Gartner survey reveals 87% of supply chains to invest in resilience

A global Gartner survey with over 1,300 supply chain professionals found that 87% of respondents plan investments in supply chain resilience within the next two years.

The survey also revealed that 89% of supply chain professionals are planning to invest in agility.

The research firm said, however, that cost remains a priority, challenging chief supply chain officers (CSCOs) to find a new balance between resiliency, cost-efficiency and fulfilling increasing customer demands.

“Supply chain executives overwhelmingly recognise the necessity to make their networks more resilient and agile,” said Geraint John, VP analyst, Gartner Supply Chain practice.

“At the same time, 60% admit that their supply chains have not been designed for resilience, but cost-efficiency. The challenge will be to create an operating model for supply chains that combines the best of both worlds and also delivers supreme customer service,” John said.

Gartner defines resilience as the ability to adapt to structural changes by modifying supply chain strategies, products and technologies, and agility as the ability to sense and respond to unanticipated changes in demand or supply quickly and reliably, without sacrificing cost or quality.

The survey found that three-quarters of respondents believe that the additional costs caused by the investments in resilience and agility will be covered by the supply chain budget. Gartner said that’s why CSCOs must take the lead in identifying where and how much to invest.

“In practice, the concrete investments will likely be a series of activities ranging from incremental projects in small firms to transformative capital investments by global industry leaders,” John said.

“We see that many organisations are investing in diversifying their supply base and redesigning products to mitigate risk,” he said.

He continued that more collaborative relationships with key customers and suppliers is also a priority for almost all respondents.

The survey also revealed that 45% of respondents believe their customers favour low pricing over domestic sourcing and production, particularly in retail and fashion. Meanwhile, cost differences and efficiencies will remain key considerations for supply chains when evaluating and redesigning operational networks.

Gartner noted that almost half of respondents believe that lean methodologies, just-in-time systems and low-cost country sourcing will be relevant for future strategies, while 30% of respondents report plans to shift from a global to more regionalised supply chain model.

Another finding was that 56% of survey respondents think that automation will enable them to make onshore manufacturing economically viable.

“Ultimately, the right balance between investments in resilience and agility, and cost-optimisation depends on each organisation’s individual circumstances, including their financial strength, market position, appetite for risk and external factors such as regulatory requirements or supply chain,” John explained.

He concluded that if CSCOs choose their investments wisely, they can expect to see positive results as soon as the next disruption.