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80% of supply chain not accounted for in current digital decision models
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The vast majority of the supply chain environment is uncaptured by supply chain decision makers’ current digital models, resulting in digital trade-off analysis failing to improve outcomes, despite the potentially transformative capabilities of these new tools.

Digital trade-off analysis includes things such as what-if analysis, scenario modeling, or simulations. Digital trade-off analysis offers improvements in analytical power and clarity when processes are adhered to and enabled with high-quality data.

“The ‘digital-to-reality gap’ will continue to hamper supply chain performance objectives unless technology investments are complemented by enabling decision support for local, cross-functional decision makers, who have better visibility into the hidden and often undigitized elements of the supply chain,” said Suzie Petrusic, Senior Director Analyst in Gartner’s Supply Chain Practice.

Gartner’s research, based on an analysis of 600 survey responses of supply chain decision makers received in December 2022, found that current use of digital models to analyze trade-offs made no meaningful impact on the rate of good decision outcomes.

Slightly more bad decisions were made with the use of digital tradeoff analysis than without and marginally increased the percentage of bad decision outcomes. The research defined a “good” decision as one that led to and met the decision maker’s expected supply chain performance and cost outcomes with low decision maker regret (See Figure 1).

Figure 1: Digital Analysis of Trade Offs on CSCO Decision Making

Source: Gartner (September 2023)

“More than half of supply chain leaders reliant on digital technology to make a recent strategic decision (e.g., S&OP decisions, network design decisions, or disruption response decisions) told us that they felt they would have landed on better decision outcomes without the use of their models, and our analysis suggests that they are correct,” said Petrusic.

“The fault is not just with technology itself, but rather with the incomplete picture of the supply chain that these digital tools capture,” added Petrusic. “Up to 80% of the actual, on-the-ground processes that these technology investments are meant to be ‘optimizing’ are not even reflected in current digital models.”

CSCOs are faced with two primary paths forward to improve end-to-end visibility and better decision outcomes: global or local, cross-functional strategies. A global strategy continues down the path of full digitalization including distilling complex end-to-end processes into a fully digital model and achieving a level of process adherence that has thus far eluded supply chain leaders.

A second strategy calls for empowering localized and cross-functional leaders already present throughout an organization’s supply chain with decision rights. These decision makers, who benefit from visibility unavailable to their global counterparts and can make use of the technology already available to them, have been shown to make good decisions 11% more often than global, end-to-end decision makers. By augmenting this human visibility through digital trade-off analysis technology, these local decision makers are 83% more likely to make a good decision than a bad one.

“A shift to relying more on a localized approach does not mean that CSCOs’ digital or globalization playbooks need to be reinvented, but it does suggest that some adjustments can be made where localized, bottom-up processes can provide both a more realistic picture on the ground and a better basis for digitizing process segments that would otherwise elude a top-down, global approach,” said Petrusic.

For CSCOs concerned with improving strategic decision-making and digital ROI, Petrusic recommends:

  1. Localizing more strategic decisions to a cross-functional level
  2. Digitizing the human element of local, cross-functional decision models
  3. Accelerating the digitization of supply chain’s end-to-end processes

Image by Fathromi Ramdlon from Pixabay

Quarter of supply chain C-Suite roles filled by women
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Women have made a strong comeback to the supply chain workforce in 2023, with gains at nearly every level of leadership, but particularly prominent at the C-Suite and executive level, where 26% of those roles (CSCO, SVP, EVP, CPO) are now filled by women, an all-time high and up from 19% in 2022.

Gartner’s eighth annual Women in Supply Chain Survey was conducted from February to March of 2023 and surveyed 225 supply chain leaders. The survey showed that women now make up 41% of the supply chain workforce, up from 39% in 2022 (See Figure 1). However, frontline representation continues to lag, with women filling just 31% of these roles.

“It’s particularly encouraging to see women make gains at the senior executive level, as we know that when a woman holds the top supply chain position this has a positive correlation with more women in leadership and in all roles through that organization,” said Caroline Chumakov, Director Analyst in the Gartner Supply Chain Practice.

