Gartner: Companies MUST adopt supply conservation strategies

Three months into the year, and it's clear to see that inflation and supply shortages are here to stay for the foreseeable future. 

If the supply chain and procurement functions are to successfully navigate these challenges, organisations MUST adopt resource conservation strategies to mitigate these operational risks. 

Commenting on this, Sarah Watt, senior director analyst with the Gartner Supply Chain practice said: “CSCOs foresee that the anticipated increases in inflation and ongoing supply shortages will lead to further production challenges and shipping ineffectiveness. These constraints are not short-term, and the underlying trend is that demand for goods is rising, while supply is increasingly scarce.”

The industry also continues to face pressures from internal and external stakeholders to push for more sustainable networks. According to Gartner, 67% of professionals are investing in environmental and social sustainability metrics.

With these challenges in mind, Gartner has outlined three strategies for organisations to deploy to be successful in navigating such complex environments.

1. Slow down primary consumption: Adopt circular economy models

Traditional economic progress has been a linear consumption of ‘take, make, and dispose’. However, Watt highlights that: “The circular economy provides an opportunity to decouple raw materials from growth. Circular economy activities range from as-a-service models to incentivised return and collaborative consumption.”

Gartner also emphasises the significance of taking ownership of end-of-life materials, especially when they contain valuable raw materials. Closing the loop could result in greater resilience against shortages. 

Watt commented: “Essentially some suppliers are using ‘end-of-life’ materials as a hedge against inflation and availability concerns.”

However, before diving straight into a circular economy strategy, Watt recommends that environmental, financial, and societal impacts are assessed at both the product and service levels.

Watt added: “The circular economy choice may also come with unintended consequences. CSCOs need to define the best candidates for circularity, or they may end up creating increased environmental burden rather than reducing it.”

2. ‘Treat waste like a value-based asset’

Gartner highlights that with the current supply constraints, organisations MUST capitalise on the potential value of waste, as well as shift their views to seeing it as an asset. 

“Capitalising on value can be achieved by building ecosystem partnerships with waste contractors, suppliers and innovators. With new legislation being passed around producer responsibility and changes in waste regulation, waste will be increasingly seen as a liability – when it could also be a resource,” explains Gartner. 

As a result, Gartner stresses the need to shift strategies, encompassing waste streams so that the materials can be used effectively. 

3. Preserve natural capital 

Natural capital - the stock of geology, soil, air and water needed to produce materials. Without natural capital, supply chains would struggle to function. 

However, Gartner stresses the need for organisations to change their relationship with natural capital, bearing in mind biodiversity loss, deforestation, and regenerative agriculture in their operations. 

“The risk today is that CSCOs are spending the feedstocks more quickly than they can regenerate, and supply chains must make sure that they don’t destroy the very base of their business,” explained Watt.