Gartner Details Sustainable Profit Actions

October 28, 2021

Supply chain organizations must take action and become more purpose-driven to successfully navigate challenges to the planet and profit, according to Gartner

During today’s opening keynote at the virtual Gartner Supply Chain Symposium/Xpo, Gartner analysts discussed the changes supply chain leaders must make to address pressing issues such as climate change and talent shortages without losing track of financial goals.

“We’re not the first supply chain leaders to hear the scientist’s warnings, but we are the last that still have time to heed that code red for humanity. Because without action, the sustainability of both planet and profit are threatened,” said Simon Bailey, senior director analyst with the Gartner Supply Chain practice.

Gartner has identified three main actions that will help supply chains change from being part of the cause of disruption, climate change and employee fatigue to help improve today’s most pressing issues (see Figure 1).

Figure 1: Three Actions to Tackle the Most Important Challenges to People and Planet

Source: Gartner (October 2021)

Pivot to Sustainable Profit

Sustainable profit means focusing on the longevity of profit and making changes that allow an organization to continue conducting business successfully into the future.

Sustainable profit consists of three main parts:

Resilient profit: Supply chains must cope with the rising rate of disruption the world experiences, such as global chokepoints, shortages of materials and workers and emerging risks.

Durable profit: Supply chains must adapt to new realities to deliver profit in the long-term.

Holistic profit: Supply chains must account for externalities that are a result of their activities and might affect other parties, such as their impact on air and soil quality.

“There are many examples of companies that have adopted a broader definition of profit to guide their organizations who now outperform their peers,” said Dana Stiffler, vice president analyst with the Gartner Supply Chain practice. “Stakeholder groups such as investors, customers, suppliers and employees have all responded well to the new focus on truly sustainable profit.”

Make Purpose Personal

Today’s professionals want to do meaningful work. They want to help their organizations do the right thing. However, they don’t want to be left exhausted on the way. The supply chain leader’s job is to make clear the connections between their hard work, the company’s objectives, and bigger and more impactful aims. This approach is called shared purpose.

“There’s a clear business pay-off connected to shared purpose. Gartner research sees a 26% increase in workforce health when work is personally relevant to an employee and 50% improvement in employee engagement when a company takes action on social issues,” Stiffler said.

Bob Bova, President and CEO of AccuSpeechMobile added, "As supply chains and their executives become more prominent in the world’s perspective, the actions they undertake respective to environmental impact on the earth and its inhabitants become important and show a leadership necessary for all businesses today. AccuSpeechMobile applauds those organizations and stands with them in providing solutions that strive to focus on purpose driven success."

Build Value-Aligned Ecosystems

A value-aligned ecosystem is a network of equal partners where all participants trade their capabilities through equitable value-exchange. They differ from today’s popular supplier ecosystems in that there’s no dominant entity. Gartner predicts that ecosystems will become the prime competitive entity in the future.

A Gartner survey between March and May 2021 among 400 companies in 18 industries found that today’s main drivers of ecosystem partnerships are efficiency and service. However, in three years the main drivers will be innovation and purpose.

“Leading organizations are rapidly increasing the number of ecosystem partners because they see value in being part of something bigger and leveraging novel partnerships, with new ways of working in value aligned ecosystems,” Bailey concluded.

Austin Elliott, Associate Manager of Operations with SmartSolve noted, "At SmartSolve, we firmly believe in building a value-aligned ecosystem. Many of the past challenges we have faced within our supply chain, resulted from suppliers who were out-of-alignment with our values. Given the current supply chain crisis, value-aligned ecosystems are not only necessary for success, they are existential for survival."

Ken Bays, the Vice President Product Management at Inmar Intelligence explained, "Necessity, the mother of invention, is causing supply chain leaders to evaluate their current practices; then identify alternative approaches for circumventing, or preventing, disruptive actions such as chokepoints, material and labor shortages – even geopolitical factors. And I agree with Gartner’s position on supply chain transformation through ecosystem partners. Inmar Intelligence, which focuses more on reverse logistics, is already experiencing the ecosystem approach, albeit to help clients capture short- to mid-term gains. However, this interim approach is a useful methodology for companies wanting to migrate to full-blown value-aligned ecosystems."

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