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Leading Supply Chains Do Three Things Well

May 04, 2016

Contributor: Christy Pettey

Bimodal capabilities, customer intimacy and advanced analytics can help supply chains be cost effective and innovation-driven.

As the world evolves to be more urban and densely populated, supply chain experts will be challenged to lead with sustainable, market-enabling strategies.

“Future capacity constraints and increasing product complexity will stretch supply chains, pushing organizations to look for more creative ways of delivering products to customers,” said Stan Aronow, research vice president at Gartner. “Leading supply chains recognize the need to partner with the business for growth, while also driving efficiencies.”

Bimodal approach is key to deploying an innovative supply chain supply

Gartner’s research shows that CEOs want “all of the above” from their supply chains: enabling growth, operational improvements and disciplined cost management, all leading to improved profit for their companies. For the supply chain organization, this means simultaneously operating in a bimodal approach.

In mature businesses and markets, there needs to be predictability, accuracy and reliability in how operations run, with continuous improvements, attention to customer service and a reduction in overall cost structure. We call this Mode 1. Meanwhile, breakthrough innovations are also likely required to enter new markets and launch cutting-edge solutions. We call this Mode 2. The focus in this mode is experimentation and agility to drive revolutionary changes in how the supply chain runs and adapts to new risks and opportunities.

“In most enterprises, scattered Mode 2 capabilities already exist, and to become bimodal most chief supply chain officers (CSCOs) can harness significant pockets of capability already in the enterprise,” said Mr. Aronow. “Mode 2, however, is not only about agility or experimentation. Building a sustainable Mode 2 capability is about fostering a culture and governance that encourages open thinking and leverages creative talent in a way that balances disruptive innovation with the needs of the business.”

“ Improved customer service and customer intimacy are key to enabling the growth that many CEOs are demanding ”

Supply chain supports growth through customer intimacy

Improved customer service and customer intimacy are key to enabling the growth that many CEOs are demanding. Many of the more mature consumer product companies have moved from local to regionalized customer service organizations to standardize and raise the overall quality of their interactions with customers. They have also built multilocal supply networks that enable agile responses to demand by staging capacity local to each region, which is key in a digital environment to sense and shape demand.

Ultimately, pleasing customers with strong operational supply chain performance, when combined with improved solution performance, will lead to measurable improvements in customer satisfaction and increased revenue.

It's in the data: advanced supply chain analytics increases ROI

“The level of data generated by Internet of Things (IoT)-based solutions provides a strong impetus for companies to adopt advanced supply chain analytics solutions to support better, more profitable decisions. We are becoming an algorithm economy, enabling the next wave of innovation. Every company must define their path to becoming an algorithmic business, starting with a foundation of the right analytics and skills,” said Mr. Aronow.

The drive to automate decision making in supply chain functions is accelerating, making the deployment of analytics and deciphering of operational data even more important. Eventually, industries will adopt "smart automation," reducing the level of human intervention required, while making better decisions. This can only be done by deploying advanced analytics that can predict future scenarios, or analyze data flows and make complex, profitable decisions, often in real time.  

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Recommended resources for Gartner clients*:

Gartner clients can learn more in “Supply Chain Trends in the Digital Age.”

*Note that some documents may not be available to all Gartner clients.

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