While the COVID-19 pandemic has laid bare the structural and organizational weaknesses of many organizations chief supply chain officers (CSCOs) should address three important CEO concerns, according to Gartner, Inc.
“When we conducted the annual Gartner CEO and Senior Business Executive Survey in the fourth quarter of 2019, many CEOs anticipated an economic downturn for 2020, and that was without the knowledge that a global pandemic was on the way,” said Thomas O’Connor, senior director analyst with the Gartner Supply Chain Practice. “Those CEOs were already planning for reduced hiring, an emphasis on cost optimization, but also an increase in digitization efforts. And this is exactly what happened, though for a very different reason.”
In addition to the usual actions during an economic downturn, the coronavirus pandemic has also prompted CEOs to question their current business and operating models – including the supply chain. There are three main concerns that CSCOs need to be aware of.
Concern No. 1: The Challenges of a Changing Global Ecosystem
With increased uncertainty around tariffs and trade regulations, CEO’s were already planning to redevelop their supply chains due to the impact of new international tariffs and trade controls. And now, given the pandemic, 21% of supply chain leaders believe their supply chain is highly resilient (according to a Gartner survey of 260 supply chain leaders in February 2020), with 55% expecting to be highly resilient within 2-3 years. CSCOs should prepare to present their plans to the C-Suite.
“Resiliency can always be improved, but there’s trade-offs. More resiliency often means a supply chain organization that is less lean, less agile and holds more inventory,” Mr. O’Connor added. “CSCOs must explain that a supply chain needs to be resilient, but also work economically. Balance is key.”
Concern No. 2: Digital Drivers
Despite 2020 being a cash-sensitive year, 39% of manufacturing businesses indicated that they had increased their technology investment beyond pre-COVID budgeted levels. CSCOs must make sure that any investment they are proposing aligns with their CEO’s critical priorities – growth, financial stability, cost management and risk management.
“CSCOs must make clear that today’s digital progress secures the options of tomorrow,” Mr. O’Connor said. “For example, supply chain organizations with the right digital capabilities can act as the central nervous system of the business that senses risks and opportunities and enables real-time action.”
Concern No. 3: Structural Shifts in the Workforce
Despite the majority of organizations implementing a hiring freeze during the pandemic, most CEOs recognize that the structure of their workforce needs to change. While this concerns all parts of the business, it’s the responsibility of the CSCOs to make sure that their organization design is appropriate for an increasingly digitalized world, while properly upskilling supply chain staff and ensuring new talent is motivated by the prospect of a robust career path.
“Training employees according to a clearly defined vision is critical to gain buy-in from leadership and staff alike. CSCOs can perform a gap analysis to understand where the organization lacks key skills and develop a strategy for either hiring those skills or upskill the existing work population,” Mr. O’Connor concluded.