Three Trends Are Driving Change In Supply Chain Operations
The role of corporate supply chain officers is evolving, and research and advisory company Gartner has identified three trends driving it that will change how they organize and operate their organizations.
“CSCOs [chief supply chain officers] are tasked to design a supply chain organization that fits into this new era,” says Mike Burkett, distinguished vice president analyst with the Gartner Supply Chain practice. “While in the past, a good supply chain was efficient and powerful, it must now be agile and fast.”
Among the three macro trends that will shape the future of supply chain is what Gartner termed “the rise of digital business.” Gartner research shows that many CSCOs struggle to create a holistic digital supply chain roadmap. At the same time, they are under pressure from CEOs who want to make their business more digital. According to Gartner research, the top barrier to a digital supply chain today is culture, followed by legacy tech, usable data and legacy processes. It advises CSCOs to work with partners across the business to overcome those barriers and enable their CEO’s digital business ambitions.
“Given the critical role of supply chain in ensuring customer satisfaction and experience, much of the digitalization efforts will be on the shoulders of the CSCO,” says Burkett. “This is the greatest transformation of supply chain structures in a long time, and it will not be easy.”
Another trend Gartner has identified is new competitor and trade uncertainty. In recent years, uncertainty has been a constant in supply chain. There is uncertainty on where the next competitor will come from and what their impact will be. Almost half of CSCOs believe that their business is at risk of being disrupted in the coming years, with the greatest risk coming from nontraditional businesses such as startups.
Then there is the trade uncertainty, caused by events including the U.S.-China trade war and Brexit. More recently, the COVID-19 pandemic has raised concern about future pandemics after shutting down global supply chains and trade routes.
“The ongoing uncertainty calls for a new approach to supply chain management,” Burkett adds. “CSCOs must build more flexible and resilient networks that can respond effectively to global shocks and disruptions—be it caused by nature or a competitor.”
The third trend on Gartner’s radar involves sustainability and the circular economy. A circular economy is an economic model that separates the ability to achieve economic growth from the consumption of natural resources. Supply chain plays a critical role in every part of the cycle—make, use, return, recycle, reuse. The 2019 Gartner Future of Supply Chain Survey found that 28 percent of organizations had already implemented circular design approaches in their innovation strategy—and 39 percent planned to do so within the next two years.
Burkett says, “A supply chain that enables the circular economy has to have strong reverse logistics capabilities. The heavy equipment and machinery industries are already on a good path. However, this is a trend that no industry can miss out on—including consumer products.”