5 Key Pillars for Creating a Purpose-Driven and Ethical Supply Chain

Introduction

The COVID-19 crisis has significantly accelerated supply chain transformation, putting pressure on supply chain leaders to propel their businesses ahead of the competition. However, 38% of these leaders are worried that their supply chains are not adequately prepared to tackle the challenges of the coming two years. Many supply chains are designed mainly for cost efficiency rather than resilience and agility. How will Chief Supply Chain Officers (CSCOs) rise to this challenge?

• Briefly introduce the concept of a purpose-driven supply chain.
• Mention the growing importance of aligning supply chain strategies with broader company values and societal goals.

Research by PlambIndia Software Solutions reveals that 76% of supply chain leaders focus on the following priorities:

• Connecting with Customers: Enhancing customer relationships through impactful product offerings.
• Positive Societal Impact: Ensuring operations benefit society and the environment.
• Organizational Purpose: Aligning supply chain strategies with broader company values.

Future supply chain productivity hinges on three new value drivers

Has your digital transformation project failed to generate the expected productivity ROI again? What now?

• The three new drivers of supply chain value.
• Key investment areas for commercial growth in 2024, including cybersecurity, ESG strategies, and hybrid work models.
• The economic challenges facing global supply chains.
• Shifting focus from cost control and efficiency to resilience and agility.

Path to the supply chain of the future

1. Supply chain leaders are pivotal in driving business strategy. Despite facing volatility, they continue to prioritize and invest in future capabilities. Follow their lead to map out your path to success.

1) Economic Value

Develop skills and resources that will enhance future supply chain efficiency and effectiveness.

In recent decades, corporate investment in digital assets has surpassed other types of investments. However, productivity has remained stagnant, indicating the need to rethink investment strategies. Here are key points to consider.

• Redefine Value within the Value Chain:

1. The future of supply chains demands a redefinition of value beyond just digital or physical resources.

• Invest in Operations and Intangible Assets:

1. Focus not only on maximizing economic value through operations but also on
2. Employees: Invest in those providing data analysis and strategic direction.
3. Ecosystems: Support the broader production ecosystems.

• Leverage Digital Supply Chain Tools:

1. Fully utilize the productivity potential of digital tools by supporting them with intangible assets.

• Adopt a New Definition of Value:

1. Both supply chain organizations and the entire enterprise must embrace this new approach to ensure ROI.

• High-Performing Supply Chain Organizations:

1. 72% of high-performing supply chain organizations are viewed as critical enablers of business strategy.
2. Invest in key capabilities.
3. Drive commercial growth
4. Prepare for future, hard-to-measure outcomes.
5. Manage supply chain risks effectively.

2) Shift from real-time analytics to real-time implementation.

• Current State:

1. 95% of supply chains need to react quickly to changes.
2. Only 7% can execute decisions in real time.

• Problem:

1. Without real-time execution, supply chains know what to do, but response execution is delayed.

• Future Investment: 

1. Digital supply chain investment in real-time decision execution is expected to increase 5x by 2028.

• Benefits of Real-Time Execution:

1. Automates execution.
2. Improves performance across the end-to-end value chain.

• Three-Step Transformation for Real-Time Capabilities:

1. Access Real-Time Data: Obtain real-time data from across the end-to-end supply chain.
2. Analyze Data on the Fly: Enable on-the-fly data analysis to meet enterprise expectations for real-time decision-making.
3. Execute Real-Time Decisions: Ensure real-time decision making triggers real-time execution.

• Challenges:

1. Overcoming legacy technology issues.
2. Addressing the lack of data.

• Required Technology for Transformation:

1. Artificial Intelligence (AI)
2. Large Language Models (LLMs)
3. Augmented Reality (AR)/Virtual Reality (VR)
4. Other advanced technologies

3) Redirect the focus from operational efficiency to enhancing customer experience.

• Challenges Facing Supply Chains:

1. Customer Loss: Disruptions are causing supply chains to lose customers.
2. Mounting Issues: Backorders, low inventory, increased prices, and delayed shipments are prevalent.
3. Customer Retention: Supply chain performance is crucial for customer repurchase likelihood.

• Key Insights:

1. Customer Enablement: According to research, enabled customers are twice as likely to repurchase.
2. Current Focus: Only 23% of supply chains prioritize customer enablement.

• Actions to Enhance Customer Experience:

1. Streamline Service Offerings: Offer supply chain capabilities “as a service” & Differentiate the customer experience throughout the buying journey.
2. Gain Funding and Improve Cost Transparency: Secure funding to address high service delivery costs & Implement cost-to-serve transparency to manage expenses effectively.
3. Accelerate Service Launches: Address the slow pace of launching new services & Enhance the agility of the supply chain to quickly introduce new offerings.

4) Adopt an Employee Value Proposition (EVP) that promotes flexibility and creativity in work design

• Talent Scarcity Challenges:

1. Scarce Talent: A significant issue in the supply chain industry.
2. Job Seeking Behavior: Gartner’s Global Labor Market Survey shows that around 20% of supply chain employees have been actively seeking new jobs over the past year.
3. Business Impact: 54% of supply chain organizations report that the inability to access talent has disrupted or halted business activities.

• CSCOs' Response to Talent Challenges:

1. Proactive Investment: Chief Supply Chain Officers (CSCOs) are investing in improving the employee experience and enhancing the Employee Value Proposition (EVP).

• Ongoing Challenges:

1. Work Flexibility Issues: Procedural and cultural barriers to flexible work persist.

• Strategies for Attracting and Retaining Talent:

1. Beyond Financial Incentives: Move past purely financial motivations to offer a more comprehensive EVP.
2. Flexible and Purposeful Experience: Provide a flexible, meaningful daily work experience.
3. Employee Understanding and Autonomy: Ensure employees feel understood and autonomous.
4. Valued and Invested Employees: Make employees feel valued and invested in.
5. Personal Development Pathways: Offer opportunities for personal growth and choice in work.

• Competitive Advantage:

1. Engaged Workforce: Attracting and retaining the right talent leads to a more engaged and productive workforce.
2. Organizational Success: Engaged employees contribute significantly to the overall success of the organization.

5) Ensure supply chain resilience by adapting to climate change.

• Increasing Importance of Sustainability:

1. Legislative and Stakeholder Pressure: Rising demands for sustainability have made it essential, not just a nice-to-have.
2. Critical for Future-Proofing: Achieving sustainability is now vital for securing future business operations and addressing global concerns.

• CSCOs and Sustainability Accountability:

1. Environmental and Social KPIs: 67% of Chief Supply Chain Officers (CSCOs) are responsible for environmental and social sustainability key performance indicators.

• Improving Effectiveness and Reputation:

1. Communication and Alignment: These can enhance internal effectiveness and boost reputation.
2. Supply Chain Transformation: True sustainability and meaningful change in the value chain are achieved through transforming the supply chain.

• Key Sustainability Activities:

1. Circular Economy: Implementing practices that support the circular economy.
2. Emission Reduction: Reducing greenhouse gas emissions.
3. Risk Governance: Strengthening governance to manage risks effectively.

• Leading CSCOs' Capabilities:

1. Top Performers: Leading CSCOs are 19% more likely, on average, to have the necessary capabilities to meet their sustainability goals.

• Embedding ESG in Business Operations:
• Commitment to ESG: To genuinely fulfill sustainability commitments, integrate Environmental, Social, and Governance (ESG) factors into goals, measurements, and decision-making processes.

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