A survey of more than 1,300 supply chain professionals found that while 87% of respondents plan investments in supply chain resiliency within the next two years, even more supply chain professionals (89%) want to invest in agility, according to research from industry analyst Gartner, released this week. (See figure 1.) However, cost remains a priority, challenging chief supply chain officers (CSCOs) to find a new balance between resiliency, cost-efficiency and fulfilling increasing customer demands.
Figure 1: Responding to a Disrupted World
Source: Gartner (February 2021)
“Supply chain executives overwhelmingly recognize the necessity to make their networks more resilient and agile,” Geraint John, vice president analyst with the Gartner Supply Chain practice, said in a statement announcing the report this week. “At the same time, 60% admit that their supply chains have not been designed for resilience, but cost-efficiency. The challenge will be to create an operating model for supply chains that combines the best of both worlds and also delivers supreme customer service.”
Gartner defines resilience as the ability to adapt to structural changes by modifying supply chain strategies, products and technologies, and agility as the ability to sense and respond to unanticipated changes in demand or supply quickly and reliably, without sacrificing cost or quality.
Three-quarters of respondents believe that the additional costs caused by the investments in resilience and agility will be covered by the supply chain budget. That’s why CSCOs must take the lead in identifying where and how much to invest, Gartner said.
Other key findings in the survey:
- National interests clash with competitive pricing demands: high tech, healthcare, and pharmaceutical organizations report that national interests will have increased influence over future supply chain decisions.
- At the same time, 45% of survey respondents think that their customers favor low pricing over domestic sourcing and production – particularly in industries with ferocious price competition, such as retail and fashion.
- Only 30% of survey respondents report that they are shifting from a global to a more regionalized supply chain model.
A look to the future
Advanced robotics and other automation technologies provide opportunities to overcome this constraint. Fifty-six percent of survey respondents think that automation will enable them to make onshore manufacturing economically viable.
“Ultimately, the right balance between investments in resilience and agility, and cost-optimization depends on each organization’s individual circumstances, including their financial strength, market position, appetite for risk and external factors such as regulatory requirements or supply chain constraints. If CSCOs choose their investments wisely, they can expect to see positive results as soon as the next disruption,” Mr. John concluded in the company's recent release.
The research reflects data from a survey conducted between September 2020 through November 2020, Gartner said.
