What Boardrooms Are Saying about Supply Chain
Accenture CEO Julie Sweet hosts a roundtable to explore what supply chain topics matter most to boardrooms.
Published: June 23, 2023
— The topic of supply chain has made its way into boardrooms. But what are they discussing and why? Accenture CEO Julie Sweet led an executive roundtable to find out.
Visibility, reliability, and cost optimization are essential features of today’s supply chains.
Boardrooms are having serious discussions about supply chains. But what are the most salient topics of these discussions? A former CEO and current honorary chairman of a multinational health, nutrition and materials organization weighed in during the roundtable, highlighting visibility, reliability and cost optimization as central themes. He also mentioned sustainability and circularity as being at the top of boardrooms’ agendas, with many members acknowledging that these goals can only be achieved via more effective supply chain management.
“Visibility: I would like to understand where we are and what we are doing. Second, I would like to have the supply chain running such that my operations continue to run. Certainly, and I think in that order, it is cost optimization and further optimizations which you can do. And I think sustainability and circularity can only be achieved over the supply chain per definition.”
— A former CEO and current honorary chairman of a multinational health, nutrition and materials organization
IBP is a strategic lever to navigate supply chain volatility and complexity.
Global enterprises need more than traditional point solutions if they are to make better, faster decisions in the face of volatility and complexity. A founder of two supply chain software management companies spoke to this reality, stating that an integrated business planning (IBP) capability — software that enables the planning and decision-making alignment of all lines of business with visibility of decisions’ impact on key variables, such as EBITA, margin and even sustainability — can drive bottom-line impact to the tune of 2-5% of revenue. According to the founder, the key is the adoption of advanced AI software platforms. Such platforms go beyond transaction correctness and offer meaningful insights and enable proactive actions, allowing companies to quickly answer the four W’s of management: What is happening, why is it happening, what is going to happen and what should I do about it? The result is better, faster decisions at scale that impact the bottom line.
“The four W’s of management are the questions you need to answer immediately. That’s where AI is going to become more important: in answering the why question instantaneously. That brings us to the third W, which is forecasting or “What is going to happen?” And when I can forecast it accurately, I can go to the fourth W, which is “What should I do about it?”
— A founder of two supply chain software management companies
Turning supply chains into a competitive edge requires digitization, security and sustainability at scale.
CEOs are dissatisfied with the status quo of supply chain management. According to a chief executive officer of a global technology consulting firm, digitization, despite its advantages, hasn’t fully resolved supply chain woes. In some instances, it has led to the paradoxical practice of companies placing surplus orders to compensate for potential shortages. The industry is increasingly recognizing the need to pivot from reactive measures to sustainable strategies centered on transforming supply chains into a competitive edge. According to the CEO, the answer lies in the convergence of digitization, security, and sustainability at scale.
“A sustainable competitive advantage in supply chain, we believe, includes three things: being a digital competitor, having the best security, and having sustainability by design. Now the major barrier that we are seeing in companies is the ability to scale. To be a digital competitor in the supply chain, you absolutely have to be scaled.”
— The chief executive officer of a global consulting firm
Looking beyond the walls of the enterprise is critical to gaining end-to-end visibility.
Visibility isn’t just what’s happening within the immediate supply chain; it’s what’s happening in the extended supply chain, too. According to the chief supply chain officer of a multinational consumer electronics company, to stay competitive, it’s indispensable to gain end-to-end visibility. But visibility goes beyond the internal data provided by an ERP. True visibility involves understanding problems not just within one’s own supply chain but extending to your suppliers’ suppliers.
“Creating end-to-end visibility across the chain is an absolute must. Without that, you will lose your competitive advantage. Go to the suppliers of your suppliers. They understand where the issues are.”
— The chief supply chain officer at a multinational consumer electronics company
An agile and targeted data strategy is a need-to-have for future-focused organizations.
Companies are not suffering from a dearth of data. Their challenge lies in choosing the right data to focus on amidst a sea of information and extracting actionable insights from it. Prioritizing the right data to deliver value has become crucial. According to the chief supply chain officer of one of the world’s largest consumer healthcare products companies, an agile and targeted data strategy centered on generating actionable insights is essential to turning the supply chain into a differentiator.
“To me, it’s focusing on the things that matter most when it comes to the data strategy. It’s focusing on the things you need to deliver value. But a data strategy that’s agile enough to cope with the changing world is a really important part of the story. Having a data strategy that focuses on the data that really matters—that makes the biggest difference.”
— The chief supply chain officer at a multinational consumer healthcare products company
Regulations are leading companies to make sustainability a core component of their strategies.
Sustainability is moving from an optics-driven initiative to a central component of many companies’ strategies, according to a board director at a multinational publishing and education company. This shift is being accelerated by the complexities of differing regulatory environments across the world, pushing sustainability to the forefront of boardroom discussions. A significant development emerging from this shift is the integration of sustainability metrics into strategic forecasts and budgeting at various levels of an organization, including business units. This means even divisional heads must now take into account the future carbon footprint of their operations, as failure to reduce it could lead to charges for carbon offsets. Such practices force leaders to directly engage with sustainability, embedding it within financial planning and overall business strategy.
“Sustainability is how many companies are starting to engage with the supply chain discussion in a much more strategic way. The changes in regulation in different parts of the world are particularly tricky for global organizations, meaning this now becomes top of mind for the boardroom.”
— A board director at a multinational publishing and education company
Better supply chains require better consequences and incentives.
Supply chain players must be commercially rewarded for successes and penalized for failures, according to an executive at a multinational logistics company. Such a paradigm shift would incentivize all parties in the supply chain to prioritize solving long-term issues over achieving short-term financial results. The financial repercussions of supply chain failures are clear. A cargo ship stuck waiting in a port incurs additional financial cost. But rarely are punitive measures built into the contract to motivate the shipping company to prevent further delays in the future. Equally rare are commercial rewards incentivizing the company to ship on time. As we shape the future of supply chains, there’s a need to rethink commercial interactions between all parties involved.
“We can have really clever digital twins and planning systems but if we don’t translate it into benefits and penalties, then this becomes like the transition to clean energy. There is no penalty for pollution, there’s no penalty for using the wrong energy sources. And unfortunately, all businesses are focused on quarterly results and quarterly answers and, and therefore a lot of this remains in the long-term, strategic realm. We don’t feel the pain we’ve caused.”
— An executive at a multinational logistics company