Creating a great future supply chain vision is an aspiration I hear from most supply chain leaders, yet I find many are struggling to achieve that goal.
They see the world changing around them and speak confidently about recognizing the disruption in their industries. They know they should prepare for the future and drive change to survive, yet their daily actions tell a different story as they march along, focused on near-term goals.
Let’s face it, creating a future vision sometimes seems to be a luxury that others pursue. We’re all under pressure to tackle today’s issues and there never seems to be enough time or resources to look at long-term opportunities. I hear this in my conversations and see it reflected in Gartner surveys. In one study specific to digital supply chain, over 70% of supply chain respondents indicated they don’t have a vision for a digital supply chain that extends beyond three years (See Figure 1).
The following are three topics I regularly discuss with clients where I see a lack of a future supply chain vision is holding them back.
Creating a Supply Chain to Support Digital Business
I often see digital supply chain strategies that don’t look beyond targeted projects like improving warehouse efficiency. What’s missing is that they lack a vision for how digital will redefine future supply chains.
The boss certainly cares, and competitors aren’t standing still. Eighty-two percent of CEOs are investing to make their business more digital and digital is disrupting every industry. (See Supply Chain Brief: Compare the Progress of Your Digital Supply Chain Roadmap). E-commerce has redefined consumer-retail and digitally-connected equipment is transforming the way high-tech and industrial companies deliver the customer experience.
The future will bring further transformation. Gartner predicts that artificial intelligence (AI) will create $5 trillion of business value by 2025, with nearly half (44%) of the business value coming from autonomous decisions such as supply chain planning and forecasting. Internet of Things (IoT) endpoints for manufacturing and natural resources industries are forecast to grow 5x, from 331.5 million units in 2018 to 1.9 billion units in 2028. Imagine every asset in the supply chain using IoT to communicate its location and state in real time. (See Supply Chain 2029: Disruptions Impacting Future Innovation).
Positioning Supply Chain to Provide Differentiated Customer Experiences
Listening to the voice of the customer is not a new concept, yet we see time and again how this goal gets lost in translation within organizational silos. Supply chain organizations must articulate a clear vision of the role they play as a competitive differentiator for delivering customer value.
Companies that compete through differentiation as their primary business model often lead with product design. Yet when we survey supply chain practitioners, they indicate there are many ways that they differentiate to compete, including through service innovation (52%), responsiveness and speed (48%), and route-to-market / multi-channel (42%). (See Align Supply Chain Initiatives to Business Goals).
Customers do business with companies based upon many attributes beyond just the product itself. Supply chain organizations that don’t see this are missing an opportunity to add value to their business.
Preparing Supply Chain for the New Reality After COVID-19
These days, one of the most common discussions I have is about how COVID-19 impacts digital investments. One concern I often hear is that long-term digital roadmaps are being put on hold as companies address the near-term challenges of the pandemic. Here, it’s essential to communicate a longer-term digital supply chain vision that will support the business amid the post-pandemic new realities.
Envision a post-pandemic business environment where e-commerce orders are higher, remote work is routine and supply network risk is an executive concern. Ensure your digital supply chain vision aligns to achieving business success in this new reality, with investments such as autonomous warehouse robots picking one-PC orders, virtual environments supporting distributed workers and AI-assisted supply chain risk monitoring.
Don’t Constrain Your Vision to Simply Solving Today’s Challenges
Watch out for creating a vision that merely makes the current supply chain operate more efficiently and doesn’t consider future business models and customer value.
I gained some historical perspective during my summer reading from renowned and often controversial former auto-exec Bob Lutz’ book, “Car Guys vs. Bean Counters: The Battle for the Soul of American Business.” While the author is more a fan of product design over operational efficiency, he shares valuable lessons from the automotive industry. He highlights the dangers of short-term thinking and siloed management that might satisfy the “bean counters,” but loses sight of the customer to optimize a business. Trade-offs are clearly required here. It’s the job of a supply chain leader to create a vision that contributes to maximizing customer and shareholder value.
Leading supply chain organizations define a vision for their supply chain that extends beyond the short-term goals of continuous improvement. This cuts across industries, whether it’s an industrial manufacturer like Schneider Electric with its vision of a “Tailored, Sustainable, Connected 4.0 Supply Chain” or a consumer goods company like Procter & Gamble with its vision of a “Synchronized Supply Chain.”
These visions set the stage for improving today’s supply chain while ensuring transformative capabilities are built to enable the future business strategy and vision.
VP Distinguished Analyst,
Gartner Supply Chain