An increase in organizational goals around gender equality since 2020, as well as growth in the number of supply chain owned initiatives are clearly having a measurably positive impact on women in supply chain. The data suggests a virtuous cycle is possible as more women reach top leadership roles in their supply chain organizations, with a clear finding this year that a woman in the senior-most role leads to more women in leadership and all roles within the organization.

“This connection between female leaders and the effect on women in the workforce has positive implications for how supply chain leaders can better design their efforts to improve representation of women in supply chain,” said Chumakov.

Chief Supply Chain Officers (CSCOs) routinely report challenges with attrition broadly at frontline roles in manufacturing and logistics, particularly when compared to roles at desk-based jobs. The ability to attract more women to frontline roles—and especially in leadership roles in the physical operations ranks—could form a material competitive advantage over those who are unable to do so.

Providing flexibility was the most effective initiative in attracting and retaining women to frontline roles, significantly outperforming other areas such as benefits, employee engagement programs and even a focus on pay equity. However, only 41% of supply chain leaders had implemented an initiative dedicated to workplace flexibility at their organizations.

“There remains a mismatch between employers’ fears of chaos and instability as a result of workplace flexibility policies and the realities of what we see in our research and case studies of successful supply chain organizations. What we see in our research is that flexibility is benefiting both the organization and their female employees,” said Chumakov.

In addition to baseline data about the number of women at all levels of supply chain roles, Gartner asked questions about representation of women from underrepresented races and ethnicities, practices that increase the success of women in supply chain roles, pay equity and transparency, frontline engagement practices for women in on-site roles and attrition challenges specific to women.

Gartner partnered on the survey with AWESOME, a U.S.-based nonprofit organization focused on advancing women’s supply chain leadership and boom!, a U.K.-based global community formed to support and link women in the supply chain profession.

Image by StartupStockPhotos from Pixabay

Supply chain productivity declines ‘cannot be solved by technology alone’
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New technologies ranging from smart robotics to actionable AI have the potential to transform the supply chain function, but they will fail to lift historically low levels of labor productivity unless utilised as part of a broader strategy.

Gartner experts shared those findings during the opening keynote presentation at the Gartner Supply Chain Symposium/Xpo EMEA, which took place this week.

“There is legitimate excitement today around new technologies that hold out the promise of vastly enhanced organizational productivity,” said Thomas Pocock, Senior Director, Advisory, in Gartner’s Supply Chain Practice. “Supply chain leaders must remember that these new technologies require the partnership of an engaged and productive workforce for these gains to be realized. Unfortunately, the data tells a discouraging story on this front.”

Pocock highlighted data from Gartner’s Global Labor Market Survey from 1Q23 when 2,613 supply chain employees were surveyed to show the extent of supply chain’s labor productivity challenges:

  • Only 25% of the supply chain workforce is fully engaged.
  • Turnover is 33% higher in the supply chain function than pre-pandemic.
  • Only 16% of the supply chain workforce is willing to go “above and beyond” in their roles.

“Introducing new technologies, especially of the magnitude of AI or smart robots, would come with implementation challenges at any time,” said Pocock. “Any new technology introduced in this environment is likely to be met with elevated levels of mistrust and change fatigue. It’s clear there needs to be a new strategy to make such integrations work for all sides.”

Pocock noted that technology is just one of a series of strategies that need to be reinvented to reverse supply chain’s labor productivity slide. He recommended Chief Supply Chain Officers (CSCOs) reexamine their approaches in three key areas:

Integrating technology and people strategies: The introduction of new workplace technologies should be designed with the human-technology relationship front and center. Organizations must also create opportunities for reciprocal learning, or the opportunity for employees to safely make sense of new technology and see how technology is incorporating human input. New technology investments must be made side-by-side with equivalent investments in workforce training, skills development and knowledge curation.

Individual talent management: High-demand skills are often already available in supply chain organizations but are too often trapped by the rigid nature of job descriptions. CSCOs can unlock more skills and flexibly deploy talent where it is needed by breaking down projects into component tasks and seeking skills needed for those tasks across the entire organization and even beyond it.

