Due to uncertainty and high customer expectations challenges chief supply chain officers (CSCOs) will find new trade-offs between cost, speed and services says Gartner global survey of 1300 supply chain professional. The survey was conducted from September 2020 through November 2020.
Key finding of the survey include:
- 87% of respondents plan investments in supply chain resiliency within the next 2years and 89% want to invest in agility.
- Cost will remain a priority, challenging CSCOs, to find a new balance between resiliency, cost-efficiency and fulfilling increasing customer demands.
- 60% admit that their supply chains have not been designed for resilience, but cost-efficiency.
- 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.
“Supply chain executives overwhelmingly recognize the necessity to make their networks more resilient and agile,” said Geraint John,VP analyst with the Gartner Supply Chain practice.
Figure 1: Responding to a Disrupted World
John further added. “We see that many organizations are investing in diversifying their supply base and redesigning products to mitigate risk. More collaborative relationships with key customers and suppliers is also a priority for almost all respondents.”
National Interests Clash with Competitive Pricing Demands
- 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.
- Cost differentials and cost-efficiency will remain key considerations for these supply chains – as for others – when evaluating any redesign of their operational networks. Almost half of survey respondents see lean methodologies, just-in-time systems and low-cost country sourcing as relevant to future strategies.
- 30% of survey respondents report that they are shifting from a global to a more regionalized supply chain model.
- The high level of integration in global supply chains, the regulatory burden of moving already established supply chains to a different location and the concentration of key suppliers in certain geographies make it difficult to completely regionalize a supply chain network.
- High labor costs and a shortage of skilled manufacturing workers have long been an argument against domestic production in developed Western economies.
Automation as the Key to Domestic Manufacturing
Advanced robotics and other automation technologies provide opportunities to overcome this constraint.
56% 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,” John concluded.
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