Global supply chains have been stretched like never before as trade routes seized up throughout the pandemic. Today, ongoing threats from COVID variants such as Omicron indicate enduring supply chain challenges.
Companies caught short are taking all sorts of measures to tackle the problems. Some are cutting the number of items they sell in half to focus on critical goods. Some companies have even resorted to sending engineers to Greater China to fill their suitcases with critical components to transport back home.
There is a better way. The smartest way to succeed in the profoundly altered landscape is to engage everyone throughout the organization—not just supply chain officers and engineers—in optimizing the flow of goods and services from point A to point B.
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Meaning: the new global supply chain challenge is everyone’s challenge.
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The best companies are already embracing this reality, as we explain in our recent report, Business Futures 2021. Our global survey of 2,650 C-suite executives showed that respondents in six of 11 corporate functions—including Finance, HR and Corporate Strategy, in addition to the CSCO—ranked “Supply Unbounded” among the three most important “Signals of Change” that leaders must embrace to thrive in the future.
Unbounding the supply chain requires responding to other signals of business change, such as “learning from the future,” pushing decision-making “to the edge,” and embedding “sustainable purpose”—all detailed in our report. For instance, by shifting from centralized, linear models of supply to decentralized networks—where on-location (“edge”) decision-making and on-demand production take place—organizations can better meet customers’ ever-growing demands for fast, flexible, cost-effective and sustainable order fulfillment.
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Overcoming the physical limits of the supply chain requires reimagining and restructuring operations, with leaders—supported by employees across the organization—vested and accountable to do three things:
- Improve visibility. Our survey shows that supply chain executives lack confidence in their organization’s ability to foresee marketplace changes or identify problem areas in their own operations. However, advancing technology is enabling greater visibility. Artificial intelligence (AI) and other technologies such as open architectures, cloud-based capabilities and open-source tooling help organizations “learn from the future”—that is, to foresee market shifts and how to address them. To become a leading data-driven enterprise, BMW is training up to 5,000 employees to make better use of the company’s cloud data hub. “[We] want to switch from gut-driven decisions to data-driven decisions,” said Kai Demtroder, the carmaker’s vice president of data transformation. “We have a few hundred data scientists at BMW, but the aim is to make the data accessible to everyone.” Everyone in the organization, from engineers and product designers to marketers and salespeople, should embrace technology and contribute to a culture of innovation across the supply chain ecosystem.
- Revamp the operating model. Leading companies are moving production closer to the point of demand. For instance, many companies, from small startups to industrial and tech giants, have deployed their 3-D printer farms to overcome supply shortages and bottlenecks in faraway locations. Many interventions are rightly focused on boosting efficiency and sustainability in the last mile of delivery, which accounts for 53% of total shipping costs. In our survey, 84% of executives said they scaled up last-mile initiatives, investing in drones, autonomous vehicles and other technologies. A large retail company, for instance, has increased its use of micro-fulfillment centers: highly automated modular warehouses averaging 20,000 square feet—vs 400,000 to 1 million square feet in traditional warehouses. Many are built within or added to existing stores.
- Serve all stakeholders. Sustainable companies—leading organizations with the best chance to thrive in the altered and ever dynamic future—have “sustainable purpose” at their core. Leadership takes a multi-dimensional view of value creation that benefits all stakeholders, not just shareholders. All companies need to rethink their facilities and the products that they send through their supply networks. Using simpler, recyclable material at the outset enables reuse and remanufacturing.
As organizations embrace new ways to deliver on rising customer expectations for speedy, cost-efficient delivery, the leaders will also make a positive impact on society and the planet. This is the way to create sustainable supply chains and to set up for success in our ever-changing future.
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