Organizational design: Organizations can leverage crisis situations and market opportunities as a reason to breakdown silos and find new, more efficient organizational structures. Spontaneous redesign of decision-making processes happened at many companies during the initial disruptions of the COVID era. They can be productively harnessed to build resiliency in the face of new challenges, such as persistent inflationary conditions or changing geopolitical considerations.

73% of average supply chain IT budget ‘will be allocated to growth and performance’
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As organisations place greater emphasis on supply chain management, Chief Supply Chain Officers (CSCOs) intend to grasp their collective opportunity to invest in growth through new technology investments.

That’s according to a survey of 499 supply chain leaders undertaken by Gartner from October through December 2022 in North America, Latin America, Western Europe and the Asia/Pacific region, in which 65% of respondents said they anticipate it will be easier to fund new technology investments with 73% of supply chain IT budgets this year to be allocated to growth and performance enhancements, on average.

“The last three years of uncertainty have blurred the line between business and technology strategies to the point that they must be considered together,” said Simon Jacobson, VP Analyst in Gartner’s Supply Chain Practice. “Supply chain leaders must have an understanding of the strategic, disruptive and unavoidable technologies that will impact their planning processes over the next five years.”

Jacobson noted that three key motivations among supply chain leaders help to categorise this year’s technology trends: to pioneer new forms of engagement, optimize for resilience, and scale performance that enables technology to be delivered “any place and any time”.

Figure 1: Top Strategic Supply Chain Technology Trends for 2023

Top Strategic Supply Chain Technology Trends 2023

Source: Gartner (May 2023)

The 2023 top supply chain technology trends are:Actionable AIActionable AI delivers better data-driven decisions by mimicking the problem solving that humans make by augmenting decisions and keeping humans in the loop for validation purposes. Actionable AI learns patterns based off past decisions and experiences to adapt to changing, real world circumstances. Solutions continuously retrain models and learn within the runtime and development environments based on new data.Smart OperationsSmart operations extends the preexisting concept of smart manufacturing to encompass all core operational capabilities, including manufacturing, service and logistics that span warehousing, transportation and global trade. This involves the orchestration of a web of different and distributed processes and the underlying systems and data that support them. While manufacturing is ahead in pursuing smart operations, logistics organizations are rapidly embracing the potential of this idea to transform their businesses.Mobile Asset Optimization

Mobile asset optimization maximizes the use of an enterprise’s mobile assets by combining business process software, sensory technologies and operational research techniques for optimization and business intelligence. This has implications inside the warehouse where intralogistics smart robots are garnering attention and investment. Outside, transportation visibility platforms can show carrier activity and capacity improving collaboration between shippers, carriers and logistics providers.

Industry Cloud Platforms

Industry cloud platforms combine software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS) with specific functionality for vertical industry use cases. They do so not as predefined, one-off, vertical SaaS solutions, but rather as agile composable platforms supported by a catalog of industry-specific packaged business capabilities. In effect, they turn a cloud platform into a business platform and expand a technology innovation tool into one that also serves as a business innovation tool, creating added value beyond traditional cloud approaches.

Employee Engagement

Employee engagement is broadly a set of tools and applications used to help companies improve frontline worker performance, satisfaction and retention. This trend can span mixed reality and mobile devices to provide content that augments the job, wearables for safety and location management, collaboration tools and more. These technology investments have to be anchored in a broader workforce strategy that spans knowledge curation, skills development and training.

Composable Application Architecture

Composable business applications are designed to follow the core design principles of modularity, autonomy, orchestration and discovery, with a specific business use case. These packaged business capabilities are encapsulated software components that represent a well-defined business capability, recognizable as such by an end user.

