The Supply Chain: Getting ‘match-fit’ for 2020 and beyond
Automation, Digital Transformation & Sustainability: Looking Ahead
As we touched on previously, digital transformation is rapidly evolving the landscape of supply chain management. However, the question now remains, how can Supply Chain leaders build towards an ever-approaching future?
To design a supply chain that is future-fit, Supply Chain Leaders need to anticipate:
- What/how key forces of change will impact their supply chains, and;
- How to evolve their supply chain management approaches
Forward-thinking Supply Chain leaders will recognise the opportunity to build future-fit supply chains that drive progress on top procurement priorities whilst advancing the sustainable business agenda. Summarised below are the views of a number of Supply Chain leaders, highlighting how companies can embrace and capitalize on the key forces of change that are changing supply chains, and in doing so achieve their top procurement priorities.
Plan for the Supply Chain Impacts of Automation and Migration
Mass migration on a scale previously unimaginable, combined with projections that significant numbers of workers will be displaced by automation, will naturally increase volatility in supply chain workforce dynamics. As such, companies need to evolve their approaches accordingly. One way to mitigate this volatility will be for companies to foster responsible and inclusive labour practices. For example, businesses sourcing from regions impacted by mass migration can redirect resources to engage with industry peers and cross-border actors, including government, labour unions, and employers, to reinforce legal frameworks and insist on better enforcement of labour laws. Companies with supply chains that expect significant uptake of automation through 2025 can insist key suppliers develop clear plans to support a sustainable workforce transition.
Build Responsible Regional Sourcing Hubs
With the increased growth in new markets, and the need to meet customer demands for customised, on-demand goods and services, companies need to understand and meet new consumption patterns and preferences, as well as providing goods and services in new locations and formats. This gives Supply Chain leaders a great platform to respond by developing agile and nimble regional supplier networks that can meet both commercial and sustainable aspirations. It will also give Supply Chain leaders the chance to embed social and environmental responsibility into the design of their regional sourcing hubs, allowing them to leapfrog supplier monitoring activities on labour conditions and environmental resilience.
Digitize Supplier Assessment and Engagement
Data on supply chains is being produced and disseminated in greater volumes than ever before. This gives Supply Chain leaders the opportunity to rethink how this data is collected and interpreted. Practitioners will need to hone in on supply chain information that is useful for decision-making in a sea of available data and dashboards. They will further need to reconsider which data they need to commission and how it is collected. Supply Chain leaders looking to the future should firmly weigh the value of investing resources in a battery of one-time, on-site supplier audits when open access channels, such as the IPE Blue Map, already publicize factory emissions and wastewater in real time. In addition there are numerous digital platforms which assess worker satisfaction and engagement as described by workers themselves. Today’s audit and remediation processes will hardly be fit for purpose to support responsible factory closures or retraining programs. Supply Chain leaders planning for the impact of automation will therefore need to guide their teams from a focus on corrective action plans towards leading a sustainable transition in partnership with their suppliers.
Strengthen Supply Chain Transparency and Disclosure
Enhanced transparency will support Supply Chain leaders should global trade be transformed by political shifts (for example, moves towards economic nationalism or away from free trade). Likewise, improving the quality and scope of supply chain disclosure will enable practitioners to stand ready should regulatory requirements increase. This will also help them to weather the increased stakeholder scrutiny that is the likely corollary of a weaker regulatory environment.
Embed Climate-Smart Supply Chain Planning
With the impending change in physical environments, companies will need to factor in, and consider, climate risk and preparedness into supply chain planning model. They may also need to seek alternative materials and resources where necessary or relevant. This will mean partnering with suppliers that share a commitment to climate awareness and action. Suppliers that sit within jurisdictions that have made policy commitments to low-carbon economies (e.g. China and India) are likely to increase and accelerate their contributions to global buyers’ visions of climate–smart supply chains. In all industries, climate-smart supply chain planning should become a fundamental part of good supply chain management as we look to the future.
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