Optimism Bubble

In a recent chief supply chain officer (CSCO) community survey we looked at how leaders are prioritizing their time and their relationships through the balance of the year. We learned a few interesting things of which one or two might be inconsistent with what we are hearing from Gartner’s research team. Is this a new trend or are CSCOs experiencing an optimism bubble?

The (Near) Future is Bright

OK, let’s start with the optimism. The overwhelming majority of the community (78%) is optimistic about the balance of 2023. This might not seem like a big deal, but we’ve been asking CSCOs over the last couple of years about their outlook and let’s just say it’s not been the rosiest. But as of two weeks ago things are looking very bright.

CPG, food & beverage, healthcare and pharma have even higher levels of optimism, and it doesn’t stop there. When we look at regional cohorts, Europe is a whopping 96% optimistic for the balance of the year, as opposed to the United States, where 72% are optimistic.

Shortages have abated in most areas allowing CSCOs to take off their chief expediter hat, but a quick scan of the landscape is a little bleak.

• China’s economy is on shaky ground, with some calling it a double-dip recession.
• Weather in China has wiped out a large portion of their wheat crop.
• Climatic impacts of drought and flooding are putting supply chains on edge.
• War in Ukraine rages on without a clear end in sight.

But nonetheless, only half of the CSCO community think there will be a recession in one or more major regions of the world in 2023. Even more optimism!

Reality Check

If we look back about six months ago to Gartner’s Future of Supply Chain Executive Report for 2023 there was a slightly different take. Researchers were able to identify high-, average- and low-performing supply chains among those who responded. They did so by looking at customer experience levels, stakeholder expectations and business results. This, on its own, is a solid breakthrough.

Taking it a step further, they asked if respondents believed their CEO and executive management team appreciate the alignment of business strategy and supply chain strategy. The results were dramatic. High-performing supply chains felt a much higher level of confidence about being aligned with the business overall. Average- and low-performing supply chains are much worse off.

This makes perfect sense. Unfortunately, not all supply chains are high performing, leaving a significant number of them average or below. The gap in alignment with the business and the overall level of optimism should raise some eyebrows.

C-Suite Status

A couple weeks back, I wrote about taking a breath before the next storm, and this is apparently what supply chains are doing. CFOs, a driving influence in supply chain operations, are also taking a breath, and there might be some correlation.

We asked the CSCO community about their relationship with the CFO, and 77% said it was about the same as it had been or getting more strategic. The balance said it was becoming more tactical. Good news on the face of it. But, again, this was a little bit counter to what we had been hearing from our finance research practice. One comment that caught my attention straight off was that CFOs don’t really talk about the relationship they have with their CSCOs. Another reason for caution.

After focusing on cost during Q4 2022 and Q1 2023, CFOs are turning to more strategic endeavors such as the organization of the future, workflows and gen AI. Out of the CSCO community, 70% said they are also more strategically focused for the balance of the year. This apparent link between the CFO and the CSCO looks a bit one-sided. Time for CSCOs to think about making the relationship more balanced.

On The Move

We might be seeing a lasting shift in the role of the CSCO. In the same survey, 63% said that their role is not reverting to its pre-pandemic position. This may be another real reason for optimism. On the flip side, we see more change is underway. Supply chain organizations are being transformed, CSCOs are retiring and CEOs are looking for a fresh perspective from new leaders.

Whether or not it’s a bubble, it’s great to see the community having a positive outlook. We’ll leave it there for now.

Wade L. McDaniel
Distinguished Advisor VP
Gartner Supply Chain
Wade.Mcdaniel@gartner.com

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