2015 Gartner Supply Chain Top 25: 3 Key Trends

Each year, our analysts research the supply chains of hundreds of companies.

Through this work, we note the trends: What are the leaders focusing on, where are they investing time and effort, and what can be applied broadly?

Three key trends stand out this year for leaders that are accelerating their capabilities and further separating them from the rest of the pack.

1. Bimodal Supply Chain Strategies
Chief supply chain officers (CSCOs) and their teams face an environment where business models must change quickly, where the expectation is that they will spend as much or more time growing and innovating as they will streamlining and promoting efficiency. Gartner has termed this reality “bimodal.”

Traditionally, supply chain executives have been successful because they were good at driving down costs. The leaders now realize they will be judged on cost containment as well as the ability to promote and support the top line.

In parts of the business with innovative products and solutions, these leaders help promote organic growth through timely supplier enablement, co-innovation and active participation in the phase gate release process to enable smooth new product launches.

When growth comes from selling in new geographic markets, supply chain is a full partner with marketing, sales, finance, and R&D, and plans for the required enablers well in advance.

Another pillar of growth that we’ve seen accelerate across most industries is the effective integration of mergers and acquisitions (M&As).

The more mature supply chain organizations that we speak with have dedicated teams and established playbooks for assessing the current and required capabilities of new businesses and determining the best transition roadmap.

The other mode for these leading supply chain teams is the continued pursuit of improvement and efficiency in mature and declining businesses. High-performance work systems are used to identify and pare out non-value-added complexity in product portfolios and operational processes to remove waste and improve profitability.

Many of the companies at the top of the Supply Chain Top 25 are running integrated supply chains that can drive the appropriate trade-offs across individual functions for lowest end-to-end supply chain cost.

Some leaders have strategies tailored to different business units, while others differentiate by major geography or individual markets. The common thread across them is a clear and cascading link between corporate and supply chain strategies, performance metric targets, business processes, technology, and talent.

2. Increased Customer Intimacy
Another trend is a focus on customer experience as a measured priority in supply chain organizations. Some of the leading companies are tracking customer satisfaction measures, such as Net Promoter Score (NPS), as a first-tier metric for their organizations. Independent of the product being sold, leaders are focused on listening more closely to their customers and responding with innovative solutions. We see this happening not only in the CP/retail space, as expected, but also across the industrial manufacturing sectors.

This year, we heard from more companies extending visibility and insight beyond first-line customers and moving on to the end users of their products. Their supply chains are not just collecting data concerning the details of the sale, but also the patterns of usage and resulting sentiment of the end user.

Consider that several leading PC and mobile device manufacturers are starting to think about product quality from both the perspective of performance-to-specification and performance-to-expectations. Mining of online sentiment data allows for these types of connections to be drawn and fed back to design teams for future product releases.

Remote equipment monitoring is another popular mechanism for gathering end-user insights and for assisting with preventative maintenance. We see applications of this capability increasing at leading industrial machinery companies and high tech manufacturers, as well as in the consumer world of health monitoring products, home office equipment and others.

Ultimately, delighting customers with strong operational supply chain performance, when combined with improved solution performance, will lead to measurable improvements in customer satisfaction and contributions to the top line. This is yet another way that leading supply chain organizations are becoming partners in growth with the business.

3. Emerging Digital Business Models
While still a nascent concept, the view on how supply chains can leverage digital capabilities to support new business models and improve broader value chain performance became clearer this year.

Manufacturing is the center of many digital capabilities, including predictive quality, energy management, and smart automation, all leveraging sensors and advanced analytics. Moreover, leading companies recognize that “the factory” is not just somewhere inside the four walls of the company or an outsource partner.

Digital synchronization of manufacturing lines with upstream suppliers and other supply chain functions is where the business value starts to multiply. The automotive and chemical industries offer a leading vision of where digital manufacturing can go next in terms of these capabilities.

The logistics function is not far behind manufacturing in terms of automation using sensors, gateways, tracking systems, and business rules to predict and alert when there will be a variance to the current plan of record.

For example, the rapid emergence of online ordering has forced retailers into the digital world of multichannel order management and fulfillment that requires increased visibility. Logistics control tower capabilities are not new, but when combined with more affordable sensors and computing power, they portend the democratization of deeper visibility that can reduce risk and improve both operating costs and customer-service levels for many companies.

The use of Big Data and advanced analytics to improve demand visibility is somewhat commonplace among the top consumer-facing supply chains, though some are taking it to a higher level. Some smartphone manufacturers are replenishing supply and offering additional services based on device activations.

A handful of consumer goods companies are using hourly SKU-shelf-level visibility to surgically manage supply during critical promotional and seasonal events.

3D printing is yet another digital-based technology having transformative effects on select processes at leading companies. Many industrial and high tech companies are leveraging it to manage their equipment spares. Consumer-facing companies are using 3D printing to quickly prototype and manufacture high-mix, low-volume packages and containers for their products.

Human organs, food, building materials - the list of potential applications is long and, as the variety of “printable” materials increases, more industries will add this form of instant agility to their toolkit of supply chain capabilities.

Related: How Can Supply Chain Management Enable Profitable Growth?