A lack of a coordinated strategy between top executives and those running the manufacturing side of the business is leading to inefficiency and lack of growth despite adoption of new technology, according to new research by Accenture.
The recently released report, “Drive Your Own Disruption: Is your supply chain in sleep mode?” shows that while most companies recognize the value of a modern supply chain that incorporates new technologies like artificial intelligence, blockchain, big data and analytics, many chief supply chain officers (CSCOs) surveyed don’t seem to be leveraging the investments made by their company’s top executives. This results in a failure to transform the supply chain function into a growth engine, the study surmised.
The research report revealed that 60 percent of the 900 supply chain executives surveyed said they see their function in two years as a cost efficiency driver. Sixty-eight percent said they see it as a support function, while 48 percent said their job was a competitive differentiator and only 53 percent saw it as a growth enabler within their organizations.
“Supply chain executives should take no comfort in being categorized as a support function,” said Mohammed Hajibashi, a managing director at Accenture and global supply chain lead in its products industry practice. “In this digital era where customers demand speed to market and hyper-personalization, these executives need to ensure that their supply chain function is not only a key differentiator, but also ensures the sustained growth of their organizations.”
Explaining further, Hajibashi said, “The fast and efficient adoption of the right new technologies that enable a new way of working, along with increased C-suite engagement with the supply chain function, are the keys to achieving growth via new digital business models that create new customer experiences, craved by the consumer.”
Accenture research found that 80 percent of the supply chain executives identified the chief information officer or chief technology officer–not the CEO, COO or CFO–as key stakeholders, despite the major role the CFO has in making technology investment decisions and the chief operating officer’s role in designing the operating model.
In conducting the study, Accenture polled 900 chief supply chain officers, chief operating officers, chief procurement officers and other supply chain leaders from 12 industries with companies that had annual revenues of at least $1 billion, including consumer goods and services, financial services industrial equipment and retail, from seven countries.
Digging deeper into the study, Accenture noted that in many organizations the supply chain wasn’t even seen as a driver of differentiation and aggressive growth. Roughly 43 percent of the CSCOs surveyed blamed the absence of a clear business strategy, while 48 percent cited an inadequately skilled workforce and 44 percent named incompatible legacy systems for their function’s inability to drive value for the organization.
Accenture’s report said CSCOs have an opportunity to work with the full C-suite to overcome three core challenges–leadership, labor and legacy technology–and move their function toward better and more strategic partnerships that can give the organization increased value-driving potential.
In the area of leadership, Accenture called for the CSCOs to be better in line with business strategy and to build new and productive working relationships with the executives responsible for long-term digital investment.
In labor, CSCOs should establish a workforce that focuses on core supply chain workers, part-time and on-demand employees, and artificial intelligence/robotics that collaborate to improve productivity with speed. The CSCO should also use their C-suite connections to secure support for an ongoing reskilling strategy, according to Accenture.
As for legacy technology, Accenture said it’s important to separate legacy systems in a way that allows for a less resource-intensive and more impactful way to achieve agility through investing in new, more compatible systems.