Supply Chain Strategic Planning Must Account for 5 Key Capabilities

Supply chain leaders need to keep strategic planning focused on end-to-end capabilities and not get caught up in distracting details.

Chief supply chain officers (CSCOs) and heads of supply chain strategy often struggle to translate visions, goals and objectives into understandable, easily communicated, integrated priority actions, due to the natural complexity of supply chain and strategy. They need a simple way to codify and articulate their plans.

CSCOs must assess the capabilities and resources — including organization, process, skills, data and technology — of their supply chain’s current state and desired future state, and then map a path to close any gaps.

“The process can’t be too complex and time-consuming or CSCOs risk losing sight of their overall strategic ambitions,” says Pierfrancesco Manenti, VP Analyst, Gartner. “This is where problems often start.”

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The initial scoping phase of strategy planning requires a top-down approach to understand the internal and external context of the supply chain now and in the future. It’s critical to focus on getting an overarching view of the end-to-end supply chain’s capabilities, as opposed to drilling down on details.

The Gartner Matrix for Supply Chain Strategy offers a construct by which to map supply chain strategy, priorities and interdependencies. It can help with this initial scoping phase of strategy development.

5 supply chain capabilities are key to gaining a view of supply, demand and agility

The Gartner Matrix helps CSCOs determine how all the interconnected parts of an end-to-end supply chain interact with each other, and is structured around five essential capabilities.

 The Gartner Matrix for Supply Chain Strategy covers 5 essential capabilities for supply chain leaders to implement.

  1. Supply sense: Organizations need to know what is possible in their supply chains. This capability includes processes such as supply chain planning, supply risk management and supplier relationship management.
  2. Supply response: The operations in a supply chain that make things happen — inbound logistics, manufacturing, asset management — fall into this category.
  3. Decide and commit: With their supply and demand sense capabilities, companies can orchestrate their end-to-end supply chains and make profitable promises to customers. Processes that enable these actions include control towers, product life cycle management, and advanced sales and operations planning. 
  4. Demand sense: This capability involves learning and monitoring what customers want. Demand management, forecasting and demand sensing are included here.
  5. Demand response: Processes such as logistics, multichannel fulfillment and e-commerce enable companies to give customers the products and services they want.

Integrated capabilities enable end-to-end supply chain strategy 

Siloed organizations rarely have a clear understanding of how all processes contribute to the overall supply chain function. Very often, a central “decide and commit” capability is nonexistent, and strategic decision making takes place independently across a number of silos.

“To create a highly orchestrated, end-to-end supply chain strategy, all five capabilities must be well-developed and highly integrated,” says Manenti.

When populated, the Gartner Matrix provides a powerful, one-page view of end-to-end supply chain capabilities — combined with the critical aspects of agility — that clarifies strategic objectives and improvements and gains consensus for the strategic plan and its related investments.

Whether or not they use the Gartner Matrix, CSCOs can ensure a more holistic end-to-end view by taking these three steps:

  1. Loop in stakeholders from a range of functions and processes involved in supply chain planning and operations.
  2. Have the team map current supply chain processes across capabilities together. Different perspectives will emerge on the strength of current capabilities, gaps to fill and the importance of potential improvements or investments.
  3. Make sure the entire team agrees on priorities for action and makes decisions on immediate next steps.

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Recommended Gartner client* reading: Introduction to the Matrix Framework for Supply Chain Strategy by Pierfrancesco Manenti.

 

*Note: Some documents may not be available to all Gartner clients.

 

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