How Supply Chains Can Thrive in a Resource Constrained World

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By Laura Rainier , Sr Director Analyst

The concept of resource constraints is a bit like pickleball in 2024 — once you become aware of the phenomenon, you begin to see it everywhere.?

Gartner began research around resource constraints in supply chains with a thesis: that geopolitical turbulence and climate change are converging to make our supply chains less reliable and the goods and services they provide scarcer. Our goal was to illuminate how supply chain leaders are effectively managing these risks today and mitigating their future impacts. Shortly after, attacks in the Red Sea impacted key shipping routes, while a severe drought threatened passage through the Panama Canal. Examples of these challenges abounded.?

Constrained Resources

The resources we rely on to make and move our products are no longer reliable and will be more uncertain in the future.

In place of the Red Sea, we could have told the story of energy, cotton, wheat or semiconductors. This resource disruption predictably affects our supply chain effectiveness. A significant number of supply chain leaders report that this challenge is already impacting their cost to serve. And 64% of supply chain leaders who responded to the 2024 Gartner Geopolitical Risks Impacting the Supply Chain Survey expect geopolitical risks to negatively impact total cost to serve in the next three years1.

Visionary supply chains are assessing the potential risk of resource constraints and building strategies to address them. However, few supply chain leaders highlight the issue as a key focus. For example, only 28% of supply chain leaders responding to our 2023 Future of Supply Chain Survey cited “raw material availability due to geopolitical changes” as a key challenge in the next one to three years2.

Three Key Actions

The challenge is a Catch-22. Current disruptions, including those caused by resource constraints, require urgent action, and prevent the supply chain from applying resources to address long-term threats. So how should supply chain leaders navigate this environment and effectively balance long-term threats with short-term firefighting? Our research recommends three key actions:

1. Effectively addressing resource constraints, like most things worth doing, requires investment and commitment. To secure this, don’t fight the enterprise’s tendency to prioritize short-term issues. Leverage it to motivate investment and action by temporarily deprioritizing long-term constraints, such as anticipated limits on greenhouse gas (GHG) emissions.

Conduct a critical resource assessment, as illustrated in the figure below, to surface urgent resource constraints already affecting your supply chain. Assess the importance to business and time to scarcity. Focus the business case for investment on the most urgent and important constraints. You’ll have an easier time getting enterprise support, because it rests upon, rather than fights against, the enterprise impulse to focus on the short term.

2.? While the common approach to addressing supply chain risks is, unsurprisingly, to take action in the supply chain, the true potential for change lies in design. Make changes in product and supply chain design, where a small shift delivers outsized impacts. Design solutions that address both short- and long-term constraints.?(see figure below).?

We’re seeing supply chain leaders increasingly engaged in the design and new product introduction process. Use tools like circular design principles and renewable material inputs to design out resource constraints for future products.

Also consider how thoughtful product design can mitigate exposure to capacity constraints due to limited skilled labor, assets or equipment. For example, during the height of the chip crisis, Intel adjusted the design of its Ajinomoto build-up film (ABF) substrate to alleviate capacity constraints and increase throughput. Attaching certain capacitors to both sides of the substrate, rather than just one side, enabled its Vietnam assembly test factory to complete chip assembly more than 80% faster, while at the same time freeing up its substrate suppliers who are constrained on capacity. 3

3. Still, even organizations with a mandate and design solutions fail because change is hard, often met with internal drag due to resistance to change and knowledge barriers. Leading supply chains overcome this by looking outward and finding opportunities to learn. Engage the marketplace — from suppliers to innovative start-ups and solution providers — to overcome internal barriers to implementing and scaling innovative solutions.

Collaborate with ecosystem partners, through win-win partnerships that unlock collective progress. When a redesign cannot be immediately implemented, leaders build bridge solutions, which mitigate exposure to resource constraints until they can be fully “designed out.” Meanwhile, they build momentum by identifying and exploiting co-benefits of improved designs.

Resource constraints are a real business risk that threaten supply chain effectiveness and future business viability. ?As a result, to thrive in a resource constrained world, supply chain leaders must lean on their risk management and sustainability processes. ?And it turns out, addressing the root cause of resource constraints naturally leads to environmental sustainability. In this way, sustainability is no longer an altruistic initiative by businesses to make the world a better place. Rather, resource constraints are a business problem for which sustainability is the solution. ?

More Supply Chain Resources

• Download the Supply Chain Risk Guide
• Tactics to Counteract Supply Instability
• Have a question? Let's connect

This newsletter provides an opportunity for Gartner analysts to test ideas and move research forward. Some comments or opinions expressed hereunder are those of individual analysts and do not always represent the views of Gartner, Inc. or its management.