Convergence is Key to Supply Chain Resilience: NC State University Research

• The misalignment between procurement and supply chain operations is the most damaging to businesses today
• These and other gaps in organizational and supply chain processes pose significant risks and lead to higher costs, longer cycle times and reduced resilience
• The need of the hour is to “converge” critical processes, information flows and technologies across the organization, the supply chain and the extended ecosystem.

Finding ways to counteract supply chain disruptions and build resilience is a top priority for organizations today. However, many organizations have not had a say in this endeavor.

In fact, there are still glaring gaps in procurement and supply chain processes that pose greater risks in today’s uncertain business environment.

These gaps were revealed in a recent study conducted by GEP in collaboration with the Supply Chain Resource Cooperative at North Carolina State University (NCSU). The primary objective of the study was to determine the strategies and priorities for procurement and supply chain professionals across a variety of industries.

What’s the biggest gap?

The study found that there are several “very worrying” points of misalignment – ​​or gaps – in most organizations and supply chains. These gaps occur in processes, information flows, and technologies, and often lead to reduced productivity and significant risks.

As many as 59% of supply chain executives surveyed rated the sourcing-supply chain gap as a “major concern.” This was ranked as the #1 gap in the organization according to the study.

The warehousing and transportation gap was the second most important point of separation, while the gap between supply chain planning and execution was the third largest.

Executives see significant problems in these gaps and report that they result in higher costs, longer cycle times and reduced resilience. Specifically, 58% of supply chain executives said the primary gaps can lead to higher costs, 47% were concerned that the gaps lead to longer cycle times, and 42% said the gaps negatively impact resilience.

Different teams, different priorities

The report also found a surprising split in the prioritization of resilience in most organizations, with chief procurement officers (CPOs) and chief supply chain officers (CSCOs) focusing on resilience as their top priority in the current environment, while middle and operational management focused on resilience hyper focused on their traditional dimensions. For procurement managers, the key focus is managing costs in the face of inflation, and for the supply chain, ensuring delivery of supplies amidst shortages.

The report also dives deeper into internal misalignments, including those related to company-level priorities such as sustainability. The study also uncovered a surprising disconnect between executives and chief information officers (CIOs), who appear to have different views of the organization’s execution needs.

Interviewed executives reported Supply chain visibility and collaboration in the supply chainboth internal and external, were the two biggest pain points – with underlying organizational and supply chain misalignment.

Convergence is the need of the hour

According to the report, companies must Procurement and supply chain operations to address key pain points and build resilience. And it concludes with a discussion of necessity convergence — A unification of critical processes, information flows and technologies across the organization, the supply chain and the extended ecosystem.

Convergence, a growing talking point in c-suites and supply chains, is seen as a necessary step to close gaps and build greater alignment and resilience.

In a next post, we will dive deeper into the report, specifically the segment that examines the relationship between resilience and sustainability, and the importance of organizational and sourcing/supply chain alignment to these business priorities.

Download the full NC State University report – Supply chain convergence in a disruptive environment.[SG3]