88% of supply chain leaders reported their C-suite considers the supply chain a cost center, underscoring the shift in attitudes back to pre-pandemic views
NEW YORK, Sept. 17, 2024 /PRNewswire/ — As the pandemic moves further into the rearview mirror, supply chain executives may be losing the strategic gains they made with their C-suite counterparts, according to new research from Ernst & Young LLP (EY US). While 88% of supply chain executives report that their organization’s supply chain plays a vital role in enhancing the customer experience by promptly addressing and meeting customer needs, their colleagues across the C-suite overwhelmingly (88%) view the supply chain function as a cost center, highlighting one of multiple gaps in perception uncovered by the study.
The EY 2024 Supply Chain Survey: Bridging the C-suite disconnect, which surveyed 347 US supply chain leaders from various industries whose companies have at least $500m in annual revenue, underscores the urgent need for a shift in how organizations view and invest in their supply chains to compete and thrive in an era of growing complexity and volatility. Despite a heightened awareness of the importance of supply chains, 78% of supply chain leaders say their organization is back to focusing on supply chain cost management post-pandemic, with 28% citing cost reduction as one of the top three priorities currently, a shift from pandemic-era strategies.
“The series of supply chain shocks that started with the pandemic elevated the role of supply chain leaders in the C-suite, but executive teams are increasingly reverting to outdated views of the supply chain as a cost center rather than a growth engine,” said Ashutosh Dekhne, EY Americas Supply Chain & Operations Practice Leader. “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.”
Supply chain risks losing influence in the C-suite
While C-suite leaders are eager to integrate technology across the organization, they appear to underestimate the supply chain’s role in this transformation. According to the findings, both sets of leaders identified modernization efforts as one of the top priorities for the future of supply chain, but while supply chain executives are more likely to anticipate their organization’s supply chain will be mostly autonomous by 2030 (39% vs. 25% C-suite), C-suite leaders are more likely to say it will take an additional 10 years (i.e., by 2040) (27% vs. 12% supply chain executives). In fact, about a quarter (26%) of the C-suite believe their organization’s digital connectivity with suppliers is limited to email and sharing spreadsheets, which is significantly more than supply chain executives (16%) and highlights an underestimation of supply chain’s progress in digital maturity.
Additionally, there is a notable gap in perception around the need for the supply chain to collaborate across functions and with external partners and customers, as well as the benefits greater collaboration brings to the organization. About two-in-five (39%) supply chain executives admit that one of the top challenges their organization currently faces as it relates to supply chain metrics is proving the value of cross-functional collaboration, missing out on a crucial avenue to help the C-suite better understand their impact.
Elevating supply chain as a strategic growth driver
Supply chain leaders can work to reposition and elevate their role within the organization by demonstrating how the benefits of technology-enabled supply chain capabilities go beyond mere cost reduction to enable growth, enhance competitiveness and support key business objectives.
“Differentiated supply chains are pivotal assets that drive revenue growth and organizational agility,” said Dekhne. “Supply chain executives must overcome the disconnects with their C-suite to reassert their place at the table and guide the trajectory for future innovation and expansion.”
Dekhne and the EY Supply Chain and Operations team recommend that industry executives do the following to reshape C-suite perceptions:
Align supply chain metrics with business objectives. Nearly all (97%) supply chain leaders report facing challenges with supply chain metrics, and only 44% currently track customer satisfaction as a key performance indicator. Supply chain strategies should integrate metrics that reflect not just cost efficiency but also contributions to customer service, responsiveness and innovation.Extend the impact of supply chain to include customer experience. Supply chain leaders are overlooking customer experience, with 84% admitting to spending more time focused on internal operations than customer needs and 76% prioritizing creating new and innovative products over creating the best customer experience. To rectify this, supply chain leaders should integrate customer experience metrics into their reporting and communicate customer successes to their C-suite colleagues, highlighting how improvements drive growth and revenue.Enable supply chain to lead organizational convergence. To enhance supply chain resiliency, 80% of supply chain leaders are improving internal cross-functional collaboration and 79% are improving cross-functional collaboration with external vendors. Continue to encourage and showcase the collaboration between supply chain functions and other departments and external partners to enhance transparency and align operations with business goals.Cultivate a future-ready supply chain workforce. Addressing labor and skills shortages is one of the top three priorities currently for supply chain leaders, and closing the perceived digital maturity gap among C-suite executives will require supply chain professionals to be well-versed in the latest technologies and their applications within the supply chain.Go beyond resilience to achieve agility. While 87% of supply chain leaders say their organization has made significant investments to improve supply chain resiliency, one-in-five (19%) admit that today they are unprepared to face supply chain disruptions due to supply shortages. To improve, organizations should enhance supply chain visibility with robust data and analytics; use AI to foresee disruptions; keep business continuity plans current; and diversify supply sources, suppliers, manufacturing and logistics partners.
Methodology
EY US commissioned a third party to conduct the EY 2024 Supply Chain Survey: Bridging the C-suite disconnect. The online survey was conducted among n=347 US supply chain leaders who work full-time for an organization with a minimum USD500m annual revenue in one of the following sectors: telecommunications and media, life sciences, consumer goods, agriculture, construction, advanced manufacturing and mobility, energy, and health-related enterprises.
The survey was fielded in the spring of 2024. The margin of error for the total sample is +/- 5 percentage points at the 95% confidence interval.
Throughout the findings, total respondents were referred to as “supply chain leaders”; CEOs, CFOs and COOs were referred to as “C-suite,” while chief supply chain officers, executive vice presidents, senior vice presidents or vice presidents of supply chain functions were referred to as “supply chain executives.”
About EY
EY exists to build a better working world, helping create long-term value for clients, people and society and build trust in the capital markets.
Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform and operate.
Working across assurance, consulting, law, strategy, tax and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. EY member firms do not practice law where prohibited by local laws. For more information about our organization, please visit ey.com.
Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited operating in the US.
CONTACT: Lizzie McWilliams, lizzie.mcwilliams@ey.com
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