How to develop purpose-driven supply chains

24 August 2021

Supply chains must embrace collaboration and show executive commitment to successfully become “purpose driven”, according to Gartner.

A study by Gartner said enterprises are moving from operating profit-centric businesses to being purpose-driven, with the aim of delivering benefits to all stakeholders.

The report is based on a survey of 573 practitioners in supply chains and other functions carried out in January and February this year. The vast majority (85%) of supply chain leaders believed a business’s main purpose should be to connect to the customer through products while having a positive impact on society and the environment. The second main priority was investor return, cited by 61% of survey respondents.

In its Purpose-driven supply chains deliver value to stakeholders report, Gartner listed five actions companies should focus on to create a purpose-driven supply chain.

This includes showing executive commitment, with chief supply chain officer’s making “purpose” a vital part of the overall supply chain strategy, as well as the decision-making processes and metrics.

Chief supply chain officers should be more active in product development to ensure promises are delivered on, such as being able to provide traceability and evidence to back a product marketed as made from recycled material.

Supply chains must also embrace collaborative working and make sure all critical partners are aligned to being purpose-driven, Garner said. This also leads to innovation, the creation of new products and shared value.

Employee engagement in a purpose-driven supply chain must be fostered by getting workers involved in decision-making processes and providing the opportunity to ask questions. The purpose-driven culture of the supply chain should also be communicated when attracting future talent, the report recommended.

Accountability is also required to avoid the risk of stakeholders viewing a purpose-driven agenda simply as a marketing ploy.

Sarah Watt, senior director analyst at the Gartner Supply Chain practice, said: “Purpose-driven enterprises deliver benefits for stakeholders while also generating long-term profits. With this approach, supply chain leaders must consider their positive and negative impact across stakeholder groups and balance the trade-offs.”

Gartner’s report also recommended that supply chain metrics focus on profitability and shareholder value, such as revenue and cash flow, and must be balanced by metrics that display the interests of other shareholder groups, such as supplier engagement and diversity, equity and inclusion.

“Enterprises aren’t charities,” said Watt. “Still, chief supply chain officers and executive leaders need to decide if they want their purpose to enable long-term profits, or if the enterprise is purely profit-centric, with purpose relegated to being an employee engagement tool. If they choose the former, they must implement the metrics to prove that they can walk the talk.”

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