How to reclaim supply chain’s influence as a driver of growth

EY research shows diverging views between the C-suite and supply chain executives. Here’s how to stay competitive and not complacent.

During the pandemic, supply chain issues quickly became a top priority on corporate agendas, and supply chain leadership rose to the occasion and delivered significant value. However, a new EY survey of C-suite and supply chain executives suggests that, as the worst of the pandemic subsides, the sense of urgency around this issue may be giving way to complacency.

Businesses continue to face global disruptions and increased complexity in supply chains. These supply chain issues are more intense and more interconnected, arising rapidly and often simultaneously, and with a more widespread impact. Such structural changes demand that organizations mobilize their supply chains differently and invest in them accordingly.

However, the influence of supply chain leaders may be waning, as a new EY Supply Chain Survey reveals, and the C-suite increasingly views their strategic importance through the narrow lens of cost management. In this business climate, agile, integrated, high-performing supply chains can be strategic differentiators — requiring a unified approach on how companies are investing in, and measuring supply chain integration, such as through the use of digital, AI and automation. 

Before COVID-19, boards only considered supply chain disruption their 10th most significant business risk, and the penalty for inaction was steep. Today, supply chain leaders must recapture the momentum for change and reposition themselves as vital allies driving business expansion. Based on our findings, we provide five key focus areas to reframe discussions about supply chain, positioning it as an engine of growth rather than merely managing it as a cost center. 

Consensus on priorities but disconnect on how to achieve them

Modernizing the supply chain through technology and digitalization is one of the most pressing challenges for supply chain leaders in the past year. Leaders overall consider supply chain modernization through tech/digital a key priority today.

Figure 1: Top supply chain challenges and priorities

But modernization is happening by function, rather than holistically. In addition, highly manual processes for internal and external collaboration are frustrating supply chain integration: 22% of supply chain leaders say their digital connectivity to suppliers is limited to sharing emails and spreadsheets and a further 42% say they are starting to adopt digital tools and/or cloud-based platforms for various supply chain functions. Embracing technologies such as AI, cloud and data platforms is an imperative for competitiveness.

Our research also revealed concerning gaps between the perceptions of C-suite and supply chain executives in three key areas:

These disconnects with the integrated supply chain are significant enough to derail performance, diminish morale and restrict the strategic use of the supply chain to enhance revenue growth and elevate customer satisfaction. So how are leading companies handling this?

Differentiated supply chains are pivotal assets that drive revenue growth — not just cost savings. Leaders must be aligned on the business goals that the supply chain achieves, how those goals are enabled through technology and integration, and how success is measured. Supply chain executives must reassert their place at the decision-making table and collectively help set a trajectory for future innovation and expansion. 

Paul Barsch, Assistant Director, Ernst & Young LLP, also contributed to developing this article.