Offset Strategy for the Supply Chain and 5 Key Challenges to Address

After three years, the Gartner Supply Chain Symposium/Xpo™ was back live on September 27 -29 2022 in London, UK, with a focus on delivering the must-have insights, strategies and frameworks for CSCOs and supply chain leaders to bring continued agility, resilience and adaptability to their organizations. The Opening Keynote on September 27th was led by Tom Enright, VP Analyst at Gartner, who highlighted the importance of offset strategies to the resilience and success of supply chain management.  

Enright started the session by reminding the audience where we are and where we’ve been, having survived some of the most volatile and uncertain times in recent history. During these challenging times, supply chain leaders have kept the world running delivering food, materials, medicine, supplies and energy. Yet the journey is not done, and we’re in the face of war, energy crisis, inflation, disruption, and acceleration.  

“Our world is more connected now than in any other time in history, and it’s leading to accelerating changes in how people live and work together; in economic and trade networks, in our impact on the environment, and the evolution of advanced technology. These changes continue to accelerate exponentially and are not going to stop.” – said Enright. To provide relief in the face of ongoing uncertainty, the speaker reacquainted the audience with the concept of offset strategies, defined as a plan to counteract targeted, urgent and uncontrollable forces when traditional strategies fail. 

Enright explained that offset strategies help leaders respond to urgent challenges that are on the immediate horizon, with an unconventional approach to solving problems. As the world accelerates and challenges continue to disrupt the supply chain, offset strategies are actionable and deployable today to help teams to get a competitive edge and stay ahead of new challenges. 

“It’s time to stop coping. It’s time to act to get ahead of the accelerating change,” said Enright, before highlighting 5 challenges that Gartner believes supply chains should be addressing through the use of offset strategies: 

1. Cognitive overload 
2. Evolving customer expectations 
3. Technology change 
4. Supply chain cyber risk 
5. Energy Instability 

Gartner’s analyst explained that by using an offset strategy to deliver at least one win in each of these five areas, leaders can keep pace with accelerating change. The steps to take in an offset strategy: first, Sense; consider the context and the problems confronting you. Then, Shift; choose an unconventional or untried offset action. Finally, Steer; manage the new course to deliver value. 

Let’s take a look at the first three challenges, the current landscape in these key areas, and the shift and steering direction that Gartner suggests supply chain leaders take to get on the right track. 

1. Cognitive Overload 

Gartner research showed that 87% of supply chain professionals are expecting complexity to continue to increase over the next two years, and 83% of the workforce feel overwhelmed. Enright highlighted a shift is required to respond to complexity with simplicity; reducing what we do and how we go about working together.  

To steer this in a new direction, it’s important to put constraints on key variables of decision making, such as time to make decisions, information to collect, escalations and number of people to involve. “In a world of decision making, less is more,” affirmed Enright. 

The speaker highlighted how leading organizations are investing in technology and constraining decision making. Companies are investing in technology and offsetting the challenges of complexity in the supply chain planning process by using artificial intelligence (AI) and machine learning (ML) to shift the burden of decision making and reduce the cognitive overload. 

2. Evolving customer expectations 

Supply chain professionals have a mission-critical role to deliver value for customers and for their business. For decades, functional efficiency and cost optimization have been the centric focus of the supply chain, but the last two years have hit organizations hard, and Gartner believes the ‘just-in time approach’ is no longer fit for purpose. Current operating models are unstable and customer expectations are changing, so there is a call for a shift from putting cost and efficiency at the center, i.e., “just in time,” to putting the customer at the center: “just the customer.”  

Steering the approach will mean optimizing customer solutions – sourcing policies, priorities, and networks to deliver value, rather than simply focusing on driving down cost, to better respond to the customer. Supply chain teams will need to focus on delivering unique commercial offerings that enable customers to achieve better outcomes. 

3. Technology change 

Regarding the role that technology will play in making changes possible, Enright pointed out that innovative and highly integrated solutions are available for leaders to successfully run their supply chains – however, the challenge lies in adopting technology and getting the most from these investments.  

“The biggest challenge facing supply chain leaders in the technology space is not necessarily the technology itself but embracing and adapting to the new technology and envisioning new ways of doing business,” said Enright. 

Gartner predicts 80% of companies will suffer significant value loss due to a failure to merge their digital supply chain twin and control tower initiatives. The offset for technology change requires a shift from looking at the past to focus on the future and envisioning how technology will change how we work. “Steering our supply chains in the right direction requires us to recalibrate the relationship between humans and technology.” 

Enright explained how global companies like Lenovo are using ML and AI technology to run predictive analyses and simulation for decision making support, while using automation to enhance workflow operations. He said that the key to unlocking the possibilities that technology brings is within adaptability; i.e., the skill, inspiration, and the will to implement new technologies. “Inspiring employees in the next generation of technology is our number one goal in this offset strategy.” 

Leaders are in a critical position to sense the landscape, shift to a new mindset and steer organizations into the future to carefully invest in the right technology, infrastructure, and people.  

Helping you to solve today’s critical challenges 

The gap is widening between digital laggards and digital leaders, and to close that gap it’s critical for leaders to embrace technology and unleash the power of digital – to empower teams and better serve customers.   

Digital acceleration of the supply chain is not only a logical next step, it is a critical action organizations must take. As complexity increases, it is a near impossible challenge for supply chain leaders to handle all the uncertainty and volatility through manual processes, using rigid tools like spreadsheets and ERPs. Technology presents a pathway forward for leaders to connect data, decisions, and operations, with the ability to harness advanced capabilities like ML and AI in practical ways to augment human decision making and automate operational best practices. 

At John Galt Solutions, we focus on helping companies like yours create the right supply chain planning strategy wherever you are in your transformation journey. Our Atlas Planning Platform provides a comprehensive end-to-end supply chain planning solution for companies across all industries and sizes to help them solve today’s critical operational challenges. Let’s take a look at how your business goals can be realized through accelerated digital transformation.