Supply chains need to shift beyond efficiency to innovation

An innovative supply chain can boost growth by double digits, according to a new Accenture study. The firm zoomed in on 90 supply chain “masters” to see what they’re doing right.

Innovation, agility, and digitalization have been top priorities for many businesses in recent years, as they look to keep pace in a dynamic market. When it comes to supply chains, the focus has been to make them as efficient and lean as possible. According to Accenture, this perspective needs another dimension.

“Large companies have invested, on average, $153.4 million to transform their supply chain for growth over the past three years. With investments that significant, efficiency alone is no longer the measuring stick for successful supply chains. They must deliver return on that investment in the form of growth,” said the firm in its report.

What are masters doing right

What companies need is a supply chain that is shaped to match their growth and purpose, with the customer at the center. Accenture examined 900 businesses around the world to examine their supply chain practices, and found that 10% have found the right formula. These “masters” have a growth advantage of 13%, while their supply chains contribute three times as much to revenue and nearly 3% more to profit margins.

According to Accenture, there are four key factors that set the masters apart. For one, they design their supply chain with the customer in focus. Both B2B and B2C masters, for instance, place the sustainability of their supply chain and manufacturing operations as their top priority. Most customers now prioritize ethical sourcing and manufacturing practices, and supply chain masters keep this in mind.

Customers have also grown to demand a highly connected and personalized customer experience, which also ranks high on the priority list for all masters. Understandably, customer-facing B2C models rank this as a higher priority than B2B models, alongside other considerations such as hyper-personalized products and delivery.

Customer value propositions prioritized for supply chain investments

A more pertinent issue for B2B businesses is data privacy and security. In a hyper-connected age, businesses need to be sure that their data is in safe hands, which makes this a priority across the supply chain. B2B businesses are also looking to gear their supply chains to incorporate more product-as-a-service models – increasingly in demand across the business environment.

The second characteristic of supply chain masters is that they have digitalized a large part of their operations, and use the data drawn from a collaborative tech architecture to generate insights that can make drastic business improvements. In fact, digitalization and insight-based operations alone can generate nearly 8% in additional growth for masters.

Third on the list of merits is the focus on key competencies – what Accenture terms “select capabilities.” Most have gained a degree of maturity in capabilities that can bring tremendous value to their supply chain. For instance, B2B businesses have invested in blockchain capabilities for the security and flexibility that they can bring.

Turning insight to innovation

For B2C businesses, the primary area of investment has been customer and product segmentation in real time, allowing them to deliver more targeted products and services. Other select capabilities of value across B2B and B2C supply chains are design-to-margin capabilities – which identify value adding products and services – as well as cybersecurity and data privacy.

According to Accenture, the last thing that sets masters apart is that their CEOs are heavily involved in supply chain conversations. “Masters’ CEOs are more likely to drive supply chain discussions with the board. And they translate those discussions into results – actively allocating funds and talent that fuel innovation capabilities and transformation for their supply chain,” explained the firm.

Each of these factors allow supply chains to be better geared towards business goals, and consequently drive growth in revenues, margins, and operations. Accenture points out that achieving these conditions involves moving supply chain discussions beyond efficiency.

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