The annual Gartner CEO and Senior Business Executive Survey in the fourth quarter of 2019 revealed CEOs were anticipating an economic downturn for 2020.
“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,” said Thomas O’Connor, senior director analyst with the Gartner Supply Chain Practice.
The COVID-19 pandemic quickly revealed the structural and organizational weaknesses of many organizations. This prompted CEOs to question their current business and operating models – including the supply chain.
Gartner lists the three main concerns that chief supply chain officers (CSCOs) need to be aware of.
One: 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. With 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,” O’Connor added.
Touting the importance of balance, he suggested that a resilient supply chain must also work economically.
Two: 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.
O’Connor suggested that CSCOs make clear that today’s digital progress secures the options of tomorrow. “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,” he explained.
Three: Structural shifts in the workforce
During the pandemic, CEOs recognize that the structure of their workforce needs to change. It is 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,” O’Connor concluded.
