Majority Of Companies Don’t Have Customer-Centric Supply Chains Required for Resilience

With COVID-19 magnifying the challenges and changing global demands of supply chains, now is the time to make the lifeline of humanity more responsible and relevant than ever.

Just 10% of companies were on the right path to building customer-centric supply chains that are resilient and enable growth prior to the COVID-19 pandemic, according to a new report from Accenture. While supply chains have traditionally been a driver of efficiencies and scale, the report discusses how their role in recent years has evolved beyond mere efficiency, and toward lasting growth.

Based on a global survey of 900 senior executives from nine major industries across 10 geographies, – including Australia – the report, titled “A License for Growth: Customer-centric supply chains,” identifies major supply chain challenges that have only been magnified by the ongoing COVID-19 global crisis including: inflexibility to deliver undifferentiated customer offerings; poor ecosystem design lacking the right partners; and a siloed technology architecture that stifles collaboration and co-innovation. The report also outlines leading practices of a few selected companies that have transformed their supply chains and created a customer experience that is both purpose-led and focused on growth.

“The COVID-19 health crisis has brought in in to sharp focus the need for companies to be agile and responsive to supply and demand impacts in a highly volatile world and to rethink continuity in terms of the mix between onshore and offshore production,” said Jordan Griffiths, Operations Lead for Accenture Australia and New Zealand.“Australian companies have done well to respond to the massive disruption and as they begin to adjust and future proof their models, they need to take into account: agility and speed, including how intelligence is shared across the supply chain; sustainability of the production loop from recycle to reuse; localisation of suppliers to reduce risk and transportation; and partnering for the long term with companies who are resilient and focused on delivery of outcomes in good and bad times.”

The companies in the report have invested AUD$222 million, on average, over the past two years to transform their supply chains. However, it is just a small group — 10% of those surveyed — that are effectively using their investments to transform their supply chains to meet increasing and evolving customer experience demands.

The Accenture analysis found that these leading companies follow four key practices that cement them as leaders among their peers:

1. Begin with the customer in mind. Base supply chain strategy on what the customer values, which is a more complex endeavour than ever before because customer experiences are now purpose-led and personalised. More than two-thirds (71%) of the leading companies build supply chain strategies to deliver experiences linked to key customer value propositions, such as sustainability, data privacy/security and customised delivery and service.
2. Turn insight into innovation. Invest in building analytical, asset-light collaboration architectures, which could significantly increase the supply chain’s impact on revenue and shared success within and outside their ecosystems. In fact, more than half of the average revenue growth that the leading companies experienced came from collaboration tools and data-driven insight technologies.
3. Develop targeted capabilities. All of these leading companies, whether B2B or B2C, have built capabilities to segment customers and products in real-time. They’ve partnered with procurement to design products and services and identify potential suppliers to achieve target margins. They also invest in advanced cybersecurity capabilities to address the growing security threats from data breaches and data theft.
4. Engage the CEO beyond conversation. Support from the top is key to true supply chain transformation. The CEOs of these leading companies are more likely to drive supply chain discussions with their boards and translate those discussions into results. More than half (53%) of these CEOs allocate funding to drive supply chain innovation, and 49% allocate top talent to accelerate supply chain transformation.

The report also includes analysis proving that the efforts taken by these leading companies have paid off. Accenture’s financial analysis of these leaders has found that during the period from 2017-2019, they have outperformed other companies in several areas. For instance, they grew [revenues] 13%, on average, compared with an average revenue decline of 5% for the other companies. Moreover, their supply chain contribution to total revenue was triple that of the other companies’ (52% vs. 17%); and they delivered EBITDA* margins 2.5% higher than those of the other companies.

For the full report, visit Accenture.