How C-suite complacency is burying progress in the supply chain risk management function

How C-suite complacency is burying progress in the supply chain risk management function | Insurance Business America

Risk Management News

How C-suite complacency is burying progress in the supply chain risk management function

Supply chain leaders see customer value, while executives still focus on cost reduction

Risk Management News

By
Kenneth Araullo

According to new research from Ernst & Young LLP (EY US), supply chain executives may be losing strategic ground with their C-suite counterparts as the pandemic moves into the past.

Despite 88% of supply chain leaders stating that their supply chain is critical in enhancing customer experience by meeting customer needs, 88% of C-suite executives view the supply chain as a cost centre. This gap in perception is highlighted in the EY 2024 Supply Chain Survey, which gathered insights from 347 US supply chain leaders representing companies with annual revenues of at least $500 million.

The findings underscore the need for organisations to re-evaluate how they perceive and invest in their supply chains, particularly in an era of increasing complexity.

Although awareness of supply chain importance has grown, 78% of supply chain leaders say their companies have refocused on cost management since the pandemic, with 28% listing cost reduction as a top priority, shifting away from pandemic-era strategies.

Ashutosh Dekhne, EY Americas supply chain and operations practice leader, said that while the pandemic initially elevated the role of supply chain leaders in the C-suite, executives are reverting to old views of the supply chain as a cost centre.

“Our research uncovered concerning perception gaps between supply chain and C-suite executives around the value of supply chain, the digital maturity of supply chains and the value of cross-collaboration,” Dekhne said.

While both groups identified modernisation as a priority, supply chain leaders are more optimistic about achieving autonomy by 2030, with 39% expecting this, compared to just 25% of C-suite leaders.

A quarter of C-suite executives believe their organisation’s digital connectivity with suppliers is still reliant on basic tools such as email and spreadsheets, which contrasts with the more advanced view held by supply chain leaders.

The research also revealed a disparity in how collaboration is valued. While 39% of supply chain executives acknowledged that demonstrating the value of cross-functional collaboration is one of their top challenges, this area of collaboration is seen as an opportunity for supply chain leaders to better convey their strategic importance to the C-suite.

To address these disconnects, Dekhne suggested that supply chain leaders should reposition themselves by demonstrating how technology-enabled capabilities not only reduce costs but also enhance competitiveness and drive growth.

Nearly all supply chain leaders (97%) face challenges with tracking supply chain metrics, with only 44% monitoring customer satisfaction as a key indicator. EY recommends aligning supply chain metrics with broader business objectives, incorporating metrics that reflect contributions to customer service, responsiveness, and innovation.

Further, supply chain leaders are encouraged to focus more on customer experience, as 84% admit they spend more time on internal operations than on customer needs. Integrating customer experience into supply chain strategies can help demonstrate the direct impact on growth and revenue.

The research also found that 80% of supply chain leaders are working to improve internal cross-functional collaboration, with 79% enhancing collaboration with external vendors. The research emphasised that showcasing these collaborative efforts can help align operations with broader business goals and improve overall supply chain resilience.

Addressing labour and skills shortages remains a top priority for supply chain leaders, and closing the digital maturity gap with the C-suite will require continued workforce development in advanced technologies. Additionally, improving supply chain visibility through data analytics and artificial intelligence will help organisations manage future disruptions, according to the EY report.

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