As they strive to create resilience, build sustainability and drive top-line growth, supply chain decision-makers are caught in a balancing act of competing priorities. To analyze the tradeoffs, many are investing in digital technologies.

Often, however, that investment has yet to yield positive results. According to a Gartner survey of 600 supply chain decision-makers, the use of digital models to analyze trade-offs has made no meaningful impact on operations.

Despite using multiple forms of digital technology for tradeoff analysis, global decision-makers make 8% more bad decisions than good ones. Exercises such as “what-if” analyses, scenario modeling and simulations haven’t significantly improved the likelihood of making good decisions.

Additionally, only 10% of global decision-makers surveyed have the requisite process adherence, data-derived models and tradeoff clarity in place. Their digital decision models are only capturing about 20% of actual, on-the-ground processes that impact the key performance indicators they’re optimizing for. 

Technology should help, not hurt, decision-making, so why is it impeding progress?

The three main areas of investment by supply chain leaders are defining end-to-end processes, visibility and analytics. Together they can boost the likelihood of making good decisions by 206%. Yet only 10% of all decision-makers surveyed actually had all three of those key enablers in place.

On average, they estimated, staff deviates from defined processes about 30% to 40% of the time. As a result, digital decision models aren’t the reality for many supply chains. Without substantial progress on process adherence and data-derived model use, investments in tradeoff clarity will provide little value.

Supply chains have a choice: continue fumbling forward with the same investments, knowing the high hurdles that must be overcome to realize return, or realign investments toward empowering localized cross-functional decision-making.

Local leaders can provide visibility into the invisible, undigitized (and sometimes undigitizable) information that impacts a supply chain’s KPIs. Human visibility fuels knowledge of which variables to consider, as well as the accuracy of all underlying data.

Granting local leaders the power to make decisions — using current technology with no new investments — is more effective than working top-down, from the global end-to-end level. Localized, cross-functional decision-makers make good decisions 11% more often than their global counterparts, and they make good ones 14% more often than bad ones.

It’s important to note that our research doesn’t recommend that supply chain leaders abandon global decision-making or re-invent their entire digital technology strategy. Instead, it points supply chain leaders to an alternative path: realizing return on investment from digital investments by supporting localized decision-makers with digital tradeoff analysis. They can do so by:

• Determining which decisions should be made at a local, cross-functional level. Localize cross-functional decisions where product and customer complexity is high, and where analog process knowledge and in-person collaborations are important to the decision. Decisions should remain global when they’re straightforward, mostly digitized or require little in-person collaboration.
• Incorporating human visibility into the digital analysis of those decisions. Empower local, cross-functional decision makers to make and execute decisions. Then collect performance results and conduct a “what-if” analysis comparing the local approach against what outcomes the global decision-maker would have expected.
• Digitizing supply chain processes. Only about 40% to 50% of all relevant processes have been fully digitized, a fundamental prerequisite to being able to use data-derived models. A strategy to accelerate digitization of supply chain processes is to democratize robotic process automation (RPA) throughout the supply chain.

Through localized, cross-functional decision-making, supply chain leaders can optimize each local, cross-functional segment and close the information gap by building stronger, more accurate and more efficient global outcomes. By augmenting tradeoff analysis technology, local decision makers are 83% more likely to make a good decision than a bad one.

Suzie Petrusic is senior director analyst in the Gartner Supply Chain Practice.