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RESEARCH REPORT

Next stop, next-gen

Tap into new value with advanced supply chain capabilities

8-MINUTE READ

May 20, 2024

In brief

  • A new economic and industrial context reveals new opportunities for companies, and C-suite leaders must prioritize new capabilities to unlock value.
  • New research reveals a correlation between greater maturity in supply chain network capabilities and strong financial results. 
  • To implement and scale more mature capabilities, supply chain leaders should put in place four key enablers of greater maturity.

A new context supports a new performance frontier

As we continue to move through a period of continuous disruption and ongoing change, companies will need to move beyond traditional benchmarks, processes and ways of working to maintain a competitive advantage and capitalize on new opportunities. As part of this transformation, companies and C-suite leaders urgently need to implement and scale far more advanced capabilities across their supply chain networks and operations. And our latest research shows big gains for those who are already doing so. For example, the small fraction of companies who are using more mature supply chain capabilities are generating an average EBIT margin of 11.8%, compared with 9.6% among all other companies.

By “mature,” we mean the extent to which a company embraces evolving technologies that continually optimize complex, real-time variables for quick, smart action.

Are companies ready for the next generation of supply chain capabilities?

When considering supply chain and operations capabilities, we think about maturity in four distinct stages: 

  1. Past: Operating with legacy technology, limited data visibility and a high reliance on manual, human-involved tasks and decision-making.
                                                         
  2. Now: Using some digital tools to facilitate basic operational tasks and featuring partial digitalization in routine tasks.                                                                                                                             
  3. Near: Scaling up digitization across operations, with contextualized, high-quality data integrated from various sources, eco-friendly practices and strong ecosystem relationships.
                                                                                                                                            
  4. Next: Employing generative AI and advanced machine learning for autonomous decision-making, advanced simulations and continuous improvement through data analytics and AI-driven insights. 

In our new research, we applied this concept of evolving maturity, and its four stages, to 29 key capabilities across seven main supply chain domains. We used this framework to evaluate 1,000 companies in eight geographic regions, interviewing three executives at each company to understand just where their company stood on each capability.

80%

Companies expect 80% of capabilities to reach “near” level within two years  

So, what did we find? The median maturity index score across our survey population is just 30% and the average is 36%, with 100% denoting fully mature. This lack of maturity clearly illustrates the urgency for companies to take action to bolster their key capabilities across supply chain networks. The good news is companies understand this urgency. Our survey reveals the global pace of transformation is ambitious, with companies expecting to reach “near” level in 80% of their capabilities within two years.

Percentage of capability maturity level
Percentage of capability maturity level

The case for greater maturity

Why is capability maturity so important? Consider the 10% of companies in our survey we view as “leaders” based on overall maturity scores. These leaders are investing heavily in sophisticated technologies (especially AI and generative AI) to build and leverage greater maturity across all 29 capabilities in our model. Their result is maturity scores two to three times greater than other companies. And our analysis reveals a correlation between greater maturity and strong financial results. In addition to leaders generating, on average, higher EBIT margins, we found that publicly traded leaders deliver better total return to shareholders (TRS) at 8.5%, compared with 7.4% for others. 

With more mature capabilities, leaders’ supply chain networks can deliver more and various types of business value. They can move beyond traditional deliverables to, instead, focus on driving sustainability and resiliency — and, in the process, achieve a new competitive advantage. 

8x

Leaders are 8x more likely to say their supply chain and manufacturing capabilities support their business priorities “very well.”

Four key enablers of higher maturity

The leaders in our study highlight how adopting and scaling more mature capabilities leads to greater value. As leaders ambitiously invest in next-generation capabilities – at four times the rate of other companies – we see an increasing polarization. It’s the virtuous cycle of leaders pulling away from the pack versus the vicious circle of those who are falling behind and continuing to lag. 

The question is, how does leadership across supply chain networks and operations make sure their investments translate into an actual increase in maturity — and business value? Key to greater maturity are four enablers, which form the infrastructure necessary to implement and scale up the next-generation capabilities companies need.

Leaders are investing in next-generation capabilities at 4x the rate of other companies.

Companies need to strengthen their digital core, using cloud, data and AI to build a suite of tools that integrates all major supply chain processes. Leaders are nearly 2x more likely to have these architected and interconnected tools. 

An advanced operations data platform incorporates a unified and interlinked data model to help turn data into meaningful and contextualized insights. Leaders are 3.3x more likely to have implemented such platforms.

A previous Accenture survey reveals regional sourcing is expected to grow nearly 30%. When making major changes to localize networks, companies should enhance the digital maturity of their capabilities to support new, flexible approaches.

Companies must create an “organization platform” to foster agility across the enterprise. Leaders are 3.3x more likely to have this environment. To scale this, it’s critical to have a vision for how to reinvent work and prepare workers

Accelerating transformation to keep pace

For companies that have previously downplayed the importance of these enablers, the time for action is now. This isn’t about just incrementally boosting efficiency or productivity or maximizing current operations. It’s about fundamentally reinventing supply chain networks with new technologies and new ways of working that underpin the next-generation capabilities needed to continuously reach new levels of business performance.  

WRITTEN BY

Max Blanchet

Senior Managing Director, Global Supply Chain & Operations Strategy Lead

Brad Pawlowski

Managing Director, Strategy & Consulting, North America Lead for Supply Chain & Operations

Melissa Twinning-Davis

Senior Managing Director, Operations Lead for Global Supply Chain

Stephen Meyer

Principal Director – Supply Chain & Operations, Accenture Research