Blog-hero.jpg

The Innovator's Solution

     

New Findings from the Gartner Supply Chain Users Wants and Needs Study

Posted by Jeff Bodenstab on Jan 4, 2018 11:48:00 AM

High Maturity Supply Chains Outperform Peers.png

The annual Gartner Supply Chain Technology User Wants and Needs Study is one of the most comprehensive studies of supply chain users. The most recent survey included more than 473 people spanning the globe. We have written on this study before, but Gartner recently published an updated analysis (Top Digital SCM Take-Aways From Gartner's 10th Annual SCM Technology
User Wants and Needs Study, November 7, 2017) with additional insights. Here are a few:

Supply chain maturity, performance and technology use are clearly linked – Gartner says, “Without question, higher maturity supply chains use, invest in and exploit technology to gain competitive advantage. These organizations also consistently outperform their peers and have cultures that keep them on the leading edge.”

Gartner offers user survey data as strong evidence. As shown above, 82% of Stage 1 respondents' supply chains are performing below or at parity with peers, whereas 90% of Stage 4 or 5 supply chains offer a modest advantage or are leaders compared to peers. Not even a single Stage 4 or 5 respondent said they were below peers (See explanation of the five Gartner maturity stages at the end of the blog).

Technology maturity strongly impacts overall supply chain maturity - Gartner looks at five elements to determine overall supply chain maturity including: business outcome focus, use of metrics, business process focus, decision-making process and use of technology. But they suggest that technology outranks the other four factors in impact on supply chain maturity:

  • Nearly all Stage 1 maturity supply chains are Stage 1 or Stage 2 users of technology
  • Stages 2 and 3 supply chain organizations have made progress, but continue to focus internally on improving process orchestration horizontally within the company
  • Nearly 70 % of Stages 4 and 5 supply chains have made the transition from an inside-out to an outside-in view of technology enabling multi-enterprise collaboration across a business ecosystem

Gartner concludes, “So if you wish to progress to a higher stage of maturity you must also elevate your technology maturity.” But they also recommend building on a solid foundation — don't leap over stages.

Your type of technology adoption depends on your of maturity stage - Companies at different stages of maturity invest differently.

  • Stage 1 maturity supply chain organizations are mostly conservative adopters of technology
  • Stage 2 and Stage 3 supply chain organizations are mostly mainstream adopters of technology, because as Gartner says, “they understand the value in technology, but their corporate culture has not yet evolved to where they are ready to embrace risk.”
  • Stages 4 and 5 supply chain organizations split between mainstream adopters and aggressive adopters of technology

Underperforming supply chains are often plagued by culture and managerial issues - When asked to identify obstacles to achieving goals, many Stage 1 and Stage 2 companies’ tagged "corporate culture" as one of the top obstacles to moving forward. By comparison, none of the high-performing companies listed “management” or “leadership” as the primary obstacle to achieving goals, instead focusing on “outside-in” obstacles such as network complexity and customer demands.

To step up a Stage 4 or Stage 5 supply chain, you must invest in transformation - Supply chain leaders striving to reach higher stages of supply chain maturity allocate more of their IT spending to transformational initiatives.

  • When you are at the bottom (Stage 1 or 2) you can focus on “keeping the lights on" such as infrastructure and basic application support, without much budget to grow the business or projects that could transform the supply chain
  • Even at the top (Stage 4 or 5) you can run more balanced budgets
  • But companies in the middle (Stage 3), “striving to reach higher stages of supply chain maturity must consider reallocating far more of their IT spending to transformational initiatives.”

Companies investing in supply chain technology are investing in “digital business – It’s the top priority, along with cloud and big data. Multichannel is also a big focus.  “The explosive emergence of new business models like digital business is forcing supply chain organizations to reformulate their supply chain management (SCM) IT strategies,” says Gartner.


As a reminder, here are the five stages of supply chain maturity, according to Gartner:

Stage 1 — Highly fragmented applications portfolio with a large number of stand-alone applications on different technologies and from multiple vendors/sources

Stage 2 — Siloed functional solutions with some data/transactional integration of systems of record

Stage 3 — Improving technologies to support end-to-end processes, and improved data rationalization and process integration capability

Stage 4 — Enabling trading partner transactional connectivity and support for mature processes in the extended supply chain. Convergence of supply chain planning and execution.

Stage 5 — Multi-enterprise process orchestration with innovative technology tools to enable collaborative network wide value creation


Click below for more on improving supply chain maturity and performance:

How do I optimize an E2E supply chain to drive organic growth?

Topics: Supply Chain Planning