Supply chains are shifting from profit-centric to purpose-driven. With this shift, supply chain officers (CSCOs) - according to Gartner - should focus on five actions to create a purpose-driven supply chain.
“Purpose-driven enterprises deliver benefits for stakeholders while also generating long-term profits. With this approach, supply chain leaders must consider their positive and negative impact across stakeholder groups and balance the trade-offs,” said Sarah Watt, senior director analyst with the Gartner Supply Chain practice.
Surveying 573 practitioners in supply chains and other functions in January and February 2021, Gartner found that 85% of supply chain leaders believe that the top priority for an enterprise purpose is to connect the customer through product offerings while providing positive societal and environmental impact.
Gartner’s Five Actions for CSCOs
1. Executive Commitment: without concrete actions supply chan leaders risk a loss of authenticity and employee trust. As a result, Gartner identifies that CSCOs should make purpose a vital part of the overall supply chain strategy, as well as processes for decision making and metrics.
2. Engagement in Portfolio Management: Gartner explains that decisions made about products, purpose and marketing positions impact supply chain organisations, which they must deliver on. If a product is marketed as sustainable the supply chain organisations must make sure that it is the case, as well as providing traceable evidence.
“CSCOs and their teams should play a more active role in product development and portfolio management. For example, the supply chain organization is uniquely equipped to review the product pipeline for unintended consequences or advise on raw materials selection,” Watt said.
3. Align Partner Ecosystem to Purpose: “an organisation cannot be fully purpose-driven unless its critical partners align to the same purpose,” said Gartner. Supply chains can amplify their purpose by collaboratively partnering across the ecosystem. In doing so supply chain can drive innovation, create new products and share values. “However, survey results show that less than half of supply chain leaders perceive ecosystem partnerships as a key factor for enabling purpose,” added Gartner.
4. Employee Engagement: “Employees will not buy into the purpose of the supply chain if they don’t feel included and heard,” commented Gartner. Therefore it is important for supply chain leaders to foster employee engagement, empowering them through decision-making processes and the opportunity to ask questions.
“Building a purpose-driven culture means providing employees with autonomy, decision-making principles, and opportunities to ask questions and contribute. This can be through innovation days, town hall meetings, open-door policies and one-on-ones. Internships and interviews must also be designed in a way that communicates the supply chain purpose to external and future candidates,” Watt said.
5. Be Accountable: “Purpose without accountability risks undermining the approach,” stated Gartner. Supply chain metrics that are focused on profitability and shareholder value should be counterbalanced with metrics that display interests for shareholder groups such as supplier engagement and diversity, equity and inclusion (DEI) metrics.
“Enterprises aren’t charities. Still, CSCOs and executive leaders need to decide if they want their purpose to enable long-term profits or if the enterprise is purely profit-centric, with purpose relegated to being an employee engagement tool. If they choose the former, they must implement the metrics to prove that they can walk the talk,” Watt concluded.