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Executives Continue to View Supply Chain as a Support Function Rather Than a Competitive Differentiator

05/30/2018 By

Despite the push to transform procurement and supply chain from a back-office function to a strategic one, supply chain executives are still more inclined to see supply chain as a support function rather than as a competitive differentiator or a growth enabler, according to a recent report from Accenture.

In “Drive Your Own Disruption: Is Your Supply Chain in Sleep Mode?” the authors of the report argue that new digital technologies are key to shifting supply chain beyond its support role. Blockchain, machine learning and other potentially disruptive technologies can “turn the supply chain into a powerhouse of top-line growth — if [they are] targeted effectively and strategically deployed.”

Accenture’s researchers surveyed 900 supply chain executives from 12 industries and found that 68% believe that supply chain will continue to play the role of a support function in the next two to three years. Fewer than half of the executives (48%) think that their function will become a competitive differentiator.

Source: Accenture

The report suggests that there is a strategic disconnect between the supply chain function and the C-suite. While CFOs and COOs play crucial roles in deciding what technologies to invest in, more than 80% of the survey respondents identified the CIO/CTO as the primary stakeholder in IT investments, not the CEO, CFO or COO.

Businesses tend not to view supply chain as a primary driver of growth. For the supply chain executives, an inadequately skilled workforce, a lack of a clear business strategy and incompatible legacy systems are to blame for supply chain’s struggle to generate value.

Source: Accenture

To boost their function’s value creation, supply chain executives need to work with the C-suite in tackling challenges related to leadership, labor and legacy:

  • Leadership: The report authors point to the case of Schneider Electric, which created a dedicated office of supply chain innovation. Supply chain executives, they argue, need to have concrete success stories in order to provide the C-suite with value scenarios that can help them in making IT investment decisions
  • Labor: The authors recommend that supply chain executives populate their function with core, part-time and freelance workers, as well as embrace AI and robotics
  • Legacy: Following an ambitious IT reboot, the insurance company Towergate united 4,500 employees across its 300 acquisitions, all while achieving 30% in annual savings. “By decoupling applications from their legacy IT infrastructure, [supply chain executives] can then create the flexibility to scale new product and service offerings, new businesses and new markets, as well as accommodate diverse application workloads,” the report authors write.

Check out the full report here.