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Bimodal Balance: Strategic Changes In & Along the Supply Chain

Gartner’s theory of “bimodal balance” between the strategic and the operational is maturing. Once exclusively an approach adopted by large, global corporations, the idea is now being adopted at mid-level corporations, particularly in the electronics industry. Not only is a focus on bimodal balance changing organizational strategies, it also heralds change in supply chain relationships, and in the demands of suppliers, opening new challenges and opportunities.

Challenges and demands along the electronics supply chain continue to increase as CEOs extend growth directives into traditional supply chain domains. Gartner's recent report, 2015 CEO Survey: Bimodal Balance Is Required for Future of Supply Chain, explores the new balance challenging Chief Supply Chain Officers (CSCOs) to be both “growth partner and operational caretaker.” In other words, CSCOs must now support competitive growth and innovation while still attending to traditional domains of extending efficiencies and cost cutting. Gartner coined this dual demand on CSCOs as a “bimodal balance,” a new challenge that “is the default orientation for successful CSCOs,” said Michael Dominy, research vice president at Garner and co-author of the survey report.

Gartner research evidenced that the bimodal balance is particularly engaged and operationalized in the largest global companies, that is, those with more than $12 billion in annual revenues. Increasingly, an important component of the success of these largest corporations is rooted in their bimodal acuity: “We see Centers of Excellence and other teams whose focus is not as much on the day-to-day operations but specifically on projects and initiatives to advance supply chain abilities and to increase opportunities long-term,” said Dana Stiffler, research vice president at Gartner and co-author of the survey report.

Particularly for electronics OEMs, the pace of change and growth continues to escalate. The ability to balance growth and innovation alongside of cost savings while streamlining for efficiencies, all at increasingly rapid paces, demands a significant shift in strategies. Importantly, this shift is not occurring only internally at these major electronics OEMs, but also in the supply chain relationships that define the electronics industry. The bimodal balance demanded of CSCOs, therefore, translates into a demand of additional capabilities of supply chain partners beyond providing lean and agile procurement solutions. Now, in order to gain in prominence, supply chain partners must also contribute to their partners' rapid growth and innovation goals; bimodal balance will extend into and along the supply chain as part of channel expectations in evaluating partnerships.

Cycle of success

As Stiffler questioned, “Is innovation in the supply chain an oxymoron or an imperative?” To understand the tension, Stiffler underscored that the traditional directive for CSCOs has been “a focus on supply and operations, particularly managing time + energy + resources in addition to efficiency, costs, quality, and compliance issues.” Presently, given the disruptive forces from competitors, market challenges, and other shorter product cycles, companies and CSCOs in particular, “have to change, they must be more bimodal. Competition can now come from anywhere,” said Stiffler.

To be prepared for rapid change and sudden disruptions from new competitors and challenging market conditions, is an agility that is afforded by the balance of focusing on growth and innovation while attending to the traditional cost and efficiency requirements. “Success today is not accidental, it is a cycle of success,” said Stiffler. The cycle of success can be directly traced to having adopted bimodal capabilities and strong talent development alongside of a keen dedication to the core strengths of the company. That is quite a balance to strike; having the resources and depth of personnel at the largest OEMs supports a dedicated bimodal balance being struck.

A related question posed of Stiffler was, whether it is possible to recreate this cycle of success, the dynamic of bimodal engagement in companies that fall into mid-sized range, $1 to 12 billion, and the smaller range, less than $1 billion in annual revenue. The potential barrier is whether these sized companies have the resources and personnel to dedicate to these new supply chain approaches because of what is entailed in maintaining bimodal balances in large organizations. Stiffler responded that the Gartner research has identified that some mid-sized companies in electronics are successfully engaging in bimodal strategic efforts to ensure continuous improvement and nimble growth (e.g., component manufacturers, industrial electronics manufacturers, EMS providers, and memory OEMs, to name a few). These are also companies who are also market leaders, underscoring the cycle of success that these bimodal supply chain strategies are affording.

Balancing issues

While there are many challenges in successfully coming to a bimodal balance for CSCOs, one common challenge facing organizations, especially those rooted in consumer product cycles, is directly related to the internal talent culture, Dominy added. As he explained, there exist internal tensions between executives who demand of middle management to move at increasingly faster paces, and again between middle management and the youngest generation of professionals, where the youngest come in accustomed to operating at faster speeds. Middle management tends to track along a generational grouping more accustomed to slower rates of change. The tension between these groups defines the current executive challenge of talent strategy. The ability to strategically align internal talent and strategic goals along both sides of the bimodal balance operations directly influences the ability to succeed and move fluidly through growth patterns.

As supply chain officers are charged with this bimodal balance of innovation and growth on the one hand and cost cutting and efficiencies on the other, they must also align the right talent within the organization and must now also evaluate supply chain relationships with this critical balance. In this manner, not only are internal organizations shifting in structure, but we expect to see real shifts along the industry's supply chains as bimodal focus matures and extends across organizations. Supply chain partners will have more demanded of them while at the same time may find their own opportunities for growth through new relationship opportunities.

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