Most people would love to know the future so they can better plan today. I know I would. And that’s kind of the idea behind Accenture’s Business Futures 2021, the inaugural edition of which you can get here. Business Futures is Accenture’s structured approach to identifying the Signals of business change that are most critical for organizations to understand to shape their futures. Six Signals stood out in the research this year, and all of them had significant implications for the supply chain. One, in particular, was all about the supply chain:
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Supply Unbounded: To meet growing customer needs for fast, flexible, cost-effective, and sustainable order fulfillment, companies are restructuring their supply chains and moving production to the point of demand.
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This really underscores how important the supply chain is to the future success of organizations. And there’s more. Among those participating in the Business Futures research were nearly 250 Chief Supply Chain Officers (CSCO), whose thoughts on the Signals give us a unique window into these executives’ priorities and what the future supply chain might look like. In this blog post, I highlight three issues that CSCOs told us are especially important to them.
The need for visibility
Only a small percentage of supply chain executives are completely confident in their organization’s ability to foresee changes in the market or identify problem areas in their operations, but most expect that technology will boost their ability to do so.
The widespread disruption of supply chains caused by COVID-19 was a direct result of a lack of visibility into both external and internal factors. CSCOs participating in our research admitted as much. Just 24% said they are completely confident in their ability to foresee changes in the business environment that affect their business strategy, and only 25% said the same about economic, environmental, and behavioral changes that affect customer sentiment and demand patterns. CSCOs also aren’t all that confident that they can see bottlenecks in their supply chain (22%) or failures in their manufacturing processes and equipment (24%).
Now the good news: CSCOs see technology coming to the rescue within a few years—especially when it comes to their own operations. Nearly half (47%) said they’ll gain complete confidence in their ability to spot supply chain bottlenecks, and 52% said the same about seeing process and equipment failure within two years. Also, 73% of CSCOs reported their organizations are increasingly using both external and internal real-time data more to help them boost visibility so they can make faster and better decisions.
A new operating model
CSCOs believe the world is fragmenting, which is leading them to scale up changes to their operating models so they can operate much less centrally than they do today.
Most CSCOs agreed that markets and organization structures are changing, with eight in 10 believing markets will become more segmented, with distinct geographic trading pacts, nations, and regions emerging that operate according to their own rules. This means, according to nearly half of CSCOs, the notion of global, centralized business governance is outdated. In fact, 79% of CSCOs believe operating like broad federations of businesses will be important for their organization’s success in a much more fragmented market.
So what are they doing about it? Around 80% of CSCOs indicated they’ve taken action, or will within a few years, to decentralize different parts of their business. Thirty-one percent said they’ve already made their supply chain and operations much more decentralized, and an additional 36% said they intend to do so in the next three years. Some of the related changes CSCOs said they’ve made or are making include looking for people with diverse skills who can be productive in dynamic and varied environments (69%); integrating ecosystem partners into systems, processes and strategy setting (66%); and expanding the use of real-time, on-site data to inform decision making at the edges of the organization (65%).
Serving all stakeholders
CSCOs believe organizations will increasingly take a multi-dimensional view of value creation that works for all stakeholders, not just shareholders, and many are adopting various measures to embed an approach to generating value for the benefit of all.
The days of looking at business value narrowly—what have we returned to shareholders?—are quickly disappearing. Seventy-seven percent of CSCOs said the name of the game today is taking a multidimensional view of value that includes all stakeholders. They see this as becoming much more important to their organization’s success. At the same time, 21% of CSCOs noted that simultaneously addressing the interests of customers, employees, suppliers, communities, and shareholders is the biggest barrier to delivering value for all stakeholders.
That’s why they’re putting in place or planning new ways within the next year to help them think more broadly about what value means and to whom. These include regularly consulting with stakeholders on the actions their organization should take to increase the value it creates for them (81%); measuring and tracking the impact the organization has on all its stakeholders (80%); and linking the impact the organization has on its stakeholders to executive compensation (79%). And nearly all CSCOs (95%) said their processes and corporate policies already incorporate responsible practices or will within three years. Clearly, it’s not just about financials anymore.
With change now rapid and constant, all organizations have to do a much better job of understanding the future so they can prepare today. Read the full Business Futures global report to get more details on the six Signals for 2021.
See more Supply Chain & Operations insights.