Chinese Companies Lack Resilience in Supply Chains

Photo credit: iStockphoto/summerphotos

Before COVID-19, 12% of Chinese companies were on the right path to building customer-centric supply chains that are resilient and enable growth.

The finding is part of a new report from Accenture report titled “A License for Growth: Customer-centric supply chains.” Over 900 senior executives from nine major industries across 10 geographies took part.

The report identified three major supply chain challenges that the ongoing COVID-19 global crisis magnified:

  • Inflexibility to deliver undifferentiated customer offerings
  • Poor ecosystem design lacking the right partners
  • A siloed technology architecture that stifles collaboration and co-innovation

“The supply chain has always been the lifeline to businesses. The COVID-19 health crisis has brought to light the critical need for a resilient supply chain that produces and delivers all essential goods and services quickly, safely and securely,” said Marcello Tamietti, managing director and Strategy & Consulting lead for Accenture Greater China.

The 12% of Chinese companies that were seen as transforming their supply chain invested USD 180 million, on average, during the period from 2017-2019. They used their investments to meet increasing and evolving customer experience demands, said the report.

“Companies have moved quickly to prioritize transparency and enable faster decision-making. Now they must double down on building more customer-centric, purposeful supply chains that will lead to growth as economies rebound,” said Tamietti.

The report analyzed the results and showed that the investment paid off. Accenture’s found that during the period from 2017 to 2019, these companies outperformed other companies in several areas.

For example, they grew revenues by 11%, on average, compared with an average revenue decline of 4% for the other companies. Their supply chain contribution to total revenue was over four times that of the other companies’ (51% versus 12%).

“As we continue to navigate the uncertainty of fast-changing shifts in customer behaviors, a customer-centric supply chain is essential to the well-being of companies and society as a whole,” said Jane Pan, managing director and Greater China lead for supply chain and operations at Accenture Strategy & Consulting. “The good news is that the approaches that leaders are taking is an imitable formula that all companies can follow to transform their supply chains and sustain the operations that serve their customers and communities with purpose and growth.”

Accenture identified four key practices that set these companies apart:

  1. Begin with the customer in mind. These companies had supply chain strategies to deliver experiences linked to key customer value propositions, such as sustainability, data privacy/security and customized delivery and service.
  2. Turn insight into innovation. More than half of the average revenue growth that these companies experienced came from collaboration tools and data-driven insight technologies.
  3. Develop targeted capabilities. These leading companies, whether B2B or B2C, built capabilities to segment customers and products in real-time. They’ve partnered with procurement to design products and services and identify potential suppliers to achieve target margins. They also invested in advanced cybersecurity to stop data breaches and data theft.
  4. Engage the CEO beyond conversation. The CEOs of these leading companies are more likely to drive supply chain discussions with their boards and translate those discussions into results. Many of them also allocate funding for supply chain innovation and finding talent for accelerating transformation.

Photo credit: iStockphoto/summerphotos