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The four key practices of supply chain strategies, according to Accenture

By Catherine Knowles
Wed 5 Aug 2020
FYI, this story is more than a year old

Supply chains can move beyond creating efficiency to bring long lasting growth to businesses, and this is increasingly important following COVID-19, according to a new report from Accenture.

However, Accenture finds that only 10% of companies are on ‘the right path’ to building a customer-centric supply chain that is resilient. This is especially important to note as COVID-19 has magnified challenges and changing global demands.

The companies in the report have invested NZD$236 million, on average, over the past three years to transform their supply chains but only 10% of those surveyed are effectively using their investments to transform their supply chains to meet increasing and evolving customer experience demands.

The Accenture analysis found that these leading companies follow four key practices that cement them as leaders among their peers. First, they begin with the customer in mind.

Accenture says these companies base their supply chain strategy on what the customer values, which is a more complex endeavour than ever before as customer experiences are now purpose-led and personalised.

More than two-thirds (71%) of the leading companies build supply chain strategies to deliver experiences linked to key customer value propositions, such as sustainability, data privacy/security and customised delivery and service.

Next, they turn insight into innovation. This includes investing in building analytical, asset-light collaboration architectures, which could significantly increase the supply chain’s impact on revenue and shared success within and outside their ecosystems.

In fact, more than half of the average revenue growth that the leading companies experienced came from collaboration tools and data-driven insight technologies, Accenture states.

They also develop targeted capabilities. All of these leading companies, whether B2B or B2C, have built capabilities to segment customers and products in real-time, according to Accenture.

They’ve partnered with procurement to design products and services and identify potential suppliers to achieve target margins and also invest in advanced cybersecurity capabilities to address the growing security threats from data breaches and data theft.

Finally they engage the CEO beyond conversation. Support from the top is key to true supply chain transformation, Accenture states, and the CEOs of these leading companies are more likely to drive supply chain discussions with their boards and translate those discussions into results.

More than half (53%) of these CEOs allocate funding to drive supply chain innovation, and 49% allocate top talent to accelerate supply chain transformation.

Accenture’s financial analysis of these leaders has found that during the period from 2017-2019, they have outperformed other companies in several areas.

For instance, they grew revenues 13%, on average, compared with an average revenue decline of 5% for the other companies.

Moreover, their supply chain contribution to total revenue was triple that of the other companies’ (52% versus 17%); and they delivered EBITDA margins 2.5% higher than those of the other companies.

Accenture New Zealand technology lead Paul Hearnden says, “The arrival of COVID-19 has forced many New Zealand organisations to rapidly adapt and manage change.

"As Kiwis saw with the run on supermarkets, one of the most significant lessons has been around the need for building and maintaining an agile supply chain and network that is able to move quickly and flexibly.

“New Zealand companies have done well to respond to the massive disruption and as they begin to adjust and future proof their models, they need to take into account: agility and speed, including how intelligence is shared across the supply chain; sustainability of the production loop from recycle to reuse; localisation of suppliers to reduce risk and transportation; and partnering for the long term with companies who are resilient and focused on delivery of outcomes in good and bad times.”

The report is based on a global survey of 900 senior executives from nine major industries across 10 geographies and is titled “A License for Growth: Customer-centric supply chains”.

It identifies major supply chain challenges that have only been magnified by the ongoing COVID-19 global crisis including: inflexibility to deliver undifferentiated customer offerings; poor ecosystem design lacking the right partners; and a siloed technology architecture that stifles collaboration and co-innovation.

The report also outlines leading practices of a few selected companies that have transformed their supply chains and created a customer experience that is both purpose-led and focused on growth.

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