When the COVID-19 pandemic laid bare the flaws in global supply chains, chief supply chain officers (CSCOs) zeroed in on finding short-term solutions to structural and organizational weaknesses.
Now, the time has come for addressing longer-term concerns — including those that their CEOs already voiced in 2019.
“When we asked business leaders last year about their outlook on 2020, a global pandemic was certainly not on their list,” said Thomas O’Connor, Senior Director Analyst, Gartner, during the virtual EMEA Gartner Supply Chain Symposium/Xpo, 2020. “Many expected an economic downturn caused by the end of this business cycle. This would lead to reduced hiring, an emphasis on cost optimization and an increase in digitization efforts. And this is exactly what happened, though for a very different reason.”
In addition to the usual actions during an economic downturn, the coronavirus pandemic has prompted CEOs to question their current business and operating models — including the supply chain.
There are three main concerns supply chain leaders need to be aware of.
A changing global trade ecosystem
Organizations had already experienced increased uncertainty around tariffs and trade regulations last year. That’s why 57% of CEOs were planning to redevelop their supply chains to better adapt to this new environment. Now, in light of the pandemic, 21% of supply chain leaders believe their supply chain is highly resilient, with 55% expecting to achieve that state within two or three years.
Supply chain leaders should prepare to present their resiliency plans to the C-suite, but must also explain that there will be trade-offs. More resiliency usually means a supply chain organization that is less lean, less agile and holds more inventory. Resiliency is important, but a supply chain must always work economically. Finding the balance between these potentially competing modes of operation is key.
Digital drivers of supply chain efficiency
This year will be a cash-sensitive one. However, in a recent Gartner survey 39% of manufacturing businesses indicated that they had increased their technology investment beyond the levels budgeted before the pandemic. Supply chain leaders must make sure that any planned investment aligns with their CEOs’ critical priorities — growth, financial stability, cost management and risk management.
“CSCOs must make clear that today’s digital progress secures the options of tomorrow,” O’Connor said. “Supply chain organizations with proper digital capabilities can act as the central nervous system of the business that senses risks and opportunities and enables real-time action.”
Structural shifts in the workforce
Although many organizations have frozen hiring since the pandemic began, most CEOs recognize that the structure of their workforce needs to change permanently. In fact, 40% of the CEOs surveyed pre-COVID were already substantially or completely changing their organizational structures.
While this concerns all parts of the business, it’s the responsibility of supply chain leaders to make sure that their organizational design is appropriate for an increasingly digitized world. This means upskilling existing supply chain staff as well as ensuring that new talent is motivated by the prospect of a robust career path.