Gartner: CSCOs Must Incorporate Regional Designs into Global Networks
September 13, 2021
better deal with growing protectionism and the need for higher agility, chief
supply chain officers (CSCOs) must incorporate regional designs into their
global networks without diluting the cost or competitive advantages of existing
global networks, according to Gartner.
Gartner analysts pointed out today during the Gartner Supply Chain Symposium/Xpo,
which is taking place virtually in EMEA through Wednesday, that global trade has
tripled in the 21st century, from $7 trillion to $21 trillion – along with the
complexity of global supply chain networks.
“Many industries have become capacity-constrained,” said
Kamala Raman, vice president analyst with the Gartner
Supply Chain practice.
“Some of this is driven by availability of material, some is driven by labor
shortages in both manufacturing and transportation, some of it is driven by
changing quarantine conditions around the globe, as well as the general
inability of countries around the world to operate at a pre-pandemic normal.”
For supply chain leaders, this means that the world is still relying on global
trade but has become less globalized compared to a few years ago. A recent
Gartner survey showed that 51% of supply chain leaders expect that national
interests and pressure to favor domestic operations will increase in influence
on future supply chain decisions. A successful supply chain now integrates
regional supply chains into global networks.
There are two approaches supply chain leaders should consider:
Regional Sourcing Improves Scale-Based Industries
For scale-based industries that are driven by customer demand, such as clothing,
electronic devices and groceries, it has been the consumer’s need for
predictable supplies, despite volatile demand patterns, that has led to a rise
in local sourcing for retailers. Consumers demand agility and reliability from
their retailer of choice. If a product is not available, and consumers don’t
know when it will be in stock again, they will go to the competition.
“Consumers want reliable goods available at an acceptable price. In today’s
world, a company’s ability to fulfill demand does not come from only a global
network, or only a regional network, but a blend of both,” Raman said.
Xi Chen, VP, Operations with Geekplus America
added, “It’s no secret that the global pandemic has greatly changed consumer
behavior and forced many retailers and e-commerce companies to adapt to sharp
changes in demand. Our autonomous mobile robots (AMRs) and advanced software
solutions help companies meet these unprecedented consumer expectations by
providing flexibility and efficiency in the warehouse, as well as the regional
and global supply chains. This enables our customers with faster and more
accurate order fulfillment capabilities which ultimately enhances brand loyalty
and consumer satisfaction.”
Partnerships Help Navigate Strategic Industries
In strategic industries, such as the semiconductor or high-capacity battery
sector, organizations can’t make decisions based on cost alone. They are also
restricted by national security concerns or simply an impossibly high demand for
innovation. Public-private partnership is often key.
example, the European Commission has approved a $3.5 billion fund to foster the
development of batteries for electrical vehicles in 12 European countries. This
public funding is expected to draw a further $11billion from the private sector.
Taiwanese entrepreneurs have drawn upon their government’s substantial R&D
support to become a chipmaking powerhouse. The CHIPS for America Act will
provide $52 billion in federal investments to strengthen domestic semiconductor
research, design and manufacturing.
Supply chain leaders in strategic industries must distinguish between the
decisions they control, the decisions they can influence, and the decisions made
for them by industrial or national policies. Meaningful partnerships with
relevant players in their ecosystem, as well as governments, are critical for
“Countries are all tightly integrated when it comes to the goods we’re used to
having around. Consider the dozens of suppliers around the globe in the COVID-19
vaccine supply chains that are saving billions of lives today. For example, for
the Pfizer/BioNTech vaccine, there are 280 components from 25 different
suppliers involved, spanning 19 countries. CSCOs have to find a way to balance
the global supply chains that have worked well– and still do – with regional
additions that place people, planet and purpose above short-term profits,” Raman
Bob Bova, President and CEO of AccuSpeechMobile
"Gartner rightly states that any supply chain technology strategy, globally and
regionally, needs to be agile, flexible, and adaptive to changes. While many
benefits can be adopted using cloud based applications, Edge-based architecture
solutions can be customized quickly and easily to provide the type of functional
agility Gartner cites. Device-based software implementations will empower cloud
applications for many years to come, specifically because of agile change
"Designing the right supply chain network right now is a real challenge, for all
the reasons cited by Gartner, putting a premium on a network strategy that
focuses on agility," said
Dan Gilmore, chief marketing officer at supply chain
software provider Softeon.
Gilmore added that "This
puts a premium as well on selecting supply chain software that provides high
levels of configurability, and that is delivered from a software partner that
has a proven track record of supporting on-going change and continuous