Gartner: What drives supply chain network changes?
A new survey of chief supply chain officers from Gartner Inc. provides insight into their strategic decisions.
According to the survey, 73% of respondent companies have added or removed production locations from their supply chain networks. The data shows that risk management considerations, such as improving resilience, in addition to enhancing flexibility and agility, have displaced cost-efficiency as the top drivers of network changes.
Top factors driving changes to the supply chain network in the past two years (more than one answer accepted) include:
- Increase resilience/redundancy as part of risk management strategy: 46%.
- Improving agility or flexibility: 43%.
- Reducing operational expenses and being cost-efficient: 41%.
- Meeting sustainability objectives or targets: 38%.
- Simplify/streamline supply chain network: 36%.
- Set the organization up for future growth: 35%.
- Meet regulatory requirements: 32%.
- External geopolitical pressures: 26%.
The survey also revealed that the most frequently cited changes to supply chain networks were adding new supply locations with existing supply partners (50%) and pursuing new supply locations with new supply partners (48%). According to Gartner, the addition of supply locations is a strategy companies often deploy to serve multiple purposes, including diversification, achieving cost efficiencies, mitigating geopolitical pressures and improving efficiency.
The survey also revealed that the most frequently cited changes to supply chain networks were adding new supply locations with existing supply partners (50%) and pursuing new supply locations with new supply partners (48%). According to Gartner, the addition of supply locations is a strategy companies often deploy to serve multiple purposes, including diversification, achieving cost efficiencies, mitigating geopolitical pressures and improving efficiency.
Other findings
Among organizations that have made supply chain network changes in the past two years, 90% reported that they have met or exceeded the expected benefits of the change. These benefits include improved service, cost reduction, enhanced agility, and reduced carbon emissions.
Despite the early success of these network shifts, Forman noted that 96% of respondents cited challenges with operating in new locations. Among respondents from North America, a shortage of factory workers is a more common challenge compared to all other regions.
A previous Gartner survey also indicated a clear statistical relationship between a supply chain organization’s embrace of artificial intelligence and its likelihood of being successful.
"Supply chain leaders are moving away from an overreliance on low-cost networks and are instead focusing on diversified approaches to mitigate risks and enhance performance," said Vicky Forman, senior director analyst in Gartner’s supply chain practice. "While cost-efficiency is still a prominent concern, CSCOs are taking a wider view of the costs associated with the impacts from disruptions and poor levels of resiliency when making network design changes."
[READ MORE: Gartner: Artificial intelligence will spread in supply chain]
Gartner surveyed 437 respondents from April to May 2024, including senior managers and above from companies with annual revenues of at least $250 million across North America, Latin America, Europe and Asia/Pacific.
