According to a recent Bain & Company survey of supply chain executives, “Cost isn’t everything.” Such a sentiment may come as a surprise to those accustomed to offshoring to reduce expenses in service of profits.
But with painful memories of pandemic disruptions so recent, geopolitical tensions seemingly growing by the day, and advancing technologies changing the face of business, some organizations are shifting strategies to maintain a competitive edge.
Here, we’ll take a look at what recent surveys reveal about new supply chain priorities for 2024.
Looking beyond cost
A brief providing an overview of the Bain & Company survey, “How CEOs Can Balance the New Supply Chain Equation,” says the supply chain of old is definitely a thing of the past: “It took less than four years of massive global turbulence to upend decades of business dogma about how to design and operate a winning supply chain. Now, the question CEOs must answer is no longer ‘Should we reinvent our supply chain?’ but rather, ‘How should we reinvent our supply chain?’”
Saying that the “traditional formula” is no longer enough, the four Bain & Company experts who authored the brief explain that while the previous priorities of cost reductions; inventory optimization; service and quality improvements; and the need to drive growth are still essential, the “post globalization era” requires additional supply chain priorities that include:
- Increasing resilience
- Improving sustainability
- Growing responsiveness to customer expectations
But they say that getting there won’t be easy.
“Reinventing supply chains for the new world order clearly requires making more complex trade-offs than most operations teams have ever encountered,” the experts write. “They’ll need to work closely with teams across and outside the company to find the right solutions. … The bottom line is that reinventing the supply chain is a CEO-level problem — and opportunity.”
In this “new era,” they say successful supply chains will have a new look, with critical features that include more:
- Built-in flexibility —that includes “capabilities in monitoring and recovery in addition to flexible design”
- “Split-shoring” — defined as a “balance between offshore manufacturing and manufacturing closer to customers and suppliers”
- Visibility into the whole chain — in which “digital traceability — allowing companies to see what’s happening in their supply chain in real time and from end to end — will be the greatest enabler of the supply chains of the future”
- Circularity — enabled by “models that recycle, remanufacture, repair, and repurpose materials and equipment”
The brief’s authors say that although each organization’s approach will differ, what they see in early leaders is an emphasis on “more integrated and cross-functional decision making, guided by a shared understanding of how they want to differentiate their respective supply chains.“
They also recommend four key steps for companies seeking successful supply chain reinvention:
- Take a “holistic view to redesign the whole system”
- Assign a “cross-functional team to find end-to-end solutions”
- Build the “operations team’s skills in strategy and cross-disciplinary collaboration”
- Work “more closely with suppliers, customers, and other partners”
The experts acknowledge that some of these steps may seem counterintuitive and require changing decades-long business practices — but predict the effort will be worth it.
“Leadership teams can position their companies for success and market share gains by anchoring actions in a well-defined strategy to differentiate their supply chain,” they write. “That will help them manage the competing trade-offs at each fork in the road of their supply chain reinvention journey. They’ll come out the other side operating on a different performance curve.”
Supply chain planning still a top priority
In another recent survey — which was part of APQC’s tenth annual Supply Chain Priorities and Challenges research — over 350 supply chain professionals were asked to identify where their organizations are “investing resources, innovation, and hiring for supply chain in 2024.”
APQC, which describes itself as “the world’s foremost authority in benchmarking, best practices, process and performance improvement, and knowledge management,” says supply chain planning topped the list for the fifth consecutive year and was selected by 90% of respondents.
“With the continued challenges facing supply chains—from geopolitical conflict to extreme weather events and beyond—that should be no surprise,” APQC says.
To drill down further, the organization explored the focus areas respondents cited as “most actionable” to help achieve their 2024 supply chain planning goals. They include:
- Integrated business planning (49%)
- Demand planning and forecasting (28%)
- Sales and operations planning (27%)
- Automations and digitization (26%)
- Analytics and measurement (23%)
- Master data management (14%)
- Talent acquisition and retention (12%)
- Sales forecasting (10%)
- Network design (8%)
APQC also asked about actionable strategies for supply chain planning, which revealed the following priorities:
- Evaluate and compare performance through benchmarking (61%)
- Improve collaboration and communication (55%)
- Implement new technologies and capabilities (51%)
- Standardize processes (51%)
- Improve forecasting accuracy (47%)
- Identify and implement best practices (46%)
- Shorten cycle time (31%)
- Network continuity/resiliency (29%)
After providing in-depth commentary on the results, APQC sums them up like this: “In 2024, supply chain organizations will continue to focus their attention and resources on supply chain planning. Cross-functional collaboration and communication are critical success factors for working effectively across business silos in support of better integrated business planning. Evolving technologies and capabilities provide deeper visibility across supply chains and drive more data-driven decision making. Standardized processes help to enable technology and help organizations better prepare for disruption. These strategies are all valuable, mutually reinforcing, and worthy of attention in 2024 and beyond.”
Top five supply chain trends for 2024
In a recent article for Supply Chain Management Review, Marisa Brown, Senior Principal Research Lead, APQC, provides additional insights into the organization’s 10th annual Supply Chain Management Priorities and Challenges research results.
She says respondents indicated that five top trends, innovations, and developments will have a major impact on supply chains by 2027:
- Big data and advanced analytics (65%)
- Supply chain digitization (64%)
- Data management (62%)
- Process standardization (53%)
- Sustainability/ESG factors (51%)
Brown also describes the top four obstacles to improvement as cited by the respondents:
- Implementation of new technologies
- Lack of collaboration across functions and externally
- Lack of governance/poor data management
- Talent/labor concerns
But, she says organizations are taking various measures to overcome them, with the majority saying they have “re-evaluated or modified their supply chain strategy” to do so.
Overall, Brown says this year’s results indicate the ongoing need for preparedness: “APQC’s latest research in priorities and trends for supply chain professionals indicates that 2024 is shaping up to be another challenging year for supply chains. … The theme for supply chains this year is preparation in the face of uncertainty. …”