Cyber Resilient Supply Chains

As supply chains implement more advanced technologies, they add additional supply chain partners, vendors and service providers to their “digital” supply chain. However, each addition of an external entity to the digital enterprise represents additional digital connectivity and increased cybersecurity vulnerabilities and risks. Cybersecurity represents the tools, processes and governance methods (mechanisms) needed to mitigate cybersecurity risks caused by the extreme heterogeneity of supply chain technologies and ecosystem participants.

Supply Chain Integration Services

Supply chain integration services encompass technology platforms, integration teams, strategic decision making on which applications to connect when and how (different integration strategies), and finally, cloud services to manage these integrations. Supply chain integration services elevate the role of integration from a tactical, execution-centric and technical view of system interoperability to a strategy-led vision of a more-interconnected world.

Research pinpoints top five smart factory implementation risks
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Smart factory operations can help supply chain leaders achieve many of their highest priorities, but the challenges are too often underestimated.

That’s according to research from Gartner, which says successful smart factory initiatives require accompanying cultural and operational transformations that are slow by nature and in many cases will require entirely new organisational designs to integrate the new capabilities within the broader supply chain.

“Smart factory operations hold the allure of numerous benefits for supply chain leaders, from expanding lights out manufacturing capabilities to improving quality and solving labor challenges,” said Simon Jacobson, VP Analyst in Gartner’s Supply Chain Practice. “The potential for transformational benefits can also present the biggest pitfall, as organizations may rush into launching smart factory initiatives without a clear understanding of the extent of the challenges facing them.”

Gartner research has identified the five top risks to avoid when launching new smart factory initiatives:

1. Confusing factory optimization with business model transformation: The optimization benefits of a smart factory are confined to that single site. When smart factory initiatives are disconnected from the rest of the supply chain, the site level benefits can come at the expense of creating costly constraints elsewhere in the business. This risk can be mitigated by ensuring factory objectives are synchronized with supply chain operating models and enterprise digital ambitions, flexibility and automation opportunities.

2. Overlooking the scope of change management: New technology acquisition may be straightforward and relatively cheap. Underestimating the resulting changes to existing processes, integrations and new performance targets can drive up both cost and time. This risk can be managed in part by treating such changes as part of an enterprise-wide initiative that requires alignment between senior leadership and the utilization of continuous improvement teams to ensure initiatives are properly sequenced.

3. Underestimating the complexity of aligning and converging IT, OT and ET: Governance for smart factories is not just centered on plant-business connections but also on how IT, operational technology (OT) and engineering technology (ET) are managed. These three are inseparable, and their convergence and alignment are critical as production models change. To mitigate the complexity of this risk, supply chain leaders should familiarize themselves with alternative organizational models for IT/OT alignment and evolve governance and organizational structures in line with new production models.

4. Insufficient funding for upskilling, reskilling and talent development: Modernizing learning and development (L&D) programs to help associates learn, acquire and retain knowledge to acquiesce to new experiences is essential. So too is enabling employees to execute the work they are aligned to support through additional education and upskilling.

5. Narrowly focusing on a single use case and technology: As technology options increase and expand, too much focus on enabling technologies and the “art of the possible” can expose organizations to a significant IT backlog and technical debt. The environment is complicated by the fact that there is no single dominant technology or vendor that fulfils all smart factory requirements. Technology purchases must be balanced between strategic considerations such as the ability to scale, along with the pragmatic, such as planning appropriately for operational disruptions.

Excellence in supply chain initiatives recognised
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Gartner has announced the winners of its Power of the Profession Supply Chain Awards, which showcase powerful supply chain initiatives that enhance communities and the environment while delivering results that benefit businesses, communities, stakeholders and customers.

The awards were presented in four categories: customer or patient innovation, process or technology innovation, social impact and people breakthrough. In addition, an overall winner was recognised for supply chain breakthrough of the year.

“This year, Gartner’s Power of the Profession Awards showcased innovation on a global scale with an increasing emphasis on social impact,” said Eric O’Daffer, research vice president with Gartner’s Supply Chain practice. “The majority of finalists and winners were notable for approaching challenges with a global lens and the entries we received that focused on social impact more than doubled from last year.”

