Since its inception, the Hype Cycle for Supply Chain Strategy’s main charter has been to educate and inform chief supply chain officers and supply chain strategy leaders on the top supply chain capabilities that are critical to both continuous improvement and innovation.
Capabilities include technologies, such as control tower and digital supply chain twin. They also span operating models — like modular and circular supply chains — and organizational frameworks such as agile teams, hybrid work and centers of excellence.
Understanding these capabilities and their characteristics — maturity level, associated risks of adoption and expected business benefits — can guide supply chain investment plans.
Graphically, each capability falls in a few phases. Once triggered by a breakthrough that generates industry interest, the capability progresses towards the peak of inflated expectations. In that phase there are unrealistic benefits expectations. If the capability doesn’t meet those expectations, it dives towards the trough of disillusionment. This is a period where companies might question its value. If it services the trough, the capability progresses towards a plateau where it enjoys broader adoption and more consistent returns.
What’s in the Trough?
Where the capability falls can determine whether organizations should pilot, reexamine, or scale it.
Artificial intelligence represents a capability suited for piloting. In recent research, both CEOs and CSCOs report that they consider AI as the top technology to support business transformation. Given where AI falls on the hype cycle, organizations should start with targeted pilots and take a phased deployment approach. Pilots can demonstrate potential benefits while uncovering hurdles — like lack of talent or data — that can limit broader adoption.
This year we see supply chain risk management in the trough of disillusionment. Many organizations believe that their approaches for managing risk are lacking. Some conflate risk management with business continuity planning or crisis management.
Driven by the pandemic, companies like McCormick are reexamining their risk management practices. The food manufacturer realized that frontline staff do not consistently report supplier risk indicators, either because they self-censor, thinking the risk is unworthy of reporting, or because staff fears that reporting will create red tape that can slow down their response.
Supply chain and procurement leaders sought to introduce more effective risk management practices. They developed an approach around encouraging staff to “trust their gut” and report all risk indicators but promised the staff as much autonomy over mitigation response.
They also provided their staff with tools to collect the right information, identify leading risk indicators and collaborate with suppliers to minimize risk exposure. With this new strategy, the number of suppliers with high financial risk that the staff identified almost tripled, allowing the organization to be more proactive in risk mitigation.
Network Design to the Right
This year, we observe that network design falls to the right of the cycle. Having demonstrated significant benefits, companies are scaling and expanding their network design capabilities. They use it not only to optimize for cost, but to achieve other objectives like reducing carbon footprint, evaluating “nearshoring” and reshoring strategies or improving supply chain resilience.
This year’s hype cycle sees a few new entrants. One example is ecosystem partnerships to develop equitable relationships and exchange value among an ecosystem’s participants. In our research, CSCOs report that they see ecosystem partnerships as a key enabler of customer experience and business growth. As an emerging capability, ecosystem partnership falls on the left side of the hype cycles as it faces hurdles to broader adoption. For example, only 25% of organizations agree, or strongly agree, that the culture of their organization is open and receptive to external collaboration.
We also introduced hybrid work; work where at least some activities can be done in any location. This is a critical capability to track since most employees said the ability to work flexibly would affect whether they decided to stay at their organizations. On the hype cycle we see hybrid work falling to the right of the peak, starting its journey towards the trough.
After the mad dash to embrace hybrid work during the pandemic, organizations are now taking a more nuanced posture, working on finding the right level of hybrid work. They want to balance the benefits of flexibility with the value of physical presence — more collaboration, and more delineation between work and home life which could support mental and physical health.
As the lead author of the Hype Cycle, I have the privilege of working with more than a dozen Gartner thought leaders that come together to share top industry trends and best practices. The goal is to provide our busy supply chain executive clients with a one-stop scan of key capabilities that can guide their investment strategies. Please reach out to me, or any of my contributing colleagues, to further discuss any of these topics.
Hype Cycle for Supply Chain Strategy 2022 is available to Gartner clients.
An accompanying podcast is available on Gartner.com, Apple Podcasts, Spotify and Google Podcasts.
Noha Tohamy
Distinguished VP Analyst
Gartner Supply Chain
Noha.Tohamy@gartner.com
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