Convergence is Key to Supply Chain Resilience: NC State University Research
- Misalignment between procurement and supply chain operations is hurting businesses the most today
- These and other gaps in organizational and supply chain processes present significant risks and result in higher costs, longer cycle times and less resilience
- The need of the hour is to ‘converge’ critical processes, information flows and technologies across the organization, supply chain and extended ecosystem
Finding ways to counter supply chain disruption and building resilience are the top priorities for businesses today. In this endeavor, however, many organizations have not walked the talk.
In fact, there still are glaring gaps in procurement and supply chain processes that present greater risks in today’s uncertain business environment.
These gaps have been exposed in a recent study conducted by GEP in partnership with the Supply Chain Resource Cooperative at North Carolina State University (NCSU). The key objective of the study was to determine the strategies and priorities for procurement and supply chain professionals across a variety of industries.
What is the biggest gap?
The study found that there are several “highly concerning” points of misalignment — or gaps — in most organizations and supply chains. These gaps occur in processes, information flows, and technology, and often result in a drag on productivity, as well as present significant risks.
As many as 59% of supply chain executives surveyed rated the procurement-supply chain gap as a “major issue.” This was rated the No. 1 gap in the organization according to the study.
The warehouse and transportation gap was the second most concerning point of disconnection, while the gap between supply chain planning and execution was the third most concerning.
Executives see these gaps as posing significant problems, reporting they result in higher costs, longer cycle times and less resilience. Specifically, 58% of supply chain executives reported that the primary gaps can result in higher costs, 47% were concerned the gaps result in longer cycle times, and 42% reported the gaps negatively impact resiliency.
Different teams, different priorities
The report also found a surprising schism on the prioritization of resilience within most organizations, with chief procurement officers (CPOs) and chief supply chain officers (CSCOs) focused on resilience as their top priority in the current environment, while mid-level and operational management hyper-focused on their traditional measurements. For procurement managers, the central focus is on managing costs in the face of inflation, and for supply chain, it is ensuring delivery of supply amidst shortages.
The report also delves further into internal misalignments including those around enterprise-level priorities such as sustainability. The study also revealed a surprising misalignment between business executives and chief information officers (CIOs) who appear to have differing views regarding the business’ executional needs.
Surveyed executives reported supply chain visibility and supply chain collaboration, both internal and external, were the top two major pain points – with both underlying organizational and supply chain misalignment.
Convergence is the need of the hour
The report says that enterprises need to better align their procurement and supply chain operations to address key pain points and build resiliency. And it concludes with a discussion of the need for convergence — a uniting of the critical processes, information flows, and technologies across the organization, supply chain, and extended ecosystem.
Convergence, a growing topic of conversation in C-suites and supply chains, is seen as a necessary step in closing the gaps and building greater alignment and resiliency.
In a next post, we’ll delve deeper into the report, specifically on the segment that drills into the relationship between resiliency and sustainability, and the importance of organizational and procurement/supply chain alignment on these enterprise priorities.