In a post earlier this year, “Surveys Reveal New Supply Chain Priorities for 2024,” we covered the results of several surveys which indicated that within evolving post-pandemic dynamics, supply chain leaders had shifted from traditional strategies to prioritize supply chain needs in an effort to stay ahead of the competition.
However, according to the results of a recent EY survey, the supply chain is again being lowered to cost-center status by some within the C-Suite as supply chain leaders struggle to maintain its role as a strategic business driver.
Reinventing the supply chain
One of the surveys we highlighted in our June 4 post was a Bain & Company survey which concluded “cost is no longer paramount,” according to a summary of an episode of the SupplyChainBrain Podcast.
A brief providing an overview of the survey, “How CEOs Can Balance the New Supply Chain Equation,” described the shifting priorities that were revealed: “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?’”
Referring to the “traditional formula” as lacking, the four Bain & Company experts who authored the brief explained 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
In addition to the Bain & Company survey, we also highlighted the results of APQC’s 10th annual Supply Chain Management Priorities and Challenges research — which found that supply chain planning was the top priority at the time.
According to APQC’s summary of the results: “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.”
In an article for Supply Chain Management Review, Marisa Brown, Senior Principal Research Lead, APQC, provided additional insights into the results. She said they revealed five top trends, innovations, and developments that will have a major impact on supply chains by 2027:
- Big data and advanced analytics
- Supply chain digitization
- Data management
- Process standardization
- Sustainability/ESG factors
As well as four top obstacles that could hinder improvement efforts:
- Implementation of new technologies
- Lack of collaboration across functions and externally
- Lack of governance/poor data management
- Talent/labor concerns
Overall, Brown said the survey 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. …”
Although these surveys conducted earlier in 2024 identified a shift in priorities for supply chain executives, polling results recently published by EY tell a different tale.
“Growing C-suite complacency”
“New EY research highlights growing C-suite complacency on supply chain issues as crises wane and priorities shift,” the press release summary says, underscoring a mismatch between the perspectives of supply chain executives and those higher up the ladder.
“While 88% of supply chain executives report that their organization’s supply chain plays a vital role in enhancing the customer experience by promptly addressing and meeting customer needs, their colleagues across the C-suite overwhelmingly (88%) view the supply chain function as a cost center,” the statement says, noting that this is just one of “multiple gaps in perception” that study results revealed.
For the EY 2024 Supply Chain Survey: Bridging the C-suite disconnect, 347 US supply chain leaders from various industries whose companies have at least $500m in annual revenue were polled in the spring of 2024. According to EY, results underscore the “urgent need for a shift in how organizations view and invest in their supply chains to compete and thrive in an era of growing complexity and volatility.”
“Despite a heightened awareness of the importance of supply chains, 78% of supply chain leaders say their organization is back to focusing on supply chain cost management post-pandemic, with 28% citing cost reduction as one of the top three priorities currently, a shift from pandemic-era strategies,” the consulting firm says.
“The series of supply chain shocks that started with the pandemic elevated the role of supply chain leaders in the C-suite, but executive teams are increasingly reverting to outdated views of the supply chain as a cost center rather than a growth engine,” said Ashutosh Dekhne, EY Americas Supply Chain & Operations Practice Leader. “Our research uncovered concerning perception gaps between supply chain and C-suite executives around the value of supply chain, the digital maturity of supply chains and the value of cross-collaboration.”
Key findings about mismatched perceptions include gaps in:
- Technology integration: “While C-suite leaders are eager to integrate technology across the organization, they appear to underestimate the supply chain’s role in this transformation. …”
- Digital maturity: “…about a quarter (26%) of the C-suite believe their organization’s digital connectivity with suppliers is limited to email and sharing spreadsheets, which is significantly more than supply chain executives (16%) and highlights an underestimation of supply chain’s progress in digital maturity.”
- Cross-functional collaboration: “…there is a notable gap in perception around the need for the supply chain to collaborate across functions and with external partners and customers, as well as the benefits greater collaboration brings to the organization. …”
Despite these gaps, the good news is that EY experts say there are specific steps industry executives can take to help reposition the supply chain as a strategic growth driver:
- Align supply chain metrics with business objectives: “… Supply chain strategies should integrate metrics that reflect not just cost efficiency but also contributions to customer service, responsiveness and innovation.”
- Extend the impact of supply chain to include customer experience: “… supply chain leaders should integrate customer experience metrics into their reporting and communicate customer successes to their C-suite colleagues, highlighting how improvements drive growth and revenue.”
- Enable supply chain to lead organizational convergence: “… encourage and showcase the collaboration between supply chain functions and other departments and external partners to enhance transparency and align operations with business goals.”
- Cultivate a future-ready supply chain workforce: “… closing the perceived digital maturity gap among C-suite executives will require supply chain professionals to be well-versed in the latest technologies and their applications within the supply chain.”
- Go beyond resilience to achieve agility: “… organizations should enhance supply chain visibility with robust data and analytics; use AI to foresee disruptions; keep business continuity plans current; and diversify supply sources, suppliers, manufacturing and logistics partners.”
“Differentiated supply chains are pivotal assets that drive revenue growth and organizational agility,” said Dekhne. “Supply chain executives must overcome the disconnects with their C-suite to reassert their place at the table and guide the trajectory for future innovation and expansion.”