CSCOs missing opportunity to digitally reinvent supply chain, says Accenture
Many chief supply chain officers (CSCOs) are not leveraging their C-suite counterparts to help reinvent the supply chain function and transform it into an engine of new growth models and customer experiences, according to new research from Accenture.
The research report, Drive Your Own Disruption: Is your supply chain in sleep mode?, reveals that the 900 supply chain executives surveyed were more likely to say that they see their function in two years as a cost efficiency driver (60%) or a support function (68%) than as a competitive differentiator (48%) or a growth enabler (53%).
It means that many CSCOs could be leaving significant value on the table for their organisations.
“Supply chain executives should take no comfort in being categorised as a support function,” said Mohammed (Mo) Hajibashi, a managing director at Accenture and global Supply Chain lead in its Products industry practice.
“In this digital era where customers demand speed to market and hyper-personalisation, these executives need to ensure that their supply chain function is not only a key differentiator but also ensures the sustained growth of their organisations.
“The fast and efficient adoption of the right new technologies that enable a new way of working, along with increased C-suite engagement with the supply chain function, are the keys to achieving growth via new digital business models that create new customer experiences, craved by the consumer.”
Accenture research found that 80% of the supply chain executives surveyed identify the chief information officer or chief technology officer – not the CEO, chief operating officer (COO) or chief financial officer (CFO) – as key stakeholders, even despite the major role the CFO has in making technology investment decisions and the COO’s role in designing the operating model.
Furthermore, in many organisations, the supply chain isn’t seen as a driver of differentiation and aggressive growth.
Meanwhile, the CSCOs blame the absence of a clear business strategy (cited by 43% of CSCOs surveyed), together with an inadequately skilled workforce (48%) and incompatible legacy systems (44%), for their function’s inability to drive value for the organisation.
According to the report, CSCOs have an opportunity to work with the full C-suite to overcome three core challenges – leadership, labour and legacy technology – and move their function toward better and more strategic partnerships that will provide the organisation with increased value-driving potential.
It highlighted the following areas for CSCOs to concentrate on:
Leadership - the CSCO will need to be better aligned with business strategy and build a new and productive working relationship with the executives responsible for long-term digital investment: the CFO and COO.
Labour - CSCOs need to build a workforce that focuses on core supply chain workers, “adaptive” (part-time and on-demand) workers and artificial intelligence / robotics — all working together to drive productivity at speed. The CSCO will also need to leverage their C-suite connections to secure support for a reskilling strategy founded on continuous learning.
Legacy Technology - digitally decoupling legacy systems provides a less-resource-intensive and more impactful way to drive agility than spending on new, more compatible systems. CSCOs can start by decoupling data from their legacy IT systems, replicating it and moving it, in real time, to cloud-based data “lakes” that are accessible to customers.
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”