of material. This allowed them to “source around” point shortages on the fly, offering customers products with similar functionality but different underlying components and, in some cases, sources of supply.
- A life sciences leader developed a resilience dashboard that allows supply chain employees to ensure continuity of supply for critical medicines through proactive analysis of product-to-market vulnerabilities, along with monitoring and management of real-time operational risks.
- Many automotive companies have formed partnerships or are making direct investments in critical components. This includes the semiconductors that famously held up production of vehicles with thousands-of-times-higher selling prices. These supply chains are also heading upstream to “friendshore” the base minerals at the heart of electric vehicles — the future of the industry.
For privacy reasons, I did not name the companies tied to the above case examples but most of them, along with many other leading practitioners, will be participating in our next major gathering of the supply chain community. We look forward to hosting you all in Orlando, Florida, the week of May 7 at our Supply Chain Symposium and Leaders Forum events.
VP Distinguished Advisor
Gartner Supply Chain
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