Supply chains have been in the spotlight for the past year — and not in a positive way. The struggle to supply goods to a world fractured by COVID-19 has overstretched value chains and natural resources and burned-out employees. It’s time for chief supply chain officers (CSCOs) to innovate their networks and commit to a sustainable and purpose-driven supply chain that is part of the solution, not the problem.
“We’re not the first supply chain leaders to hear scientists’ warnings, but we are the last to heed that code red for humanity — without action, the sustainability of both the planet and profits is threatened,” said Simon Bailey, Senior Director Analyst, Gartner, during the opening keynote at Gartner Supply Chain Symposium/Xpo™ 2021.
“The sustainability of our people is threatened as well,” added Dana Stiffler, VP Analyst, Gartner. “From fields to factories, people have been pushing through to do their jobs, to deliver for their businesses and customers. In the last 12 months, 55% of employees have experienced significantly damaged health.”
What supply chain leaders must do now?
To transform their supply chains, look past shareholders to all stakeholders and integrate their needs into governance and operating models. Gartner research shows three keys to success.
No.1: Pivot to sustainable profit
This involves changes that allow an organization to operate long into the future. Sustainable profits are resilient, durable and holistic, so they require you to watch for disruptions, global chokepoints and emerging risks and to monitor and account for the impact their activities might be having on other parties. A factory can, for example, affect air and soil quality in a way that affects the health of workers and the community.
Sustainable profit also pays. Customers, suppliers and employees increasingly expect organizations to perform against environmental, social and governance (ESG) goals. Shareholders will support changes that respond to these evolving demands.
No.2: Make purpose personal
Along with supply chain operations, the supply chain workforce has evolved in past decades. Workers are more skilled regardless of where they work — on a factory floor, in an office or at home — and with that knowledge comes different expectations.
Today’s professionals want to do meaningful work. They want to help their organizations do the right thing. However, they don’t want to be left exhausted on the way. As a supply chain leader, your job is to make clear the connections between employees’ hard work, the company’s objectives, and bigger and more impactful aims. This approach is called shared purpose.
Gartner research sees a 26% increase in workforce health when work is personally relevant to an employee and a 50% improvement in employee engagement when a company takes action on social issues. Having shared purpose as part of a purpose-driven supply chain organization will have a tremendous effect on the business, as this environment produces more high performers.
“Your job is to make clear the connections between employees’ hard work, the company’s objectives, and bigger and more impactful aims.”
No.3: Build value-aligned ecosystems
Value-aligned ecosystems are networks of equal partners in which all participants trade their capabilities through equitable value exchange. They differ from today’s popular supplier ecosystems in that there’s no dominant entity. Gartner predicts that these ecosystems will become the prime competitive entity in the future.
A Gartner survey of 400 companies across 18 industries found that today’s main drivers of ecosystem partnerships are efficiency and service. However, in three years, the main drivers will be innovation and purpose.
Leading organizations are already rapidly increasing the number of ecosystem partners, because they see value in being part of something bigger and in leveraging the novel partnerships, value exchanges and shared capabilities that help them on their path to becoming a purpose-driven supply chain.
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