The Hype Cycle for Supply Chain Strategy has turned 6 this year. Since its inception, its main charter has been to educate and inform CSCOs and supply chain strategy leaders on the top supply chain capabilities that are critical to both continuous improvement and innovation.
We track each of these capabilities along their life cycle, starting with an Innovation Trigger, a major event or breakthrough that generates industry interest. Invariably the capability goes through a period of hype where it can’t live up to unrealistic expectation of impact. This often leads to the Trough Of Disillusionment where organizations question the capability’s value. For some capabilities they survive this disillusionment and emerge as a core competency, becoming productive and consistently delivering supply chain value.
Entering and Retiring Capabilities
This year, we have added two new capabilities — Supply Chain Resilience and Diversity, Equity and Inclusion (DEI) — both driven to the forefront by current macro trends.
The pandemic has underscored the need for supply chain resilience. 70% of supply chain leaders report that they have been constantly responding to disruptions since 2019. During the same period, those organizations have not had enough time to recover from high-impact, regional or global disruptions before another high-impact risk event has disrupted their supply chains. While being able to manage risk is important, building resilience allows organizations to altogether avoid or better absorb the business impact of major disruptions through a risk-balanced approach to product design, supply chain strategy and network design.
DEI is a critical capability for supply chains. Diverse, inclusive and equitable organizations and teams are positively correlated with superior business outcomes, including innovation, resilience and profitability. They’re correlated with improvements in human capital indicators as well — for example, the time to fill an open position, employee engagement, discretionary effort and intent to stay. Supply chain university graduates of all backgrounds report that they want to work for diverse, inclusive organizations.
We retired four capabilities that have become commoditized — undifferentiating to supply chain organizations. These are Descriptive Analytics, Diagnostic Analytics, Internet of Things and Natural Language Generation.
Descriptive Analytics and Diagnostic Analytics — foundational analytics to track supply chain performance — have become embedded in other frameworks like Supply Chain Control Tower and Metrics.
Internet of Things became a commodity that the head of supply chain strategy would not develop as a specific IoT strategy but instead would rely on specialists in operational technology to determine the best approach to leveraging IoT for supply chain insights.
Natural Language Generation (NLG) automatically creates linguistically rich description of insights found in data. We have retired NLG as we have observed that supply chain strategy leaders do not pursue this functionally independently. Instead, the functionality would be offered in other capabilities like artificial intelligence (AI) or reporting.
A quick scan of the Hype Cycle shows a cluster of capabilities around the peak. This is not inherently good or bad. Rather, it is an indication of how active the supply chain discipline is currently. New technologies — blockchain, new frameworks like DEI and immersive experience promise to be very impactful to supply chains. However, many of them have yet to mature and demonstrate a staying power. For those reasons, supply chain strategy leaders should look to pilot those capabilities, to understand not only the potential, but the challenges that their organization will face in adopting them.
For example, AI is currently in the first phase of maturity: Innovation Trigger. AI applies advanced analysis and logic-based techniques, including machine learning (ML), to interpret events, support and automate decisions, and take actions.
Both CEOs and CSCOs view AI as a transformative technology to their organization. Given its transformation benefits, supply chain organizations should actively seek to understand the potential and fit of AI through education and experimenting in small-scale pilots. However, they are advised to avoid potentially large AI projects or technology investments. First, they need to access organizational readiness, data and talent availability, and the role of AI in supporting supply chain and business priorities.
There’s a cluster of capabilities around the Trough of Disillusionment, including capabilities like Predictive Analytics, and Supply Chain Risk Management. Supply chain strategy leaders — especially in this volatile economy — are advised to reexamine these capabilities, their true potential and the challenges that have prevented their broad and successful adoption.
Predictive Analytics is one example. Predictive Analytics have been deployed in supply chains for dozens of years. Yet many organizations still struggle to point to demonstrable ROI. Adoption is challenged by poor data quality and cultural resistance. Currently, we see leading organizations revisiting their previous efforts, looking to reduce some of the hurdles by adopting complementary techniques like ML to improve data quality or data literacy to improve cultural readiness.
As a supply chain strategy leader, use the Hype Cycle as a visual check that your supply chain organization’s current portfolio of projects and initiatives supports your bimodal strategy: having two parallel operating models that support continuous improvement and innovation. The portfolio should include capabilities on the right that are stable and more mature and can incrementally improve your supply chain performance. Capabilities on the left are emerging competencies that might present higher adoption risk, but also promise higher returns. For those, limited pilots and staged adoption is the most effective approach.
For the past six years, as the lead author of the Hype Cycle, I have had the privilege of working with more than a dozen of my colleagues, distilling their deep domain knowledge in a wide array of supply chain topics. The goal is to provide our busy supply chain executive clients with a one-stop scan of key capabilities. Gartner clients can reach out to us to further discuss any of these topics.
Distinguished VP Analyst
Gartner Supply Chain