Gartner: CSCOs Must Balance Investments in Nascent, Evolving and Mature
October 27, 2021
limited budgets at their disposal, and CEOs demanding to focus on cost
optimization while also improving resilience, chief supply chain officer
(CSCO) investments must be split in-between capabilities of different
maturity, according to Gartner, Inc.
During the Gartner Supply Chain Symposium/Xpo, being held virtually
through Wednesday, Gartner analysts discussed capabilities from this
year’s Gartner Hype Cycle for Supply Chain Strategy (see Figure 1) that
CSCOs can invest in to build a balanced portfolio and achieve their
Gartner surveyed 199 CEOs and senior business executives in
supply-chain-intensive industries in 2020 and found that 17% of
respondents see cost optimization as the top issue that CSCOs should
focus on in the near future, followed by resilience.
“In supply chain, at any point in time there are hundreds of competing
initiatives and potential investment opportunities. It’s the CSCO’s job
to invest in supply chain capabilities that will align with what the CEO
wants the CSCO to prioritize,” said
Noha Tohamy, distinguished vice president analyst with the Gartner
Supply Chain practice.
“The Hype Cycle is a tool CSCOs can use to evaluate available options
and decide how much to invest where. A nascent capability from the
Innovation Trigger section should receive limited investments to run a
pilot. Then there might be underperforming capabilities from the bottom
of the Hype Cycle that warrant reevaluation. CSCOs need to scale the
solid, mature capabilities that have demonstrated consistent return on
investment,” Tohamy continued.
Figure 1: Hype Cycle for Supply Chain Strategy, 2021
Source: Gartner (October 2021)
Nascent Capability: Artificial Intelligence (AI)
AI is a transformational capability that will still take some time to
reach maturity, and is at the Innovation Trigger stage of the Hype
Cycle. It applies advanced analysis and logic-based techniques,
including machine learning (ML), to interpret events, support and
automate decisions, and take actions.
“Given its transformation benefits, supply chain organizations should
actively seek to understand the potential of AI and invest in
small-scale pilots. Before any big investment decisions, supply chain
leaders must be clear about organizational readiness, data and talent
availability, and the role of AI in supporting supply chain and business
priorities,” Tohamy said.
"Artificial Intelligence and Machine
Learning technologies are definitely going to be a big part of Supply
Chain Management in the near future," said
Erhan Musaoglu, CEO and Founder of Logiwa
Technologies. "In fact, they are already being adopted by
warehouses making the transition to digital operations with, for
example, robotic picking and sorting powered by intelligent algorithms
built into leading WMS software platforms."
Evolving Capability: Supply Chain Risk Management (SCRM)
SCRM aims to make businesses resilient to supply chain risks across the
physical and digital ecosystem. A comprehensive approach to SCRM focuses
on the ability to identify and mitigate risks across the extended
network footprint. It is strengthened by technology used for risk
identification and monitoring, holistic risk impact analysis and
coordinated operational mitigation.
In response to COVID-19, risk management has become front and center as
companies needed to sense and respond to supply disruptions and shifts
in business models. However, organizations have found that existing risk
capabilities have largely been ineffective, and it is at the stage of
the Trough of Disillusionment. Despite a major stake in managing risk,
there is no clear owner of the process across supply chain functions.
“SCRM is a capability that many organizations have already invested in –
but are now disillusioned as it didn’t fulfill expectations,” Tohamy
CSCOs must reexamine their SCRM strategy and make targeted investments
that – for example – help balance the need for resilience with the goal
of efficiency when designing a network or that constrains
decision-making inputs to improve the quality and speed of decisions in
case of a disruption.
Mature Capability: Supply Chain Center of Excellence (SC CoE)
SC CoE is a physical or virtual center of knowledge, concentrating on
existing expertise and resources in a supply chain function, capability
or process. CoEs operate adjacent to groups that execute core business
functions. They find, design and implement changes to business
processes, people or technologies. Gartner research indicates that
almost 80% of supply chain organizations have one or more CoEs,
indicating a high maturity, and it is at the stage of the Slope of
“This is the stage where CSCOs can invest in scaling and expanding a
capability. Right now, most SC CoEs are focused on IT systems design and
technology enablement, but only a few on talent development or change
management. This is the next step that will enable the full potential of
this capability,” Tohamy concluded.