Supply Chain Breakthrough of the Year: Microsoft Corporation, for its submission “Real Time Visibility Enabling a Sentient Supply Chain.” This submission was also recognized as the winner of the Process or Technology Innovation of the Year.

As the pandemic’s effects on supply and demand waned in 2022, changing market conditions required Microsoft’s Devices Supply Chain team (DSC) to enable a quick pivot from a supply-constrained environment to a fully order-driven model, thereby avoiding significant inventory risks. Microsoft wanted to develop a sentient supply chain that was “all-sensing and monitoring,” predictive and able to consistently optimize itself in real time. This meant building end-to-end (E2E) visibility from tracking every raw material to finished-goods sales, returns and repair operations.

The results of this transformation included $550 million saved in inventory risk avoidance, an Azure-driven platform that captures more than 50 million supply chain data points per day and a suite of self-serve analytics that converts real time signals into actionable intelligence.

Social Impact of the Year: Vodacom Group, for its submission, “A Healthcare Cold-Chain Beyond COVID-19.”

Many countries in Africa lack the basic infrastructure and capacity to safely store vaccines at the extremely low temperatures required. Backed by a significant donation from the Vodafone Foundation, together with the Vodacom Group, the South Africa-based mobile communications company, spearheaded the successful rollout of a vaccine cold storage and distribution solution in Africa. Logistics execution was key, with close to 3,000 cold-chain units supplied to more than 500 vaccination sites across South Africa, Mozambique, Tanzania, DRC and Ghana in a short space of time.

Vodacom leveraged its internal supply chain expertise to coordinate and track the successful delivery of equipment, with the rapid establishment of a dedicated cold-chain logistics control tower solution to oversee operations.

Customer or Patient Breakthrough of the Year: Zuellig Pharma, for its submission “eZTracker: Making Safe Healthcare More Accessible from Plant to Patient with Blockchain.”

Data silos in the pharmaceutical industry hinder supply chain visibility and stifle collaboration across healthcare, resulting in vulnerabilities and inefficiencies which cause monumental disruption and threaten patient safety. With its low digital maturity, the pharmaceutical industry cannot orchestrate a coordinated response in a timely fashion to address issues like counterfeits, poor cold-chain management and medicine shortages.

To make safe healthcare more accessible, Zuellig Pharma developed eZTracker, the first production-grade, end-to-end supply chain traceability solution powered by blockchain. Live in five markets, eZTracker is a solution that tracks more than 2.9 million products and connects more than 53,000 active users on blockchain.

People Breakthrough of the Year: Procter & Gamble, for its submission “Equality and Inclusion: Goa Plant ‘Saksham.’”

In Goa, India the conservative legislative norms do not allow women to work in manufacturing industries beyond day shift work. This effectively meant that women could not be part of Procter & Gamble’s 24×7 production crews. Through a unique Equality and Inclusion program, P&G aimed to hire female shop-floor trainees to recognize them as “saksham” (meaning “capable, competent”) to achieve their professional goals, and eventually become role models to inspire others in the future.

The result was a comprehensive program that coordinated closely with external government agencies and within six months moved from idea conception to enabling a fully female shop-floor production crew, the first of its kind in P&G’s Feminine Care business in Asia Middle East & Africa Region.

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Customer enablement only emphasised by 23% of supply chain organisations
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Supply chain organisations that enable customers to get their own jobs done are twice as likely to receive repurchase orders compared with peers that focus merely on customer satisfaction or ease.

A Gartner survey also found that customer enablement is only being emphasised by 23% of supply chain organisations today, but the strategy will become the norm within five years.

Gartner surveyed 650 supply chain leaders across geography and industry from August to October 2022 to provide a preview into supply chain strategic plans. In five years, 80% to 90% of all supply chains plan to adopt the key components of these strategies across four areas, including commercial innovation, sustainability, real-time execution and human-centric work design.

