Next-Generation Supply Chain Capabilities: The Key to Higher Profitability
Release date:
2024-08-09
Author:
Jinhua Logistics
This paper examines why next-generation supply chain capabilities are so critical and how organizations can achieve them.
This paper examines why next-generation supply chain capabilities are so critical and how enterprises can achieve them.
01 Supply Chain Maturity and Profitability
Accenture’s report, “Next Stop, Next Generation,” analyzes data from Among 1,148 companies across 15 countries and 10 industries, those with the highest supply-chain maturity were found to have profit margins 23% higher than their peers (11.8% vs. 9.6%) and delivered 15% higher returns to shareholders (8.5% vs. 7.4%). These “leader” firms make extensive use of artificial intelligence (AI) and generative AI in their supply chains—six times more than their peers.
02 This high level of supply chain maturity is primarily reflected in the following aspects:
Autonomous Decision-Making: Through generativity With AI and advanced machine learning technologies, enterprises can make real-time, autonomous decisions, thereby enhancing the responsiveness and flexibility of their supply chains.
Advanced Simulation: By leveraging advanced simulation technologies, companies can anticipate and mitigate potential supply chain risks, ensuring the stability and continuity of their supply chains.
Continuous Improvement: Continuously leveraging new technologies for optimization and improvement ensures that the supply chain remains in peak condition.
Technology Investment and Next-Generation Supply Chain Capabilities
According to Accenture’s research, leading companies… Investment in AI and generative AI is substantial. Max Blanchet notes that these capabilities are critical to redefining supply chain efficiency, agility, sustainability, and resilience. While traditional supply chain drivers have primarily focused on cost, quality, and delivery, leading companies, through technology investments, have moved beyond these conventional factors, addressing numerous present and future supply chain vulnerabilities and inefficiencies.
03 Industry and Country Differences in Supply Chain Maturity
Although the average supply chain maturity score is… Between 2019 and 2023, scores rose by more than 50%, yet the average across all companies remained low, at just 36%. This score varies significantly across industries and countries: for instance, Mexico’s supply chain maturity score stands at only 22%, while Japan reaches as high as 52%. By sector, consumer goods firms scored 31%, whereas aerospace and defense companies registered 40%.
These differences indicate that companies across different countries and industries face distinct challenges and opportunities in achieving next-generation supply chain capabilities. Certain regions and sectors may require greater investment in technology and capacity-building to attain higher levels of supply chain maturity.
04 Key Elements of Next-Generation Supply Chain Capabilities
To achieve next-generation supply chain capabilities, enterprises need to possess the following key elements:
Real-time monitoring: Enterprises need to be able to monitor every link in the supply chain in real time, including multiple tiers of suppliers, in order to anticipate and manage risks.
Quick response: When confronted with market fluctuations or supply chain disruptions, companies must be able to swiftly adjust their production and supply chain plans.
Full Lifecycle Simulation: By simulating the entire product lifecycle, companies can optimize production and supply-chain processes and enhance resource efficiency.
Sustainable Design: Modern supply chains must be designed with sustainability in mind to meet growing environmental and social responsibility demands.
05 The Success Stories of Leading Companies
The report shows that leading companies enjoy significant advantages in reducing new-product development and time-to-market, developing environmentally friendly products, and improving engineering resource efficiency. For example, leading companies are eight times more likely than their peers to shorten new-product development and time-to-market, and they are more likely to develop eco-friendly products… 8.5 times, with the potential to increase engineering resource efficiency by a factor of six.
These success stories demonstrate that next-generation supply chain capabilities not only enhance operational efficiency but also deliver substantial competitive advantages. By leveraging technological innovation and supply chain optimization, companies can not only meet current market demands but also shape the future direction of their industries.
06 Current Challenges in Supply Chain Maturity
Although the average supply chain maturity score has improved, the overall level remains low. Many companies still rely on traditional supply chain management practices and struggle to fully leverage their potential. New technologies such as AI and generative AI. Melissa Twining-Davis, Head of Global Supply Chain Operations at Accenture, notes that many companies still operate their supply chains in a rather rudimentary manner—much like navigating with paper maps and first-generation satellite navigation systems.
To modernize and智能化 their supply chains, companies must overcome a range of challenges, including insufficient technology investment, data silos, and talent shortages. At the same time, they need to establish a flexible supply chain management system that can adapt to rapidly evolving market conditions.
07 Future Trends in Supply Chain Development
According to the report, The supply chain of the future will evolve toward greater autonomy, intelligence, and sustainability. Companies must continuously monitor and adjust their supply chains to keep pace with market dynamics and technological advancements. Max Blanchet added that reinventing the supply chain requires capabilities such as real-time supplier monitoring, multi‑tier risk management, rapid production adjustments, and full‑lifecycle simulation.
As the global economy and industrial landscape evolve, traditional low-cost procurement and specialized manufacturing models are no longer viable. Enterprises must leverage technological innovation and supply-chain optimization to achieve adaptive resilience and sustainable development, thereby navigating the new economic and industrial environment.
08 Conclusion
Next-generation supply chain capabilities are critical for companies to achieve higher profitability and market competitiveness. Accenture’s research indicates that… Companies with high supply-chain maturity significantly outperform their peers in both profit margins and shareholder returns. By investing in technology and optimizing their supply chains, businesses can achieve autonomous decision-making, advanced simulation, and continuous improvement, thereby enhancing supply-chain responsiveness and agility.
Although the overall maturity of supply chains remains relatively low at present, future supply chains will evolve toward greater intelligence and sustainability. Enterprises must address challenges such as insufficient investment in technology and outdated management models, comprehensively enhancing their supply chain capabilities to keep pace with a rapidly changing market environment and technological advancements.
Throughout this process, real-time monitoring, rapid response, full‑lifecycle simulation, and sustainable design will serve as critical enablers. By continuously innovating and optimizing, companies can not only meet current market demands but also steer the industry’s trajectory, achieving long-term sustainability and a competitive edge in the marketplace.
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