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3 Trends From Top Supply Chain Organizations

May 26, 2020

Contributor: Kasey Panetta

The Gartner Supply Chain Top 25 for 2020 list reveals that top supply chain leaders focus on purpose-driven organizations, business model transformation and digital orchestration to succeed.

With the unprecedented level of business change as a result of a global pandemic, supply chain organizations see sharp and often unpredictable increases and decreases in demand, inaccessibility to raw materials and difficulty transporting goods from coronavirus hotspots. 

Chief supply chain officers (CSCOs) and supply chain leaders can learn from the strategy and leadership of the top global supply chains and model their behavior to focus on building stronger supply chains for the future.

“Leaders need an agile, or adaptive, strategy that allows the supply chain organization to sense and respond to changes in the business context as they happen,” says Mike Griswold, VP Analyst, Gartner. 

Gartner found that top supply chain organizations share three trends. 

Trend No. 1: Purpose-driven 

Last summer, the Business Roundtable (BRT), an organization that includes nearly 200 large companies in the United States, issued a game-changing statement of purpose for the corporation. This influential group expanded the objective from merely maximizing shareholder return to delivering value for the benefit of all stakeholders: customers, employees, suppliers and communities, in addition to investors.

Read more: 2 Best Practices for Rebooting the Supply Chain

COVID-19 accelerated this shift in business priorities as supply chains flexed to help communities and employees around the world. Apparel companies shifted production from clothing to personal protective equipment, adult beverage companies began making alcohol-based sanitizer, and automobile companies pivoted to make ventilators — all in a matter of weeks. 

While COVID-19 pushed many supply chains to rethink their part in the world, some organizations were already doing so. Unilever had shown it was focused on the world and community with its commitment to “deforestation-free” palm oil and an emphasis on “responsible automation” and reskilling employees. 

Trend No. 2: Business transformation models

Supply chains are not immune to digital disruption. More than half of supply chain organizations, across a range of industries, believe they are at risk of disruption in the coming years, according to the Gartner Future of Supply Chain study.

Instead of waiting to be disrupted, leading supply chains became the disruptors. 

For example, L’Oreal transformed its supply chain by aggressively shifting its business model to become a retailer with both physical locations and direct-to-consumer capabilities.

Disruptors must demonstrate a deep understanding of consumer desires to deliver an elevated customer experience and drive business. For example, Lenovo translates the digital voice of customers into direct actions required by its manufacturing and supply base. It is also working to create closed-loop feedback to R&D for future products. 

Supply chains that want to remain relevant in a digital world will need to adapt — whether that’s reinventing their business, acquiring startups to gain new expertise or figuring out how to deliver capabilities in a new way. 

Trend No. 3: Digital orchestrators

In the current economic climate, it is tempting to pull back on technology investments. Leading supply chains understand that these investments actually allow the business to thrive in uncertain times. 

“Advanced supply chains are pressing forward, and in some cases, accelerating investments in real-time visibility, planning and agile supply execution capabilities, which makes them well-suited for supporting uncertain demand mixes and volumes,” says Griswold.   

Advanced analytics and big data applications are the most important and frequently adopted technologies, according to Gartner User Wants and Needs research, followed by robotic process automation (RPA), artificial intelligence (AI)/machine learning and Internet of Things (IoT) applications. 

“ Regardless of how, top supply chains focus on developing a healthy ecosystem of labor”

As top supply chains rethink their business models, they’re often adding robotics to their factory floors and connectivity to the portfolio. Cisco, J&J and Diageo have improved the quality of their data and are focused on next-gen ERP systems to replace siloed and pieced-together legacy systems. 

Supply chain leaders also recognize that to benefit from these technology investments, their organization needs a digital-ready workforce, with an emphasis on finding talent with the skills to support future businesses. Some companies, like HP Inc., Intel and Schneider Electric, have in-house education to develop skills in the employees. Others have developed close relationships with universities to create curriculum that will support the future of work. Regardless of how, top supply chains focus on developing a healthy ecosystem of labor to continue the innovation and drive better customer experience.

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