The Characteristics and Profiles of Supply Chain Readiness

How Agility, Resilience, and Innovation Drive Supply Chain Success

A recent Gartner study discovered that only 29% of supply management organizations have adopted at least three out of five critical characteristics that are required for future readiness. These vital characteristics are agility, resilience, regionalization, integrated ecosystems, and consolidated enterprise strategy; and these are crucial that supply chain leaders have to navigate new challenges such as the integration of artificial intelligence (AI) and changing trade rules.

Organizations that were classified as “leaders” were those that had implemented at least three of the five characteristics to enable them to deal with the main drivers of supply chain transformation.

Pierfrancesco Manenti, research vice president at Gartner’s supply chain division, says that volunteer organizations have a clear vision of long-term goals, whereas the other group of organizations focus on the immediate problems. “Yet, most leaders have failed to implement cutting-edge tools like real-time visibility and digital supply chain twins, but they plan to do so in the next three to five years,” Manenti said in a press release. He pointed out that leaders understand technology as an enabler of business strategies, while leaders not only focus on technology without understanding the basic functions they need to perform.

The respondents listed the major factors that would influence supply chain performance in the next few years, with 74% of them highlighting the importance of AI in improving operations and decision making. Environmental, social, and governance (ESG) regulations and trade policies were highlighted by 67 per cent of the participants, while geopolitical volatility (65 per cent), data management (62 per cent) and talent shortage (59 per per cent) formed the remaining factors.

Supply Chain Readiness was further broken down into four categories depending on their future growth strategy:

1. Design: This profile is based on the concept of business model innovation, where product portfolios are streamlined to eliminate product variants and perform functionality trade-offs to meet customer requirements through product simplification and product line simplification.

2. Durability: This profile is aimed at sustainability and risk management for the long run, with emphasis on sustainable supply chain management, transparency and environmental responsibility to increase resilience and create value for other stakeholders.

3. Deferment: In this model, funds are not allocated for the purpose of improving efficiency and reducing costs, but are made available after observing the trends prevailing in the industry and then implementing changes. This is common in regulated industries or organizations with low risk appetite.

4. Decision: In this case, organizations embrace technology and personnel to manage complexity as they embrace AI, machine learning, and real-time data analysis for simulation and improved visibility across operations to enable flexibility and engage employees.

The benefit of the Design Profile.

Although success can be achieved with any of the four strategies discussed above, the analysis made by Gartner reveals that the design model could be the best. In addition, most leading organizations adopt this approach because it is based on business model innovation. With this understanding, companies can be in a better position to invest their strategic investments in line with their chosen profiles in a bid to enhance their future readiness.

“Importantly, the finding that all leading organizations make well-targeted investments that are consistent with their profile is a key finding,” said Manenti. Those companies that embrace this disciplined approach as opposed to the more haphazard or reactive approach are in a better position to sustain their success.

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