t’s the most wonderful time of the year. Not the holiday season or the beginning of summer or even back-to-school time, for my fellow parents. It is the time of the year when Gartner publishes the Hype Cycle for Supply Chain Strategy. For the past seven years, I have had the privilege of leading this publication. It’s a collaboration with a dozen or so of my colleagues, who collectively advise thousands of organizations every year on supply chain strategy.
Since its inception, the Hype Cycle has been a trusted source, helping CSCOs and supply chain leaders identify and prioritize investments in critical capabilities. The Hype Cycle presents a capability’s maturity, adoption level, business impact and associated risks. With that, leaders can create a portfolio of investment that balances the pursuit of future innovation with the need for continuous, incremental improvement.
The cycle progresses along different phases. A capability enters the cycle, triggered by an innovation or industry focus, then progresses towards the Peak of Inflated Expectations. In that phase, the capability faces unrealistic expectations that, if unmet, will push it towards the Trough of Disillusionment. This is a period in which companies might question its value. If it survives the trough, the capability progresses to a period of broader adoption and consistent returns.
Use The Hype Cycle to Support CEOs’ Digital Transformation Agenda
In the 2023 Gartner CEO and Senior Business Executive Survey, around 85% of CEOs in supply-chain-intensive industries plan to increase investments in digital capabilities across their enterprise. Over the next three-to-five years, CSCOs are being asked by their CEOs to support their corporate digital business strategy (subscription required).
How can CSCOs deliver on that mandate? Additional digital capabilities are required, but a focused investment strategy is necessary. With the Hype Cycle, CSCOs can craft this strategy based on clear understandings of each digital capability’s maturity level, proven impact and risk of adoption.
Targeted Experimentation with Nascent Capabilities
On the left of the Hype Cycle, this year there are two nascent digital capabilities that have the potential to quickly accelerate the digital transformation journey. CSCOs are encouraged to pursue small proof of concepts that can afford their organizations better understanding of the capability’s potential against challenges and feasibility.
Digital twin of a customer (DToC): A DToC is a dynamic virtual mirror representation of a customer that helps to simulate, emulate and anticipate customers’ behavior. Customers can be individuals, enterprise customers, personas, groups of people or machines.
Machine customers: A machine customer is a nonhuman economic actor that obtains goods or services in exchange for payment. Examples include IoT-connected devices or assets that place orders independently of a human command, intelligent replenishment algorithms that maintain availability of consumables and intelligent assistants that suggest deals to consumers. Gartner’s 2020 CEO and Senior Executive Survey indicates that 61% of CEOs believe that demand from machine customers will become significant in their industry by 2030.
Generative AI (GenAI): GenAI technologies can generate new derived versions of content, strategies, designs and methods by learning from large repositories of original source content. GenAI has profound business impacts, including on content discovery, creation, authenticity and regulations; automation of human work; and customer and employee experiences. In supply chain, GenAI can create tailored customer and supplier communications.
Mindful Pursuit of Hyped Capabilities
Moving to the right of the cycle, we see capabilities that are maturing, yet still untested at a broader scale. For those capabilities, the Hype Cycle recommends conducting pilots to further understand the challenges they face ranging from immature technology, cultural unreadiness and misalignment to existing processes.
Digital supply chain twin: A digital supply chain twin is a high-resolution digital representation of the physical E2E supply chain that is synchronized with the real world to provide visibility and enable aligned E2E decisions.
Artificial intelligence (AI): AI applies advanced analysis and logic-based techniques to identify and predict patterns, self-learn and make and execute decisions. AI augments human decision making or automates routine and nonroutine tasks. AI has the potential to transform supply chains. It significantly augments humans’ ability to make decisions, by identifying patterns and making actionable recommendations.
Fully Leveraging Maturing Capabilities
For some digital capabilities, there continues to be a disconnect between their promise and their ability to support business needs. Many organizations struggled to move beyond the hype to find successful deployment strategies. Gartner recommends CSCOs work with their organizations to reexamine these capabilities anew to determine their fit for digital priorities.
Machine learning (ML): ML can identify patterns, generate insights and predict future outcomes from massive amounts of data. While its potential in supply chain is immense, ML has faced many hurdles towards broader adoption. Lack of good quality data can deteriorate the output of ML algorithms. User mistrust in the workings of complex models can limit adoption.
Advanced analytics: Advanced analytics span predictive and prescriptive, enabling organizations to predict future scenarios and proactively determine the best action. Despite demonstrating significant benefits at leaders, its broad adoption continues to elude many supply chain organizations. Low levels of staff data literacy have also been culprits to lack of adoption.
Refining and Articulating the Digital Strategy
As CSCOs build a portfolio of investments in key capabilities along the Hype Cycle, they must continuously refine and clearly communicate a strong supply chain digital strategy. A digital supply chain strategy aligns supply chain stakeholders behind an integrated set of principles, digitally enabled capabilities and governance models to support the enterprise overall digital transformation. The strategy underpins a roadmap that balances the supply chain’s short-term optimization goals with long-term vision.
For years now, leading CSCOs have leveraged the Hype Cycle to inform their digital strategy, helping them avoid piecemealed investments in digital capabilities and create a balanced portfolio of digital assets that support the vision of digital transformation.
Noha Tohamy
Distinguished VP Analyst
Gartner Supply Chain
[email protected]
Hype Cycle Season: The Most Wonderful Time of the Year