The coronavirus pandemic has put chief supply chain officers (CSCOs) under pressure to adapt and prepare their networks for an uncertain future, according to Gartner, Inc. Supply chain leaders must adapt their strategies, investment and leadership style to ensure long-term efficient growth.
During the opening keynote of the Gartner Supply Chain Symposium/Xpo, taking place virtually in the Americas through Thursday, Gartner analysts discussed the challenges and opportunities of uncertain times for supply chain leaders.
“Companies that achieve long-term efficient growth over their industry peers during turbulent times, do so because they are better at protecting large, transformative growth bets across the business cycle,” said Tom Enright, vice president analyst with the Gartner Supply Chain practice. “They avoid reactive responses to macroeconomic conditions and take advantage of uncertainty to break away from industry competitors.”
“The call to action for supply chain leaders has been seemingly clear: Survive the current turn and prepare our organization for the new normal. However, our research shows two things to be true: Survival cannot be the goal and there is no such thing as the new normal,” added Lisa Callinan, vice president team manager with the Gartner Supply Chain practice.
To achieve long-term growth through uncertain times, CSCOs should choose an adaptive approach in three key areas.
According to Gartner research, 80% of companies still base their strategic planning cycles on an annual calendar. This means that the strategy might be outdated in the case of a disruption during the year and there are no resources available to reevaluate the new situation and pivot quickly.
Adaptive strategy is a change from the previous point in time exercise, to a continuous adaptive process. This approach recognizes that regular changes in response to a dynamic external environment is the only way to keep pace and grow stronger. The core of an adaptive strategy is the continuous monitoring and identification of trends.
“Supply chain leaders should make it a regular exercise to learn about, and evaluate, the current trend landscape. They must focus on those trends that will impact their business and present opportunities to grow and gain an advantage over competitors,” Mr. Enright said. “It’s crucial to regularly update the strategy to reflect changes. Adaptive strategic planning is an always-on activity to navigate and succeed through any turn, in any version of the future.”
In addition to strategy, adaptive investments must be a priority for CSCOs. According to Gartner research, 72% of strategists say slow budget reallocation is the biggest barrier to a more adaptive plan. Supply chain leaders must work to remove this barrier and align integrated processes such as investments and budgeting with the adaptive approach.
One step towards achieving an adaptive investment approach is through capability funding. Supply chain leaders can allocate blocks of funds to several initiatives. This allows them to remain flexible in directing additional funds to initiatives when priorities change.
“A second option is to mimic the approach that venture capital firms use when assessing whether to fund early-stage start-ups. Success with a prototype or trial is the basis for developing more accurate estimates on how much further funding is needed. Teams feel less constricted and feel less pressure to present a solution that guarantees returns from the start,” Ms. Callinan said.
The immediate aftermath of the COVID-19 crisis demanded acute skills from leaders. They had to respond to the initial chaos and make teams comfortable with remote working environments and new structures. To help their team deal with the shock of disruption and strengthen their organization, supply chain leaders needed to drastically re-think what constitutes effective leadership.
It takes endurance and resilience to sustain recovery over a longer period, where safety, well-being, fatigue and burn-out are major issues for supply chain teams. “This next phase will demand another set of skills from leaders. They will need to balance their leadership style and develop skills as a master communicator to empower change and adaptability within the supply chain organization,” Mr. Enright concluded.