Outside-In: A New Mindset for Supply Chain Planning

Supply chain planners must embrace their increased importance and work to support business objectives and prepare for economic turns.

From spreadsheets to demand-sensing solutions and simple production planning to integrated decision making, supply chain planning (SCP) has evolved into a recurring top initiative in Gartner surveys of supply chain executives. 

However, the journey is not over. SCP’s advanced maturity has created a whole new set of expectations from stakeholders. Planners must change their mindsets to fulfill those expectations if they want to prove their value for the business. 

With another turn on the horizon, today’s organizations should look very closely at what those companies did in 2008 and learn from their best practices how to win in the turns

“The job description of SCP leaders today looks totally different than 10 years ago,” said Marko Pukkila, Vice President and Team Manager, Gartner, during Gartner Supply Chain Planning Summit in Denver, CO. “It’s no longer enough to provide copious amounts of data — planners must use the data to draw conclusions about future risks and opportunities. It’s all about supporting business objectives. Gartner calls this an outside-in mindset.”

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The idea behind an outside-in mindset is simple: Be aware of what is happening around you — be it a business objective or an upcoming recession — and use the capabilities of the planning function proactively to set up internal processes that are optimized for whatever will happen in the future. 

The transformation to the outside-in mindset consists of three steps.

Step No. 1: Realize that the time to transform is now

Between 2008 and 2010, the world economy experienced a recession. Looking at those years in retrospect, we can see one specific group of organizations that managed to use the recession to its advantage and enter an era of massive growth in the years to follow. 

Those companies were prepared for the inevitable economic turn. When the recession hit, they already had planning processes in place that provided forward-looking insights. They knew what supply chain decisions they had to make to align with their future needs instead of just reacting to the current economic environment. 

“The post-recession outcome for the winners was that they were able to speed out of the economic turn much faster than their average peers, and they kept on growing exponentially even years after the recession. With another turn on the horizon, today’s organizations should look very closely at what those companies did in 2008 and learn from their best practices how to win in the turns,” Pukkila said. 

Step No. 2: Refocus the planning team to business outcomes

Executives and other stakeholders expect the planning function to contribute to the overall business objectives. It’s no longer enough to just provide a forecast — planners must use the forecast to find pathways that guide the business to where it wants to go. Think of an advanced navigation system that doesn’t only plot the best route, but also foresees roadblocks and traffic jams and navigates around them.

When the planning team has plotted the path, the next step is to explain to stakeholders why this exact path is the best and why certain turns are needed. Some turns cost nothing, others cost time or money. SCP leaders must use the data at their disposal to show and explain why their path will enable the business to succeed. 

Step No. 3: Become the orchestrator of success

SCP is perfectly positioned to bring together cross-functional stakeholders. Planning leaders execute on business strategies and objectives. As planners, they should align the different functions behind a common plan. “The whole is more than the sum of its parts when all parts of the business go into the same direction. This is what planning should accomplish,” said Pukkila. 

For example: In many organizations, gaps exist between the bottom-up supply chain plan and the top-down financial plan. This is unnecessary and hurts the planning function, as nobody will trust a supply chain plan that doesn’t align with the financial plan. To be orchestrators of success, SCP leaders must be aware of the gaps and aim to close them.

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