Here’s What It Takes To Be a Supply Chain Leader in 2020

A recent studyOpens a new window by SAP and Oxford Economics found that 12% of the top 1,000 supply chain performers proved to have more resilient supply chains. In this article, Richard Howells, vice president of solution management for SAP Digital Supply Chain, dives into these characteristics that led companies to become supply chain leaders.

At the start of 2020, when experts were talking about “Vision 2020”, nobody predicted that we were entering a global pandemic that would bring the global economy to a virtual standstill within weeks. With the pandemic, came a highly variable demand for goods and services; an uncertain supply of critical Materials; constrained labor and resource capacity in manufacturing and logistics. All these factors, along with many others, resulted in reduced revenue, profits, and customer satisfaction.

Supply chainsOpens a new window have been brought to the forefront and are now a regular discussion in presidential briefings, executive board rooms, and dining room tables. One thing is for sure — unexpected disruptions that adversely affect supply chainsOpens a new window will continue to occur. The causes of disruptions will vary from pandemics or geopolitical or trade conflicts to natural disasters or the limited availability of natural resources. Businesses will have to be in an always-on mode to analyze and take action to survive and thrive in good times and bad. They require strategies, processes, and solutions to have the resiliency to minimize risks and maximize opportunities.

During a disruption, companies need to respond with agility and speed. As the disruption nears the end, they need to prepare themselves for growth. And in the long term, they need to learn from the past, predict the future and reimagine their supply chain to automate, innovate, and remain profitable.

Learn More: Top 5 Supply Chain Challenges in 2020 and Beyond

Three Characteristics of a Supply Chain Leader 

An opening paragraph from a new research studyOpens a new window conducted by Oxford Economics with 1000 supply chain executives, states, “Creating a customer-centric organization in 2020 is a lesson in managing complexity while maintaining resilience. Businesses must be able to deliver high-quality products at warp speed while meeting sustainability targets, building relationships with suppliers and sub-suppliers, predicting demand for products and resources, mitigating risk, and rapidly adopting new technologies without disrupting business as usual. Supply chain functionsOpens a new window are tasked with meeting all of these demands—even in the face of a global pandemic.”

The study was conducted to identify the common traits of supply chain leaders across all industries and geographies. It notes that the top 12% proved to have more resilient supply chains, higher levels of innovation, customer and employee satisfaction, and growth numbers than other respondents. So, what does it take to be in this elite group of supply chain leaders? There are three main focus areas that make a company a supply chain leader and set them apart from the pack.

Learn More: What is Agile Procurement and How is it Changing SCM?

1. Creating a Customer-centric Organization

Over the past few years, customer experience has inched its way to be one of the top priorities for supply chain leaders, if not, the number one priority for most. In fact, 33% of supply chain managers say that increasing customer satisfaction is a top strategic goal for their overall businesses. Customer satisfaction begins with the investment of knowing your customers, which is a key differentiator that sets a leader apart.

What satisfies a customer has changed dramatically, even within the past three years. When asked to select the most important factors in achieving satisfaction, non-leaders were typically drawn to the usual aspects, like product and service quality, price, and speed of the purchasing experience. Leaders, on the other hand, were drawn to more forward-thinking factors, such as support through the product life cycle (28%, vs. 15% among others) and ethical product sourcing (32% vs. 21%, among others). As consumers have evolved and come to expect more out of their brand than just the end products, companies, and supply chain leadersOpens a new window must evolve with them to remain available to their customers and transparent in their sustainability practices. 

Learn More: 3 Ways 5G Can Plot a Recovery for Supply Chain

2. Making sustainable practices a priority

The importance of sustainability doesn’t stop with customer satisfaction – it goes beyond that and dramatically impacts cost savings. When asked about the importance of sustainable supply chain practices, 86% of supply chain leaders said a sustainable supply chain is a competitive differentiator, compared with 68% of other respondents. Supply chain leaders show the importance of these priorities through their willingness to sacrifice profits in the short term to meet their end-goals (three-quarters of leaders say they are willing to do so, compared with just 55% of other respondents). This willingness to give up some of their impressive financial metrics is crucial as they pave the way for other organizations on their sustainability journeys.

While sustainability is a critical part of being a supply chain leader, it’s also reportedly the most difficult aspect, with time to implementation (59%) and customer demand for speed and convenience (49%) cited as top obstacles by survey respondents. However, the implementation of intelligent technologies will be a driving factor in overcoming obstacles related to sustainability, helping to ensure that these challenges are not delaying the race toward a more sustainable supply chain model.

Learn More: How Online Marketplaces are Shaping The Future of Procurement

3. Deploying intelligent technologies

All supply chain professionals are focused on increasing efficiency, and leaders especially are looking to harness the power of intelligent technologies to do just that. A modern supply chain is complex, and companies are focused on streamlining processes and automating routine tasks with automation, machine learning, and AI. All supply chain leaders are deploying such technologies at scale in their supply chains, while a third of other respondents have not yet started this rollout. 

Leaders are also way ahead when it comes to using a variety of other emerging technologies.  76% are deploying IoT in some areas (vs. 20% of others); 64% are deploying big data or predictive analytics (vs. 15%); and 48% are deploying RPA (vs. 14%). These intelligent technologies are a crucial factor in the equation to becoming a supply chain leader, as shown by the overwhelming investment in them by those already established as leaders.

While the use of intelligent technologies is clearly important and being acted upon, this does not negate the need for a human workforce. Almost all supply chain leaders (92%) say their employees are prepared for digital innovation (vs. 60% of others), and they are constantly refreshing their employees’ skill sets as the technology landscape evolves. Leaders are significantly less likely to report difficulty recruiting (9% vs. 25% of others) and retaining (7% vs. 19%) supply chain employees. It’s this mix of talented employees who harness intelligent technologies to meet organizational goals that make a supply chain leader.

Adopting the best practices of supply chain leaders is critical for companies to emerge from the current pandemic stronger and more unified. With a major focus on functions often used for working in the background; a delicate balance between customer demands, sustainability initiatives, and business as usual; and effective adoption of emerging technologies, any company can elevate themselves to becoming part of the group of supply chain leaders and setting themselves apart from the rest.

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