Leaders in Action Focus on Innovation, Sustainability and Risk

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By Stan Aronow , VP Distinguished Advisor

Gartner recently gathered supply chain and operations executives from six countries and multiple industries for two Leaders in Action events focused on innovation driving sustainable growth and managing upstream supply in a heightened risk environment.

A big THANK YOU to our gracious hosts: Ewan Andrew and team at Diageo for our Edinburgh event and Ann Ackerson and the BAE Systems team for our event in Washington, D.C.

There was so much to learn from the COOs and CSCOs in these rooms and I’ll do my best to distill the most interesting takeaways. We always kick off these events with some Gartner framing on the central topic, so I’ll start with a couple insights shared.

Sustainable Innovation: Are You Playing Defense or Offense?

Our hosts at Diageo view product innovation, supply chain operations and sustainability as parts of a whole and their operating committee members gave the crowd a master class on how to weave those threads into a cohesive fabric.

A broader look at the supply chain community reveals a continuum of perspectives on integrating sustainability into innovation. Simply put, some are playing defense — reacting to regulations and other brand risks — while others go on offense and leverage sustainable inputs, products and packaging to drive growth. The most forward-thinking make sustainability and circular economy principles key features of new-to-world offerings to capture business at the frontier.

Supply Chain Talent: Are Your Employees Feeling It?

Supply chain risks often cascade from underlying points of disruption. Many of our community members are struggling to retain key supply chain talent . ?We spent considerable time on this subject at the BAE Systems event.

For Western companies, some of this stems from geopolitical pressures. As the herd stampedes toward “China plus n” in response to heightened tensions, it is straining the workforces of established economies that long ago outsourced manufacturing-centric industries. It also impacts emerging economies, like Mexico and Vietnam, where the scale of the now-required industrial base does not yet exist.

Major demographic shifts shrinking the available labor pool are another secular trend that’s swung the pendulum of power away from companies and closer to workers. There is a reason why labor strikes make daily headlines in the business press.

And so, it’s not surprising to see a downtick in the willingness of supply chain workers to expend high discretionary effort at their jobs. What can we do about this? The best ideas shared in the room centered on better working conditions, flexible hours, subsidized transportation and buddy programs aimed at building inclusivity and friend networks.

What Else Did We Learn?

Here are some of the other key takeaways from the member sessions and group discussions at our two Leaders in Action events:

• Many of the leaders attending the Diageo event are driving significant workstreams on sustainable agriculture and materials, water stewardship and renewable energy with traditional competitors. One member mentioned that the competition lawyer observing their “coopetition-based” sessions was pushing the group to move faster.
• Some in the A&D industry refer to their commercial competitors as “competimates” and see enormous untapped potential to collaborate on the guidance provided to suppliers for cybersecurity protocols, Scope 3 greenhouse gas emissions management, etc. The regulatory environment drives many of these so called “primes” to use smaller, less capitalized, enterprises for nearly 50% of their spend.
• Having a proactive government relations organization integrated with supply chain was highlighted as a key differentiator at both events. Many told horror stories of government regulations written in ways logical to a bureaucrat, but senseless and infeasible to a supply chain practitioner. This trend is not going away anytime soon.
• One member uses a conceptual framework to drive the right amount of product innovation in their portfolio. A two-by-two with a scale on how new products will stretch internal capabilities crossed with the ability for customers to adopt them creates clarity on a spectrum ranging from limited-time line extensions to large breakthrough products.

It was an inspiring two days together at each of our Leaders in Action events and we look forward to continuing these discussions with the COO/CSCO community.

More supply chain insights:

• Download report to improve the employment value proposition to retain key supply chain talent
• Download report for a First 100-Day Plan for New Chief Supply Chain Officers
• How can we help you? Connect with Gartner for Supply Chain

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.