As they strive to create resilience, build sustainability and drive top-line growth, supply chain decision-makers are caught in a balancing act of competing priorities. To analyze the tradeoffs, many are investing in digital technologies.
Often, however, that investment has yet to yield positive results. According to a Gartner survey of 600 supply chain decision-makers, the use of digital models to analyze trade-offs has made no meaningful impact on operations.
Despite using multiple forms of digital technology for tradeoff analysis, global decision-makers make 8% more bad decisions than good ones. Exercises such as “what-if” analyses, scenario modeling and simulations haven’t significantly improved the likelihood of making good decisions.
Additionally, only 10% of global decision-makers surveyed have the requisite process adherence, data-derived models and tradeoff clarity in place. Their digital decision models are only capturing about 20% of actual, on-the-ground processes that impact the key performance indicators they’re optimizing for.
Technology should help, not hurt, decision-making, so why is it impeding progress?
The three main areas of investment by supply chain leaders are defining end-to-end processes, visibility and analytics. Together they can boost the likelihood of making good decisions by 206%. Yet only 10% of all decision-makers surveyed actually had all three of those key enablers in place.
On average, they estimated, staff deviates from defined processes about 30% to 40% of the time. As a result, digital decision models aren’t the reality for many supply chains. Without substantial progress on process adherence and data-derived model use, investments in tradeoff clarity will provide little value.
Supply chains have a choice: continue fumbling forward with the same investments, knowing the high hurdles that must be overcome to realize return, or realign investments toward empowering localized cross-functional decision-making.
Local leaders can provide visibility into the invisible, undigitized (and sometimes undigitizable) information that impacts a supply chain’s KPIs. Human visibility fuels knowledge of which variables to consider, as well as the accuracy of all underlying data.
Granting local leaders the power to make decisions — using current technology with no new investments — is more effective than working top-down, from the global end-to-end level. Localized, cross-functional decision-makers make good decisions 11% more often than their global counterparts, and they make good ones 14% more often than bad ones.
It’s important to note that our research doesn’t recommend that supply chain leaders abandon global decision-making or re-invent their entire digital technology strategy. Instead, it points supply chain leaders to an alternative path: realizing return on investment from digital investments by supporting localized decision-makers with digital tradeoff analysis. They can do so by:
Through localized, cross-functional decision-making, supply chain leaders can optimize each local, cross-functional segment and close the information gap by building stronger, more accurate and more efficient global outcomes. By augmenting tradeoff analysis technology, local decision makers are 83% more likely to make a good decision than a bad one.
Suzie Petrusic is senior director analyst in the Gartner Supply Chain Practice.
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