Global supply chains are under pressure. Up against the triple squeeze of supply chain constraints, labor shortages, and inflation, manufacturers need the frictionless connectivity in composable work environments that the new type of standardized, modular digital platforms brings, as never before.

This means IT departments will be central to improved supply chain performance, employee productivity, and cost savings by using improved data visualizations and simulations to enable augmented decision-making, Gartner predicts in a new 2023 report.

"Manufacturers are pressured to become more resilient across the organization and supply chain. High energy costs, component shortages, and resource issues are already getting in the way of a rapid response to market volatility."

This volatility is what Gartner defines as the “triple squeeze” — global supply chain constraints, shortages in the labor market, and inflation — all of which have a massive impact on manufacturers.

But here’s the good news. We believe this impact on manufacturers can be countered by leveraging the frictionless connectivity, advanced data visualizations, and real-world simulations integrated into modern digital platforms such as OMP.

Manufacturers can now go way beyond just making decisions about day-to-day operational efficiency. For Gartner, the key decisions — enabled by the improved type of supply chain platforms — must now be more about outsourcing, regionalization and reallocation of resources, and building smart factories.

But, according to Gartner, “if CIOs fail to work with business functions on strategies and concrete plans to cope with the triple squeeze, their organization’s profit margin is likely to decrease.”

Four strategic planning assumptions about the next 3 years

1. By 2025, three out of five smart factory initiatives will fail due to a lack of supply chain integration, resulting in significant cost constraints and customer service issues.
2. By 2026, supply chain regionalization efforts will more than halve the time it takes manufacturers to source, produce, and ship products.
3. By 2025, more than 80% of manufacturers will have outsourced some or all production processes to external manufacturers, compared with 46% in 2022.
4. By 2025, at least 25% of manufacturing operations applications will use a composable technology architecture, up from less than 2% in 2022.

This report isn't valid anymore. Read the "Gartner® Hype Cycle™ for Supply Chain Planning Technologies 2024"report.