Executive Summary: ISG Provider Lens™ Supply Chain Services - Europe 2024

The individual quadrant reports are available at:

ISG Provider Lens™ Supply Chain Services - Circular Supply Chain Services - Europe 2024

ISG Provider Lens™ Supply Chain Services - Supply Chain Advisory and Consulting Services - Europe 2024

ISG Provider Lens™ Supply Chain Services - Supply Chain IT Operation Services - Europe 2024

ISG Provider Lens™ Supply Chain Services - Supply Chain BPO Services - Europe 2024

Data-driven supply chain transformation remains a key focus for providers and enterprises globally

The distinctions between supply chain operations, consulting and business process services, and digital transformation
services in supply chain management have blurred significantly since 2020, when the pandemic disrupted global supply chains. Technologies such as IoT, predictive analytics, automation and AI — once primarily tools for transformation — are now strategically integrated into overall supply chain services. This integration has enabled service providers to more effectively transform supply chain processes, while helping enterprises assess and implement supply chain transformation services that better align with their business objectives.

In Europe, providers have adopted a highly focused approach to offering supply chain services tailored to a client’s digital maturity. For enterprises with low digital maturity, the focus is on process standardization and establishing a strong digital foundation. Providers prioritize quick wins by addressing low-hanging fruit, such as process automation or other low-cost, low-risk initiatives, to build momentum. For clients with moderate digital maturity, the focus shifts to refining existing digital processes and optimizing performance. Providers invest heavily in advisory and consulting capabilities to identify areas for improvement and leverage technology solutions to streamline operations and enhance efficiency. This often involves implementing advanced analytics tools, improving data governance practices and integrating disparate systems to enable better collaboration and decision-making across departments.

For clients at the high end of the digital maturity spectrum, providers focus on maximizing the potential of digital technologies. They collaborate with clients to develop advanced solutions that leverage AI, ML, IoT and other modern technologies to transform business processes and create new growth opportunities. This may include developing bespoke digital platforms, implementing predictive analytics models and exploring emerging technologies to stay  ahead of the curve. Overall, the approach is to customize methodologies and solutions to align with each client’s specific digital readiness and supply chain needs.

Data-driven supply chain transformation remains a key focus for providers, with cost reduction and process optimization being the primary outcomes delivered. Technologies like analytics, AI and automation and data management are deeply integrated into most solutions, with providers centering their tools and approaches around these capabilities. Network optimization, digital twins and blockchain have also gained traction.

Providers are strategically leveraging partner ecosystems to offer robust and modular services. Companies such as LLamasoft, Celonis, Kinaxis, o9 Solutions, Blue Yonder, Coupa and Ivalua are now integral parts of every service provider’s partner ecosystem.

Supply Chain Advisory and Consulting Services

Supply chain consulting services in Europe are rapidly growing, with providers focusing on establishing themselves as leaders in data governance, compliance and regulation management, shoring mix, sustainable and circular operations, and data-driven supply chains. To enhance supply chain resilience and responsiveness to disruptions, providers are increasingly guiding clients toward a more regional and local supply chain focus, helping mitigate the challenges  posed by global economic headwinds. This transition involves reimagining clients’ networks through network design offerings that utilize digital twin and optimization technologies, along with business scenario modeling, to help clients understand the impact of local or region-specific supply chains in response to geopolitical unrest.

Supply Chain IT Operations Services

The European market has seen a tremendous surge in the demand for digital supply chain services over the past 24 months, driven by a strong focus on Industry 4.0, rising political unrest and stringent regulations. Compared to the U.S. market, the European market places a greater emphasis on digitalization, sustainability, risk management, regulatory compliance and resilience. The growth of the European market is fueled by significant advancements in Industry 4.0, the rising need for end-to-end supply chain visibility, the growing presence of niche software vendors, and enhanced transportation and warehouse operations to support extensive geographical coverage.

Supply Chain BPO Services

ISG has observed several interesting developments in Europe’s supply chain BPO services. Enterprises are moving beyond conventional transactional outsourcing, increasingly outsourcing strategic supply chain management (SCM) processes such as supply chain planning, which has evolved significantly due to past and ongoing disruptions. With the rise of outcome-based pricing contracts, service providers are identifying functional areas, such as delivery and planning, and industry verticals that are more suited to this pricing model. There has been a dramatic shift in the mindset, with supply chains no longer viewed merely as cost centers or sources of risk but as drivers of innovation and competitive advantages. As a result, business outcomes are now focused on process optimization and improved productivity.

Circular Supply Chain Services

Compared to the U.S., Europe leads in adopting circular economy principles, which focus on recycling and reusing materials and minimizing waste. This approach is driven by stringent regulatory requirements and strong consumer demand for sustainable products. Europe is at the forefront of sustainability and circular economy compliance, with a strong emphasis on reducing carbon footprints, promoting sustainable packaging, extending the life of raw materials and implementing circular economy practices.

Some of the disruptive trends identified by ISG that will continue to shape supply chain services in 2024 and beyond include:

Demand for domain- and industry-specific consulting: Enterprises increasingly prefer service providers that have teams of qualified and certified domain- and industry-specific supply chain consultants as their consulting partners. This expertise enables providers to offer tailored services that address industry specific challenges, ensure compliance with regulatory requirements and drive innovative best practices.

Focus on circular supply chain and sustainability: Sustainability and circular supply chain principles remain top priorities for most enterprises in Europe, with many setting clear sustainability targets. Europe’s stringent environmental regulations significantly impact supply chain operations. Regulators and customers in the region emphasize ethical sourcing and circular practices, focusing on recycling, remanufacturing and reusing materials.

Adhering to regulations and meeting rapidly evolving customer demands require specialized consulting services and advanced circular supply chain capabilities and solutions.

Emphasis on resilient and responsive supply chains: As in the U.S., resilient and responsive supply chains are also a major driving force in Europe. Enterprises are increasingly focused on mitigating risks and addressing continuous disruptions by building more resilient supply chains. To achieve this, they are seeking the superior  consulting expertise of service providers to develop robust risk management strategies that ensure continuity. This often includes guiding on creating more regional and local supply chains. Providers are offering tools and solutions such as supply chain diagnostics, resilience stress tests, end-to-end visibility and comprehensive risk management frameworks to support enterprises.

Increasing stringency of regulations: Europe imposes rigorous requirements on how enterprises handle personal data and has stringent, industry-specific regulations that vary by country. In addition to these, cross-border trade within the EU requires compliance with a multitude of regulations across different countries, as well as adherence to sustainability and ESG  standards. Navigating these complex and varying laws and standards demands highly comprehensive and tailored compliance management strategies and robust data governance practices.

Adoption of GenAI in SCM: GenAI has experienced significant adoption in procurement, supply chain execution and
after-sales services. Providers are already delivering use cases such as warranty management, contract management, supply chain optimization, guided recommendations for customer service agents and supplier risk assessment. GenAI’s capability to process and analyze large datasets, coupled with its predictive features, makes it a powerful tool for modernizing and optimizing supply chain operations.

These are exciting times for supply chain professionals and global manufacturers. The dynamics of the global supply chain are changing dramatically, and advanced technologies are pivotal in supporting digital transformation, fostering circular and sustainable supply chains, and building responsive supply chains. These technologies will be crucial in enabling enterprises to achieve significant operational efficiency and optimization.

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