The Crucial Role of Local Knowledge in Supply Chain Decision-Making | Insights from Gartner

In the ever-changing landscape of global supply chains, the integration of digital technology has become a prevalent practice among industry leaders. However, recent research from Gartner has revealed that relying exclusively on digital models can result in a substantial disparity between the digital representation and the actual circumstances on the ground. In fact, it has been estimated that digital models only capture approximately 20% to 30% of pertinent processes, underscoring the potential risks of solely relying on digital trade-off analysis.

Gartner’s findings have also emphasized that in around 90% of supply chain decisions, this gap between digital and reality is considerably wide, leading to a mere 50/50 chance of making sound strategic decisions. Further analysis has shown that local cross-functional supply chain leaders are 83% more likely to make well-informed decisions when they have a strong human presence in their supply chain operations.

The key to this advantage lies in the capability of these local decision-makers to complement supply chain technology with their in-depth understanding of the local context, operational conditions, and significant relationships with key stakeholders. This insight enables them to make localized, strategic supply chain decisions in a manner that their global counterparts may find challenging to achieve.

To exemplify this concept in action, Gartner highlights the experiences of three leading companies – ASR Group, Ericsson, and Siemens – all of which have successfully utilized localized strategic supply chain decisions to drive their success. By examining their practices, valuable lessons can be uncovered on how to narrow the digital-to-reality gap in one’s own supply chain operations.

While acknowledging the crucial importance of digital technology for supply chain leaders, Gartner also recognizes that many companies encounter obstacles in developing robust digital capabilities. To tackle this issue, Gartner advises companies to commence by establishing a comprehensive supply chain technology roadmap that encompasses both short-term improvements and a strategic long-term vision.

Their endorsement of supply chain digital transformation has been proven to fuel growth, mitigate risk, and optimize costs, rendering it a valuable avenue for companies seeking to enhance their supply chain capabilities in the digital age.

Ultimately, Gartner’s research and insights serve as a forceful reminder that while technology undoubtedly plays a pivotal role in the modern supply chain, the human touch cannot be underestimated. By harnessing local knowledge and expertise alongside cutting-edge technology, companies can make informed, strategic decisions that align with the realities on the ground, paving the way for sustained success.