Future of Supply Chain: Reinvention Demanded

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Each year, through Gartner’s Future of Supply Chain survey and eponymous report, we pause to reflect on the critical trends shaping the supply chain profession.

The current analysis caps a year that delivered more plot twists and turns than we could have ever imagined: extreme-weather events, clogged ports, surging variants, massive supply constraints, and inflation. Amid this fog-of-war-type environment, a handful of long-term shifts in supply chain leadership came into sharper focus.

Four Major Shifts for Supply Chain Leaders

The 2022 report highlights four areas in which supply chains must reinvent themselves to successfully meet the challenges of tomorrow. Day-to-day chaos dominates, but when leaders pause and reflect, they tell us that supply chains sit on the precipice of revolutionary transformations demanded by a newly broadened set of stakeholders.

An analysis of nearly a thousand responses from supply chain executives at manufacturers, distributors, and retailers, in B2B and B2C industries, yielded the following trends.

From Location-Centric to Human-Centric Work Design. The pandemic accelerated three workforce trends that were in motion prior. Technological advances had enabled remote work, but the pandemic demanded that enterprises embrace it at scale. Generational shifts were changing workforce preferences and the pandemic proved that many of these new expectations were not only reasonable but achievable. Finally, global labor shortages that emerged in late 2018 were accelerated by the pandemic, creating intense talent competition that has emboldened people to demand more from their employers. Addressing this new employee value proposition requires a human-centric design that prioritizes: 1. Equality of opportunity supported by radically-flexible work experiences; 2. Innovation by design, enabled by intentional collaboration; and 3. Performance by the outcome, which requires empathy-based management.

From Real-Time Analytics to Real-Time Decision Making. In the foreseeable future, enterprises and customers will demand that supply chains sense in real-time, intelligently analyze data and synchronously execute on decisions. In practice, this might mean responding to last-minute changes in customer-requested product configurations or the location and timing of delivery. Real-time execution capability will also further enable product-as-a-service business models. Our research suggests an imbalance in the investments supply chain leaders are making. Many are focusing on real-time decision-making capabilities today but delaying investments to enable real-time execution.

From Ambitious Action to Authentic Achievement of Sustainability: 2021 was a feel-good year in that many companies issued and celebrated ambitious goals for net-zero environmental impacts. 2022 is when the bill starts coming due. Earlier this week, I was on a call with the chief supply chain and sustainability officers of a major consumer brand company. The CSO remarked that they are under incredible pressure to set bold sustainability goals, but that there will be a reckoning in the next one to two years for those who have set unreachable targets. In the meantime, supply chains are making three kinds of investments to authentically achieve responsibility and sustainability. They are holding internal and external partners accountable, providing 360-degree visibility and transparency to social and environmental performance, and investing in capabilities that transform environmental performance.

From Operational Excellence to Commercial Innovation: Even before the pandemic, we noticed that leading supply chains had elevated the function to the executive committee and shifted their orientation toward partnering for growth versus simply operating as a back-office cost center. As many supply chain leaders in goods-based industries can attest, their recent performance (or non-performance) has been the difference-maker in both top-and bottom-line growth of their companies. Ironically, many of these leaders also tell us that they would have been sacked “in the old days” for delivering their current customer service levels. As the pandemic moves into our collective rear-view mirror, supply chains’ ability to sense and respond to the voice of the customer in terms of evolving wants and needs — not just current satisfaction levels — will separate market leaders from the rest.

We see the next three to five years as a time in which the supply chain function, has taken center stage in the world and in many organizations, dares to reinvent itself with purpose. The time is now to think big, make bold moves and drive real impact through these four shifts, in preparation for an even more demanding and disruptive future.

Are you ready?

By Stan Aronow
VP Distinguished Advisor
Gartner Supply Chain

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