Labor Productivity Declines Endanger Critical Supply Chain Objectives, Says Gartner

• Labor productivity levels are historically low and stalled out, in large part due to a lack of investment in workforce innovations.

• One clear symptom is that turnover is 33% higher in supply chain organizations compared to pre-pandemic levels.

• It provides an excellent basis for supply chain leaders to experiment and rethink how they unlock, mobilize and augment the workforce to greater productivity.

Caroline Chumakov, Director Analyst in Gartner’s Supply Chain Practice

According to Gartner, low labor productivity levels threaten every aspect of the Chief Supply Chain Officer’s (CSCO) agenda.

Gartner experts shared these findings today during the opening keynote presentation at the Gartner Supply Chain Symposium/Xpo™.

“Labor productivity levels are historically low and stalled out, in large part due to lack of investment in workforce innovations. One clear symptom is that turnover is 33% higher in supply chain organizations compared to pre-pandemic levels,” said Caroline Chumakov, Director Analyst in Gartner’s Supply Chain Practice. “While that may paint a discouraging picture, it also provides an excellent basis for supply chain leaders to experiment and rethink how they unlock, mobilize and augment the workforce to greater productivity.”

Chumakov recommended that CSCOs focus on unlocking individual potential, community potential and technological potential in support of workforce enablement to reverse the trend. Each area can unlock significant productivity gains and can be harnessed together to deliver on the legacy objectives that CSCOs must prioritize.

• Individual potential – High-demand skills are often already available in supply chain organizations but are too often trapped by the confining nature of the job description. CSCOs can unlock more skills and flexibility by breaking down projects into component tasks and seeking skills needed for those tasks across the entire organization and even beyond it. This can be applied to challenging positions requiring multiple skills.

  “Often, these complex positions can be distilled into a handful of core roles that can be more effectively aligned to individual employee strengths,” Chumakov said.

• Community potential – Organizations can leverage crisis situations and market opportunities as a reason to break down silos and find new, more efficient organizational structures. These spontaneous reorganizations happened at many companies during the initial disruptions of the COVID era and can be productively harnessed to build resiliency in the face of new challenges, such as persistent inflation or a potential economic downturn.

  “The nature of these big challenges demand a new, community-driven approach where people come together across reporting lines and even across organizational boundaries. It also requires continuous decision-making within the context of the extended supply chain and connected to critical stakeholders,” said Chumakov.

• Technological potential – New technology solutions, such as actionable AI and smart robotics, can make work easier and less mundane for employees, but employee mistrust of these technologies threatens to stymie the full set of benefits on offer. All new ways of working should be designed with the human-technology relationship in mind. Organizations should also prioritize reciprocal learning – the opportunity for employees to make sense of new technology safely, and technology can learn from human input.

For more information, please visit www.gartner.com.