How Gartner’s Top 25 Supply Chains Survive and Thrive in a World of Change

The other day, my 12-year-old son and I were talking about the way technological advancement is accelerating in our world. He was born around the time that Apple’s engineers were locked in their offices, feverishly designing the first iPhone. Fast forward to today and many of us can’t imagine our daily lives without the connected computers in our pockets and purses. By the way, the look on my son’s face when I described my first mobile phone was priceless.

Supply Chain has, likewise, seen a remarkable transformation in this time frame. For instance, back in 2006, I don’t remember anyone talking about cognitive planning or the practical application of augmented reality in warehouses or factories. In the (slightly altered) words of Talking Head’s lead, David Byrne: “You may ask yourself, how did (we) get here?”

Sometimes, when I speak to clients about the leading companies in Gartner’s Supply Chain Top 25 study, I draw a parallel between the adaptiveness and agility they exhibit and Charles Darwin’s concept of natural selection in living organisms. We’re moving so fast nowadays with our innovations in technology and supply chain capabilities that, perhaps, some credit is also due to a less-celebrated scientist, Jean-Baptiste Lamarck.

Darwin’s famous theory posits that the organisms with the best inbred traits survive, thrive and more often pass their genes to the next generation. Lamarck believed that environmental conditions could prompt genes to express new characteristics that allow a living organism to better thrive (i.e., adapt) in the moment and also pass those traits on to their progeny.

The leading manufacturers, distributors and retailers in our Top 25 research are certainly good at solving today’s business challenges, but they are just as skilled at being adaptive to constant change. It is, in fact, this latter capability that consistently allows them to lead.

Some examples from the 2018 study:

• Harvesting Innovation: Companies such as Nestlé, Schneider Electric and 3M crowdsource innovation from their supply chain organizations and business partners. This starts with making space in people’s schedules and sufficient investment in “blue sky” innovation budgets. It is supported by governance mechanisms to capture and vet the best ideas and a management culture that encourages and rewards risk-taking.

• Splicing Entrepreneurial DNA: Others supplement their supply chain’s ability to manage industry disruption by “splicing in the DNA” of successful startup companies. Case in point, Unilever and L’Oréal’s respective acquisitions of Dollar Shave Club (DSC) and NYX Cosmetics. In the case of Unilever, the company has benefited from the success of the DSC business and also transferred learnings from the DSC new product introduction (NPI) process to speed up NPI in its mainline businesses. L’Oréal has, likewise, learned from NYX and also leveraged deeper pockets to extend the brand into brick-and-mortar stores.

• Transforming to New Business Models: The high-tech industry is built on a foundation of disruptive innovation. Silicon Valley bellwethers such as Intel and Cisco have reinvented themselves as their core businesses mature and customers demand solutions that are completely different than the stand-alone products for which their brands are known. Intel’s supply chain team has honed its functional and partner orchestration skills to enable a transition to data-based businesses, which now include autonomous vehicle technologies and mobile communications. Cisco’s supply chain team has developed a modular “as a service” approach. This allows it to combine different services — from NPI to traditional supply chain operations to software licensing and fulfillment models­ — that are unique to customer needs. This is a world apart from simply selling and supporting customers’ high-end telecom equipment.

If leading companies continue on this trajectory, just imagine what supply chains will look like in another dozen years. As a milestone year, 2030 feels flying-car futuristic, but it will be here in the blink of an eye.  The environment will likely be even more disruptive than it is today. Will your supply chain survive and thrive in that turbulent world?

Stan Aronow, Gartner Supply Chain Research Vice President