Chief Supply Chain Officers (CSCOs) can better compete with industry disruptors if they focus on four capabilities that put customers and innovation front and center, according to research from industry analyst Gartner, released this week.
In their “Supply Chain Executive Report: Competing Against Nontraditional Supply Chains'' Gartner analysts say CSCOs can adapt the capabilities of nontraditional competitors as a way to meet modern customers’ needs and support new business models. But the process will require some nontraditional thinking.
“Nontraditional competitors–especially digital giants, such as Amazon and Alibaba, as well as startups–are reshaping industries through disruptive innovation, the ability to uncover and address unknown customer needs, and very agile supply chains,” Pierfranceso Manenti, vice president analyst with the Gartner Supply Chain Practice, said in a statement announcing the report this week. “Most CSCOs from large established organizations we interviewed believe that nontraditional competitors are better fit to navigate the disruptions and long-term new realities that the Covid-19 pandemic catalyzed.”
But established companies can make inroads by transforming their supply chains and focusing on four “critical capabilities,” they said. Those capabilities include:
Become close to customers. Customer proximity and intimacy–the ability to know which products and services customers really want–is critical for an organization’s success, according to the research. Established companies risk losing this over time due to complacency and a reliance on long-established strategies, opening a window for competition. “To start getting closer to the customer again, CSCOs must gather voice of the customer (VoC) data and create customer journey maps to discover critical touchpoints,” the researchers say.
Instill an innovation mindset. Established companies need to respond to customer demand for new products and solutions developed and launched without delays—and they are starting to do so, the research shows. According to Gartner, 44% of survey respondents say their companies are planning to adopt an “agile product development methodology” to become faster at launching new products. This will require a top-down commitment to employee engagement. “Established organizations are now planning to operate much like a [startup] when it comes to innovation,” Manenti said. “To create the necessary innovation culture, CSCOs need to engage their employees with a strong sense of purpose and inspire them with shared beliefs to guide decision making.”
Create an agile supply chain. This step requires embracing “less hierarchical organizing and leadership models,” according to the research. “An agile supply chain organization makes use of self-forming teams and data-driven decision-making to become more responsive,” the researchers explained. “By embracing less hierarchical organizing and leadership models, companies are able to engage more of their talent to develop new ideas across operations, products, and customer service.”
Align the operating model to new business models. This requires blending conventional supply chain practices with new models focused on innovation. “Many supply chain executives operate separate supply chain segments within their global networks to support emerging new products. Those segments rely on third-party contract manufacturers and use different distribution channels than the traditional supply chain. This combination of conventional and innovative supply chain segments is a recipe for success for traditional organizations,” Manenti also said.
The research reflects data from a spring 2020 survey of 528 professionals in supply chain and other functions globally, Gartner said.