“The survey data showed that high-performing supply chain organizations are capturing competitive advantage and have capabilities at operational rates often twice as high compared to their lower performing peers,” said Jennifer Loveland, senior director analyst with Gartner’s Supply Chain practice. “These high performing teams have also succeeded in retaining the respect of the C-Suite; 72% are viewed as strategic partners at a time when perception of supply chain management’s importance has declined back to pre-pandemic levels at most organizations.”

Gartner identified high-performing supply chain organizations by rating their ability to exceed expectations on eight distinct measures over the past 12 months, including customer experience, stakeholder expectations and business performance, among other categories.

Loveland highlighted the divergence in how leading supply chain organizations approach commercial innovation strategies as one key example of the many best practices that high performing supply chains do today that all supply chains must adopt to keep pace with peers in the next three-to-five years.

“Commercial innovation requires that there is no one-size-fits-all customer experience across the supply chain and no one-size-fits every interaction for a specific customer,” said Loveland.

Traditionally, supply chain leaders think of high, medium, or low value product or customer segmentations as the primary way to differentiate supply chain service; enablement takes this further by looking at supply chain choices beyond cost, lead time and availability and differentiating experience order-to-order. The specific strategies to achieve this are being enacted at high performing organizations at significantly higher rates today compared with their low-performing peers. These strategies will become mainstream approaches within three-to-five years.

Supply chain organizstions perceive the challenges with reinventing their commercial innovation strategies similarly, despite their differing performance levels. Both high and low performing groups pointed to operational challenges related to providing a differentiated supply chain experience and a lack of funding to pursue opportunities as the top obstacles to success.

“All organizations can start now to build a service menu that captures the current options available where customers interact with their supply chain,” said Loveland. “Rapid innovation to expand that service menu captures an earlier mover advantage, while ongoing innovation in specific categories such as supply chain as a service (SCaaS) offer opportunities for advantage even beyond five years.”

To identify areas of cost improvement and gain more funding, supply chain organizations across the board must emphasize cost transparency. A “cost-to-serve” model can help align supply chain costs to service choices, rather than functions, which provides better transparency and increases the chances of funding new commercial innovation strategies.

Inadequate tech means 95% of companies will fail to enable end-to-end supply chain resiliency by 2026
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Most companies will remain locked into an outdated model that will prevent them from achieving end-to-end (E2E) resiliency in their supply chains by 2026.

Analysis by Gartner indicates that few companies have accepted the necessary paradigm shift from being forecast-driven, and primarily focused on accuracy, to instead focusing on managing uncertainty in their supply chains.

Until this occurs and technology providers align solutions specifically for achieving resiliency, rather than simply increasing decision speed or digitizing the supply chain, true E2E resiliency across most organizations’ supply chains will remain elusive.

“Companies are scrambling to add resiliency to their supply chain programs today, but ironically they are taking actions that may lead to more fragile and rigid supply chains based on outdated ‘steadier state’ models,” said Tim Payne, vice president analyst with Gartner’s Supply Chain practice. “A current focus on ever improving accuracy results in supply chains unable to cope with today’s uncertainties and simply reinforces their vulnerabilities.”

Payne said that current marketplace confusion surrounds the concept of resiliency and results in a technology buying environment consisting of solutions that are often “remarketed” to address resiliency, but they will not help companies achieve the needed flexibility and adaptability that marks true E2E resiliency.

To start down the path of achieving E2E resiliency and avoid falling prey to ineffective “resiliency-washing” solutions, organizations need to first reinvent their strategies. Gartner recommends organisations:

  • Drop forecasting-based models and enable the company’s supply chain to take full advantage of its uncertainty mitigation tactics by not constantly propagating its demand signal through the supply chain. Change the planning focus onto uncertainty rather than exclusively on the plans’ accuracy.
  • Drive from unknown uncertainty toward known variability by utilizing AI and ML for different, multiple predictions.
  • Begin to build a digital supply chain twin (DSCT) by identifying key model parameters that would help to improve the resiliency of decisions.
  • Assess supply chain decisions using uncertainty metrics rather than accuracy metrics, by deploying KPIs that describe the supply chain’s capability to tolerate uncertainty and the “probability of execution” of relevant supply chain decisions.

