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The global COVID-19 pandemic exposed just how much the supply chain can make or break a company’s success, revealed hidden vulnerabilities in these critical networks, and moved
Chief Supply Chain Officers (CSCOs) to the forefront of change. “The days when their sole focus was on cost management are gone,” Accenture points out in a new report, “and there is no turning back.”
According to Accenture, 81% of supply chain leaders are calling the pandemic their organization’s “greatest stress test” yet. From supporting new customer experiences to driving profitability, expectations that were taking shape prior to the pandemic quickly gained momentum during the crisis, taking on new urgency.
“Given that the supply chain is the lifeline of the business, all eyes are on its leaders to transform it to flex with fluctuating demand and redefine resiliency,” Accenture points out. “Every decision must be grounded in customer needs and environmental and social responsibility—from sourcing to third-party logistics partners.”
Relevancy, Resiliency, Responsibility
With relevancy, resiliency, and responsibility as the new “triple mandate” for supply chain functions, Accenture says that companies are now investing to avoid the pitfalls of 2020 and preparing for what’s next. It says progress is being hampered by a lack of visibility across the value chain, along with major resource, technology, and funding limitations.
“To move past these limitations and deliver on their new mandate, supply chain leaders need to focus on the maturity of their operations,” states Accenture, which recently conducted a global, cross-industry study of about 1,100 senior executives. The research revealed four levels of operations maturity: stable, efficient, predictive, and future-ready. “Each level is grounded in and enabled by progressively more sophisticated technology, talent, processes, and data insights,” Accenture explains.
Through its latest research, it found that:
- Three years ago, 16% of supply chain leaders believed their organization had predictive operations, and none had future-ready operations.
- Today, 4% call their operations future-ready while 65% see them as predictive.
- By 2023, 34% of these organizations expect to be future-ready.
“This evolution in thinking suggests that supply chain leaders are optimistic about the future,” Accenture states. “Yet jumping from 4% to 34% in just three years is an ambitious undertaking that requires significant transformation of both supply chain and enterprise operations.”
Steps to Take Now
Not surprisingly, Accenture says technology is becoming increasingly important to the supply chain. The majority of supply chain leaders (81%) agree that they are facing technological change at unprecedented speed and scale, and 64% report that the pace of digital transformation for their organization is accelerating.
“Even so, many supply chain functions are constrained by aging legacy technology, underinvestment in digital, and a patchwork of point solutions for everything from demand planning to transportation management,” Accenture points out. “They lack the data-driven insight to predict and monitor every action along the supply chain and reinvent how they source, plan, manufacture, distribute, and recycle products.”
To companies that want to avoid this trap and begin building more resilient supply chains, Accenture offers these suggestions:
- Understand the end goal. To influence operations transformation, supply chain leaders need to move past what they identify as one of their biggest hurdles to progress—lack of a cohesive strategy. “This is especially problematic in key areas for operating model maturity such as data, stakeholder experiences, and leading practices,” Accenture states.
- Collaborate across business and technology. Calling business and technology collaboration an “important step” to realizing the value of strategy within the operating model, Accenture says more collaboration is need. “While supply chain leaders believe that their organizations are best equipped to scale business and technology collaboration compared to all the other characteristics, just 10% say this collaboration is happening at scale today,” it adds, “noting that half of supply chain leaders expect to see automation at scale by 2023.
- Use automation to your advantage. Accenture says its most recent research shows that supply chain leaders recognize the importance of automation and report that wide or full scale automation in their organization has increased more than four times over the past three years. With 96% of companies projecting this to be the case in 2023, Accenture expects the drive to adopt more automation to continue at a rapid pace.
- Leverage your data from design through service. “As powerful as data is for transforming supply chain operations, most organizations have yet to fully exploit its power,” says Accenture, which notes that data is often trapped in silos or left untapped because organizations don’t have the tools they need to extract insights from it. “The right investments in artificial intelligence (AI) can radically change this dynamic,” it continues, “by providing supply chain leaders with real-time insights and intelligence to help them make more informed decisions across the supply chain—from design through service.”
