There’s little disagreement among leading manufacturers about what they must do to cope with ongoing supply chain disruptions. But there appears to be a significant gap between intention and action.

COVID-19 may have subsided, but its effects on global commerce are still very much with us. To learn how manufacturers are redesigning their supply chains in the face of those challenges, the Kearney consultancy teamed up with the World Economic Fund to survey 300 operations executives.

The resulting report, “From Disruption to Opportunity: Strategies for Rewiring Global Value Chains,” identifies a strategic shift in five key areas, including from:

• Global to “globally connected, multi-local value chains”;

• “Doing” digital to “being” digital across end-to-end operations;

• Economies of scale to “economies of skill”;

• Regulatory compliance to “innovative sustainability”, and

• Being cost-driven to being “customer value-driven.”

Do those conclusions signify a constructive rethinking of global supply chains, or are they just a bunch of buzzwordy business speak? The survey finds that manufacturers have indeed made “significant progress” toward acquiring the strength and flexibility needed to cope with future market turbulence. At the same time, it identifies “a gap between strategic intent and operational delivery, largely due to the scale and complexity of the necessary changes, along with opportunity costs, in the form of time, energy and resources.”

To varying degrees, reality undercuts rhetoric in every one of the five trends set out in the survey:

• In the move to regionalize production, just 28% of respondents expect to have nearly all “in-region, for-region” operations in place by 2030.

• In the push for “being” digital across end-to-end operations, just 1% have eliminated manual spreadsheets to date. 

• In the effort to upskill the workforce to meet new supply chain requirements, only 23% think they’ll have the requisite skills in place by 2030.

• In the desire to achieve “innovative sustainability,” only 14% are redesigning their manufacturing networks to reduce Scope 3 emissions — those generated by their supply chain partners.

• In the shift from cost to customer value as the chief driver of operations, just 15% cite “tangible actions” taken to strengthen performance, resilience and sustainability.

Kearney partner and report co-author Per Hong says researchers went into the project assuming that gaps existed between aspiration and tangible results. Because of the complexity of global supply chains, he says, “the strategic ambition that we aspire to achieve is different from the pace at which we can drive the change.”

On the positive side, Hong sees “a lot of excellence” among supply chain leaders as they struggle to weigh the tradeoffs among cost, performance, resilience and sustainability.

Still, cost can’t be dismissed as a key consideration in deciding where to site plants and distribution centers. The report quotes Konrad Bauer, senior vice president of global business services with Thermo Fisher Scientific, as saying that cost “continues to play a pivotal role in shaping supply chain strategies, with the impact of localization costs frequently overlooked. While there has been an increase in localized manufacturing in Europe and the U.S., a considerable portion of it is reverting to previous practices.”

As for the desire to become truly digital in operations, Hong says that sentiment was widespread among the executives surveyed, with a particular emphasis on the need for end-to-end supply chain visibility aided by artificial intelligence. Still, managers continue to employ “Excel workarounds” as they struggle to jettison manual processes that generate inefficiencies and frustrate efforts to build resilience at scale.

Along with the desire for automation and new technology comes a need for human workers with a whole new set of skills. The Kearney survey cites WEF’s 2023 “Future of Jobs” report in identifying the top five skills coveted by organizations today: analytical thinking; creative thinking; resilience, flexibility and agility; motivation and self-awareness, and curiosity and lifelong learning. Not too much to ask for, at a time when just finding the people to staff a wide range of supply chain jobs is hard enough. Hong recalls the words of one senior supply chain executive: “We’re not in a war for talent; we’re in a war for bodies.”

Why aren’t more leaders following through on aspirations to transform their manufacturing supply chains? Hong says many face the reality of limited working capital, even as an uncertain environment makes it tough to understand which initiatives should be made a priority. It’s more a question of “prevalent limiting factors than a lack of willingness or desire,” he says. “Universally, nearly everyone understands what the potential could be. The reality on the ground is that I still need to make tradeoffs and choices.”

The study’s authors urge patience as the progress of supply chain transformation inches forward. “The implementation curve on value chain optimization is steep,” they write, “and the journey towards matching ambition with the robust and prosperous outcomes outlined in this paper does not happen overnight.”