87% of business leaders expect to increase sustainability investment
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87% of business leaders expect to increase their organization’s investment in sustainability over the next two years. Customers are the primary stakeholder group creating pressure for organizations to invest or act on sustainability issues, selected by 80% of executives, followed by investors (60%) and regulators (55%).

“Sustainability enables businesses to cope with disruption,” said Kristin Moyer, Distinguished VP Analyst at Gartner, which conducted the research. “Economic uncertainty, geopolitical conflict and escalating materials and energy costs are forcing businesses to reexamine all forms of expenditure. This focus on essentialism, in combination with increasing stakeholder desire to see progress on environmental, social and governance (ESG) goals, creates new opportunities for enterprises to grow while mitigating cost and risk.”

The survey was conducted in June and July 2022 among 221 respondents in North America, Europe and Asia/Pacific. Respondents were executives in director roles or above within organizations with enterprise-wide annual revenue of at least $250 million for fiscal year 2021, which are currently engaged in sustainability-related activities.

It found that 86% of business leaders see sustainability as an investment which protects their organization from disruption. Additionally, 83% said sustainability program activities directly created both short- and long-term value for their organization, and 80% indicated that sustainability helped their organization optimize and reduce costs.

Specifically, the top areas where survey respondents said sustainability programs are mitigating cost increases are energy consumption, business travel and customer transactions (see Figure 1).

Fig. 1. Top Operations-Related Costs Being Mitigated Through Sustainability Programs

Source: Gartner (November 2022)

“Executive leaders are achieving both operational and supply chain savings through their sustainability programs,” said Moyer. “This kind of ‘two for one,’ where sustainability investment supports a business goal like cost optimization, significantly enhances the program’s impact by creating a virtuous cycle.”

Sustainability Drives Growth and Innovation

Sustainability can also enable new value creation and business growth opportunities. Fifty-seven percent of business leaders said the enterprise sustainability program has a strong connection to the results on the income statement, and 42% of respondents are leveraging their sustainability activities to drive innovation, differentiation and enterprise growth through sustainable products.

“Investing in sustainability can support product differentiation but be wary of greenwashing risks – there are no shortcuts to sustainable growth,” said Moyer. “Focus on product attributes that are important to customers and how these priorities shape buying decisions. When viewed through a strategic lens, sustainability can provide a ray of sunshine for businesses during difficult market conditions.”

CFOs ‘focusing on automation investments’ to drive down costs
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CFOs plan to protect their digital investments as they cut costs elsewhere in the business, and have particularly prioritised back-office automation as a key to driving down costs in the face of ongoing inflation.

A July 2022 survey of 226 CFOs undertaken by Gartner found that digital acceleration was the top spending priority for CFOs over the next 12 months, with 98% of respondents saying they will protect digital investments and of those, 66% stating they plan to increase their investments in the category.

A separate survey of 128 CFOs and CEOs in June highlighted the particular areas within technology that are set to receive the most investment: one third of respondents said they will prioritise back-office automation technologies, the most popular choice among 13 different categories of potential technology investment.

“Automating back-office workflows is a key to achieving efficiency gains across a number of areas including accounts payable, accounts receivable and internal IT services, such as helpdesk support,” said Randeep Rathindran, vice president, research in the Gartner Finance Practice. “In a cash-constrained environment, where margins are under pressure, the urgency to improve productivity in these areas is heightened.”

Survey respondents also indicated their plans to increase investments in pricing optimization analytics, with 32% of respondents prioritizing this area among their top three priorities. With CFOs recognizing limitations to price hikes over the long-term, pricing optimization analytics is a way for organizations to improve pricing precision while also pursuing other strategies to mitigate inflation’s impact on margins, such as cutting costs.

Gartner’s survey on CFOs’ investment priorities also revealed the areas most vulnerable to cost cuts over the next 12 months. Forty-six percent of respondents indicated they will cut spending on consultants, while 45% said they will decrease spending on real estate. Contractor spend was also targeted by 39% of respondents.

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