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Supply Chain Uncertainly Leads to Losses

Supply Chain Uncertainty Leads to Losses

Nov. 13, 2023
Gartner survey shows that supply chains that are antifragile can find opportunities in uncertainty.

Supply chain organizations that achieve an antifragile state not only survive, but benefit, from uncertainty. However, only 9% of supply chain organizations expect to achieve revenue gains due to uncertainty, according to a survey by Gartner, Inc. 

Antifragility can transform how supply chains perform in uncertain times in support of a growth agenda, explains Gartner.. Antifragility provides the ability to gain because of exposure to uncertainty. The bigger the uncertainty exposure, the more opportunity to gain.

Gartner concluded a survey of 164 supply chain professionals in June 2023 to assess how supply chains cope with uncertainty. The survey data revealed that 28% of supply chains expected no gain or loss in revenue, while 63% of respondents expected a loss of revenue due to exposure to uncertainty

“An antifragile supply chain starts with the Chief Supply Chain Officer’s mindset,” said  Tim Payne, vice president analyst in Gartner's Supply Chain Practice, in a statement.  “Rather than trying to keep uncertainty out of the supply chain, antifragile supply chains embrace uncertainty with the objective of learning, evolving and adapting their capabilities based on their improved knowledge of it.” 

The analysis identified a select group of antifragile capabilities for Chief Supply Chain Officers (CSCOs) to deploy that are 2.1 to 4.9 times more likely to gain revenue for their organizations when confronted with uncertainty.

“The inability to cope with uncertainty is driven by a misallocation of initiatives to the wrong strategy,” said Payne. “Nearly half of respondents said that more than 50% of their supply chains’ key capabilities are set up to attempt to keep uncertainty outside the supply chain. This overinvestment in a barrier to keep uncertainty out actually stifles the ability to learn from it, keeping most supply chains today in a fragile state.”

Antifragile Capabilities to Cope with Uncertainty  

CSCOs must assess their current ability to cope with uncertainty so that appropriate strategies can be applied to evolve towards the antifragile supply chain state.  The research shows that supply chains can be in either a fragile, resilient or antifragile state. While resilient supply chains may not lose during periods of uncertainty, the focus remains on keeping most uncertainty out, reducing the ability of organizations to learn from it often leading to “resiliency fatigue.”

“An antifragile mindset changes how CSCOs approach and shape their capabilities, including in areas such as integrated planning, ROI calculations, supply chain redundancy and assessing uncertainty,” said Payne. “Our research shows that a select group of antifragile capabilities are especially effective in moving a supply chain into the antifragile state.”  

 The survey data revealed the top six antifragile capabilities that are highly significant in driving a supply chain towards gains during uncertainty. These antifragile capabilities lead to a significantly greater likelihood of positive revenue gains when exposed to uncertainty, compared with the fragile or resilient versions of these capabilities.

The most impactful antifragile supply chain capabilities identified are:

  • Decision Processes and Collaboration: Enabling dynamic decision processes during uncertainty (4.9x more likely to have a positive revenue impact).
  • Calculating ROI for Supply Chain Investments: Assessing the value of investing at different times due to uncertainty (4.5x).
  • Managing the Assessment of Uncertainty: Performing a high degree of experimentation on the supply chain to stress test it (3.7x).
  • Supply Chain Redundancy: Viewing redundancy (e.g., inventory, capacity, multiple suppliers) as an investment opportunity (3.6x).
  • Supply Chain Planning: A focus on end-to-end (E2E) planning policies (probabilities, options, thresholds) in the midterm and accurate functional short-term planning (2.5x).
  • Monitoring, Adjustments and Responsiveness: Monitoring at “arm’s length” to intervene only if policies are breached and empower local stakeholders to adjust within policies (2.1x).