Transformation in the global supply chain network

Supply Chain Management (SCM) – and the seismic impact felt, the world over, when its operations are disrupted – is a hot topic of late. The widespread effects regularly make headlines: grocery shortages in supermarkets; a “petrol crisis” affecting parts of the UK; a lack of manufactured car parts leading to a hike in second-hand vehicle prices. Such events and the domino-effect they cause not only carry significant fiscal costs for both economy and industry, but also impact the lives and pockets of everyday citizens.

Between Brexit and the pandemic, one might be forgiven for drawing a line of causation from such events to the breakdowns witnessed across the global supply chain network. However, according to Forbes contributor, Harry G. Broadman, the root cause of the supply chain crisis is far bigger than either of these. He indicates that supply issues – warehousing constraints, a dearth of truck drivers, clogging of containers in ports, the astronomical cost of shipping rates – all reflect pre-existing, fundamental adjustments in supply chain infrastructure and logistics management. Clearly, there are in-built factors which are increasingly unfit-for-purpose.

Is it time to change how supply chains operate? Are there measures to safeguard against such external factors? How can business strategy prepare for the supply chains of the future?

Building a robust supply chain network

An effective, consistent supply chain ensures that goods and services are procured at the most competitive price point and that business needs are met. These needs include desired quantity, sufficient quality, timely delivery, and a location that aligns with business processes. With these needs met, a business is well poised to capitalise on customer satisfaction and competitive advantage. 

There are some key supply chain strategies to establish robust supply interfaces:

• Automate and optimise – Technology, such as data analysis and inventory control tools, enables leaders to have oversight of the relevant information to address changing circumstances. Automated systems can be operated remotely, leading to time and cost reductions and offering a more proactive approach to chain management.
• Remove information barriers – The sooner business leaders can access real-time information from front-line workers – such as lead time issues, delays, or changes in demand – the sooner they can respond. Removing these barriers and enhancing communication and information systems empowers decision making across all areas of the chain.
• Focus on Agile Supply Chain Management – Many supply chains are not yet agile or not agile enough.  Those where agility is embraced are in a stronger position to adapt to changeable markets and consumer demands, avoiding the losses of other supply management systems. Both technological advances and optimisation efforts enable agile chains to outperform others.
• Prioritise sustainability – More than ever, companies are coming under fire when, and if, they fail to be transparent about their supply chain and business practices. Where and how are raw materials sourced? Is a workforce being exploited? What are the working conditions? Is a company off-setting its carbon footprint? Today’s consumers demand ethical, sustainable products – from sourcing to packaging to marketing. Amazon, one of the world’s biggest retailers, is not immune from this criticism – recent investigations include alleged tax avoidance and working conditions – leading some consumers to choose more ethical retailers.

To reinforce efforts at supply chain stability, each organisation and stakeholder within a chain should: have a defined requirement; understand where the product is in its roadmap; and build in considerations and preparation for external factors.

Anticipating future change

We live in a world where business models must quickly adapt as new competitors or market opportunities emerge. Stakeholders across the chain – business leaders, distributors, retailers, providers – must anticipate and respond to such events, developing integrated strategies which can handle disruptive business scenarios.

Debra Hofman, Vice President at Gartner – specialists in supply chain technology and research – advises that “businesses need to expand their vision and redefine the notion of a supply chain. Traditional supply chain strategies that focused on incremental change, being risk-averse, and that are measured mostly on cost savings and efficiencies, will no longer win.”

Hofman outlines three key areas that those involved in supply chain decision-making should prioritise:

• New customer experiences
• The new virtual ecosystem
• New digital technologies

The ‘experience economy’ focuses on how businesses deliver customer value. The ways in which customer experience is delivered differs from business to business, resulting in a new metric by which businesses must compete and differentiate themselves. Customer service will be delivered in myriad forms: anticipating customer needs and solving issues – before the customer is even aware; offering personalised, immediate-access products and services; or building CSR initiatives into the chain.

Increasingly, business ecosystems – where arrangements and partnerships between multiple businesses contribute to a shared goal, as in a supply chain – are transforming into virtual ecosystems. Combining digital connections and digital products, these ecosystems are set to disrupt existing supply chains. Both solution development and product development will take place within the virtual supply chain space, featuring inputs from players currently unknown to business leaders. Gartner predicts that every company will soon compete in a virtual ecosystem, designing and managing the network’s performance alongside others.

Developments in information technology and digital capabilities fuel supply chain transformation. As an example, artificial intelligence is likely to create a future in which supply systems are self-adapting entities with the ability to thrive in fast-changing environments. Retailer Ocado has incorporated automation into its warehouses, relying on robotics-led grocery-picking. Michael Burkett, another Vice President at Gartner, highlights how new technology and algorithms will catalyse this change. According to Burkett, “our supply chains will be ecosystem-driven, crowdfunded, socially agreed, 3D-printed, drone-inspected, sharing-economy-provided, usage-metered, predictively maintained and blockchain-assured.” Such vast capabilities disrupt the narrative of a traditional supply chain and operations management. Supply chains of the future are hyper-quick, autonomous models, with the network and forecasting data to predict customer needs, monitor supplier relationships and inventory levels, and much more.

Learn the skills of a logistics and supply chain management specialist

Want to ensure your supply chain has the potential to weather change and adversity? Could you benefit from developing your expertise in supply chain design and management?

You could gain critical skills in strategic global supply chain management, procurement, and logistics and operations strategy with the University of Lincoln’s online MSc Management with Supply Chain programme. With the support of our experts, you can evaluate macro-level challenges and issues in strategic global supply chains and logistics operations. 

An ideal stepping stone to progression into senior roles or entry into a new career, this flexible course aims to equip you with the tools, techniques and competencies to excel in different work contexts. The degree also spans risk, finance and accounting, people, resource and inventory management, leadership and marketing.