How Will the Supply Chain Change in the Future?

Do you still get frequent visits from the board and the C-suite? For many supply chains, the answer is, unfortunately, "no." Stakeholders' attention has shifted because they have adjusted to the new normal of constant disruption.?

Modern global supply networks have been put on display by recent events such as the COVID-19 problem, post-pandemic economic repercussions, and the current conflict in Ukraine. Team members who work to maintain product delivery in the face of high uncertainty and rapid change have also been elevated to the status of heroes. Managers in charge of the supply chain are in an unusual position these days: they have the ear of upper management and the authority to implement significant reforms.?

There has always been the potential for disruption in supply chains. McKinsey Global Institute research conducted before the pandemic found that businesses typically face an interruption lasting between one and two months every 3.7 years. The economic impact of these disruptions over a decade is estimated to be equal to 30% of a company's annual EBITDA in the consumer products industry, for example.?

This expenditure is not necessary, as evidenced by past events. Six months of restricted production were experienced by Toyota in 2011 as a result of the tragic Tohoku earthquake and tsunami. The automaker, however, adjusted its production plan, reorganised its supply chains, and dealt with the risks associated with its suppliers. It took Toyota about two weeks to get back into production after another large earthquake devastated Japan in April 2016.?

Nike, the athletic apparel company, ramped up a supply chain technology initiative during the early stages of the pandemic. The programme made use of radio frequency identification (RFID) technology to monitor the movement of products throughout the company's outsourced production facilities. The company also employed predictive demand analytics to soften the blow of China-wide retail closures. The company was able to keep regional sales drops to 5 percent by shifting stock from brick-and-mortar locations to online marketplaces at the first signs of trouble. Major rivals also saw large sales declines at this time.?

According to Gartner Here are two different ways to go:?

According to this year's Future of Supply Chain Survey, the growing suite's awareness of the strategic importance of the supply chain appears to be an outlier rather than the start of a new trend. By 2020, 56% of businesses reported that their peers viewed their function as strategically important, but by 2017, that number had dropped back down to 47%.?

However, there is still a chance. Only 45% of supply chain businesses are considered strategic partners, but that number jumps to 72% among good performers. Just what is it that they are doing otherwise? That's why this year's research on the future of the supply chain compares the current practises of these organisations with their planned changes over the next three to five years in order to create a road map to reinvention. In what ways can you become a strategic partner and help build a competitive advantage? Where do you need to perform at a high level to stay competitive??

High-performing supply chain organisations can help you decide your future.?

Commercial innovation, attaining sustainability results, real-time decision execution, and human-centric work design are the four supply chain reinventions highlighted by Gartner in 2022 based on the priorities of supply chain leaders. This year, Gartner is focusing on understanding progress and making recommendations on how to prioritise action, based on the same drivers that were used to define the four themes last year.?

• Even while supply chain executives recognise the value of these innovations, according to Gartner, there has been little development in several key areas.?
• Customers who are helped by the supply chain to complete their own tasks are twice as likely to buy again as happy customers. Only 23% of commercial innovation in supply chain companies is aimed at customer empowerment.?
• Seventy-five percent of business leaders in the supply chain believe that it is crucial to participate in activities related to the circular economy. Despite this, only 1 in 20 people think they have the resources to make progress towards sustainable goals.?
• Ninety-six percent of executives in the supply chain say they are trying to reduce the lag time between making a decision and putting it into action. However, only about 7 percent of decisions are really executed in real time.?
• Sixty percent of supply chain companies cite labour shortages as their biggest problem, making workforce development a top board of directors' concern for 2023. One-third of supply chain companies, despite relying on human-centric work design to attract, retain, and engage employees, do not have an effective employee value proposition.?

According to Gartner, there are two things to think about: can you gain an edge, and if not, where must you stay ahead of the competition??

In order to determine where to put their focus, supply chains can analyse both the current state of an individual reinvention and the status quo across all innovations. High achievers have been shown to have twice as many capacities as poor performers, who expect to have them up and running within the next three to five years.?

Across all reimaginings:?

• In the next three to five years, commercial innovation and delivering sustainability objectives are must-dos that need excellence in order to avoid competitive disadvantage.?
• Opportunities for competitive advantage can be found in real-time decision execution and human-centric work design across all time horizons, from now to five years from now and beyond.?

There are always subsets of a given reinvention where speeding up preparations will give organisations an edge and where doing an outstanding job of executing those plans is essential to prevent falling behind. Few supply chains have really implemented the measures described in the report's capabilities section. Eighty-five to ninety percent of supply chains expect to implement these changes during the next five years. These supply networks are the ones that will be used in the future. Many of my contemporaries will be making changes in this area.?

This study can be used as a reference for setting priorities for the next three to five years. We have described the major areas to concentrate on, the issues supply chains will face in the next three to five years, and the strategies that will be most effective in bringing about each reinvention. According to Gartner If companies implement their suggestions, they have a better opportunity to have one of the most successful and strategically significant supply chains of the future.?

Now more than ever, visionary Chief Supply Chain Officers (CSCOs) can future-proof their supply networks. However, there is also the role of sustainability to be looked at.?

The Role of Sustainability in Supply Chains?

According to the McKinsey Global Institute, post-COVID-industry surveys conducted in the middle of 2020 suggested that environmental, social, and governance (ESG) topics slipped down companies' lists of priorities during the pandemic, even though consumers are increasingly likely to prefer brands that offer strong sustainability credentials and a strong purpose. Larger entities are attempting to make up for lost time. For instance, in 2021, ESG indicators were included in the incentive plans of 29% of corporations, an increase of 7% from the previous year.?

The risks to a company's image, compliance, and bottom line resulting from poor ESG performance are rising, and the pressure is on for management to take action. Strong environmental actions are also delivering real operational results, as demonstrated by companies like Henkel. A digital twin connects and benchmarks 30 factories, telling them what to do to be more sustainable in real time. Over the past ten years, this has cut energy use by almost 40% and waste by 20%.?

Conclusion?

Maintaining performance and strategic relevance in the face of cost pressures necessitates rigorous prioritisation and acceleration of important investments. Even more than high performers, those who aren't doing so well in the present need to embrace these habits if they want to become strategic partners.?

If you want help digitising and revamping your supply chain, talk to our experts right now!?