Digital business, trade uncertainty, sustainability will reshape supply chains

Three macro trends will impact the future of supply chains and, as a result, change the way chief supply chain officers (CSCOs) run their organizations, Gartner analysts said during a virtual symposium this week.

Digital business strategies, trade uncertainty, and sustainability efforts are increasingly impacting supply chain operations, according to Gartner, whose analysts presented new research on the topic during the Virtual Gartner Supply Chain Symposium/Xpo, EMEA (Europe, Middle East, and Africa), the company said Thursday. 

“CSCOs are tasked to design a supply chain organization that fits into this new era,” Mike Burkett, distinguished vice president analyst with the Gartner Supply Chain practice, said in a statement following the event. “While in the past, a good supply chain was efficient and powerful, it must now be agile and fast.”

Gartner said the three trends are affecting supply chains and CSCOs in important ways. First, the rise of digital business is putting pressure on CSCOs because supply chain operations shoulder most of the burden of a firm’s digital transformation efforts. 

“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,” Burkett said. “This is the greatest transformation of supply chain structures in a long time, and it will not be easy.”

Gartner research shows that the top barrier to a digital supply chain today is culture, followed by legacy technology, usable data, and legacy processes. As a result, the researchers say CSCOs must work with partners across the business to overcome those barriers and enable their firm’s digital business ambitions.

CSCOs are also challenged by new competitors and trade uncertainty. Almost half of CSCOs say they believe their business is at risk of being disrupted in the coming years, for instance, with the greatest risk coming from nontraditional businesses such as startups, according to Gartner. In addition, the impact of trade wars and the Covid-19 pandemic on supply chains has placed renewed emphasis on risk management and resiliency.

“The ongoing uncertainty calls for a new approach to supply chain management,” Burkett said. “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.”

Sustainability and the “circular economy” are also helping to reshape the role of the CSCO. Gartner defines the circular economy as “an economic model that separates the ability to achieve economic growth from the consumption of natural resources.” The supply chain plays a critical role in every part of the cycle: make, use, return, recycle, reuse. 

Pointing to their 2019 Gartner Future of Supply Chain Survey, the researchers said that 28% of organizations had already implemented circular design approaches in their innovation strategies and that 39% planned to do so within the next two years. This places new emphasis on processes such as reverse logistics.

“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,” Burkett said.

Gartner will present its Virtual Supply Chain Symposium/Xpo for the Americas November 3-5.