The State of the Digital Supply Chain in 2021

By Dwight Klappich | January 12, 2021 | 0 Comments

Supply ChainPower of the Profession

Welcome to 2021! Walt Disney once said, “I always like to look on the optimistic side of life, but I am realistic enough to know that life is a complex matter.” This would be good advice for executives as they develop their digital supply chain strategies. While being optimistic is good, being realistic is prudent.

“Digital” remains a strategic imperative for most supply chain organizations. Each year, Gartner conducts a Supply Chain Technology User Wants and Needs Survey that explores supply chain organizations’ IT and digital investment strategies and the impact these have on supply chain management business users. (This year’s study is in progress and results are not yet available, but we anticipate similar findings).

In last year’s study, “digital” was identified as a core strategy and investment focal point as supply chain organizations look to advance their supply chain maturity and business performance. Over 45% of respondents were senior supply chain leaders and the rest were operational managers including vice presidents, directors and managers.

Comparing the responses of senior leaders with those of front-line, mid-level respondents, we observed an interesting dichotomy. Throughout the survey, senior leaders had an overly optimistic view of their organization’s capabilities and commitments to supply chain IT. This inflated exuberance likely causes companies to overstate their real abilities, which could negatively impact performance.

For example, Figure 1 asks respondents to select which statement most closely describes the current state of their organization’s digital supply chain initiatives. Respondents chose between: “We struggle to fully understand and define how digital supply chain will affect our business and what investments we will need to make to be successful” and “We have a clear vision, plan and roadmap driving our digital initiatives.” An unbelievable 97% of C-suite respondents chose the second option. Even more surprising is how strong this sentiment was, with 66% saying they have moderate to very strong digital competencies. This, however, is not supported by Gartner client inquiries where many customers say they struggle to develop their digital strategies and roadmaps. This suggests that respondents overestimated their abilities.

While still optimistic, only 81% of operational-manager respondents — a 16 percentage-point drop — felt they had strong digital strategies and competencies. Operational managers who felt they had moderate to high competency dropped from 66% to 41% when compared to C-suite respondents. This misalignment can cause many issues for organizations, including frustrations due to differing views of reality, unrealistic expectations and misallocation of resources.

Exploiting emerging technologies is a key way to advance a company’s supply chain digital maturity. Promising supply chain management technologies can help transform a company’s operations. To explore this, the study asked respondents to rate the importance of, and their investment plans for 10 emerging technologies.

The data again found a disconnect. Figures 3 and 4 explore how respondents rate the importance of key emerging supply chain technologies and where they are investing or planning to invest. Figure 3, which indicates the responses for C-level supply chain executives, shows a dense clustering across all the emerging technologies. This indicates that in their minds, these technologies are all equally important and they are investing in all of these without prioritizing. This is unrealistic, and unsupported by anecdotal evidence from Gartner client interactions that find that companies selectively invest in a small number of emerging technologies that offer the greatest near-term business value.

Figure 4 shows the responses for all respondents, excluding the C-suite. It shows a more realistic distribution of responses, with some more mature emerging technologies showing the most investment and the greatest importance, and the remaining technologies scattered more evenly. This is realistic and supported by anecdotal evidence from Gartner client interactions.

While digital will remain critical to supply chain success, the survey highlights the disconnect between senior executives’ digital ambitions and beliefs about their organization, and the realistic capabilities and investments of their organization to meet these lofty expectations. No one is served if these two perceptions are not reconciled.

Senior supply chain leaders often fall into the trap of setting overly lofty goals but they must recognize that their organization can’t do everything at once. Instead, educate yourself on what individual technologies can do for your supply chain and then work with your organization, at all levels, to realistically map out current and desired capabilities. Then do a value assessment to help prioritize where to best invest your limited IT capital — money, talent and time. Do not expect to pursue 10 or even five emerging technologies in earnest. Pick a few key areas for firm investments with expected outcomes. Consider experimentation at the fringe, it is OK to test the waters with new technologies, even when you are not ready for big investments. In these cases it’s best to run proof of concepts, but not put too much capital at risk until strategies are solidified and the solutions fully understood. While some projects might not have a clear short-term ROI, it can still be valuable to develop skills and competencies in certain areas. Emerging technologies is a long-term game.

Mid-level operational managers owe it to senior leaders to distinguish between what is real and what is possible. They must communicate up to ensure that senior leaders are clear and buy into where you are investing, and why and where you are not. Shadow projects might be misinterpreted as further along than they are — leaving the perception that the company is more vested in a technology than it really is. Disconnect some emerging technologies from the hype and explain to leadership why you will or will not pursue these.

Be optimistic, but also be realistic. Making sure that senior leaders and mid-level operational managers are in sync will go a long way to ensuring digital success.

Dwight Klappich
Research Vice President and Gartner Fellow
Gartner Supply Chain
Dwight.Klappich@gartner.com

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