Recent research has highlighted the lack of end-to-end visibility and resilience across organisations supply chains in several sectors.
End-to-end or start-to-finish supply chain procedures refer to the process that starts with the procurement of goods and materials from first base suppliers and ends when the product reaches the customer.
A report by the EIU (Economist Intelligence Unit) on behalf of the ASCM (The Association for Supply Chain Management) evaluates how publicly listed pharmaceutical, retail, and consumer electronic companies have adapted to change, the report is a warning to those who choose to bury their head in the sand.
The EIU highlights the built-in resilience capabilities of the companies surveyed. Analysing the risk management strategies for long and short-term supply chain problems and how businesses have performed over the last year as a result.
Reporting on the Research
The report, entitled “The Resilient Supply Chain Benchmark – Ready for Anything? Turbulence and the Resilience Imperative,” offers some illuminating findings. 52% of companies or just over half rely on internal data. 37% of companies reported their reach was hampered by either the lack of internal communication, silos, or, much worse, by having no relevant data at all.
By working with internal data only, an organisation’s ability to detect threats or calculate how disruption will unfold across the supply chains and within business units increases significantly. In addition to improved visibility, up-to-date data from across the supply chain unlocks the ability to function at a higher level. Leading to better real-term capabilities that lead to increased supply chain resilience and innovation in the long term.
The benchmark report shows that forward-thinking companies use a ”looking in” philosophy rather than an outward approach. A “looking in philosophy” simply put is when systems are investigated internally and the solutions implemented are available close to home.
Companies do this by integrating supply chain partners and stakeholders by forecasting demand and planning for the long term using data and analysis to understand where the most common vulnerabilities are and how to future-proof operations against them.
Sustainability in Business
Key insights from the report include an action plan ranking system starting with sustainability as a vital way to build resilience over the coming three to five years. The ASCM has revealed a gap between what is being reported and reality. 42% of organisations have targets to reduce carbon emission through the supply chain or Scope 3. In reality, electric vehicles and automation while considered top priority are being implemented at such a slow rate targets are unlikely to be met.
The “Resilient Supply Chain Benchmark” report highlights the fact that climate change is the most important risk factor that will drive operational change in the 21st century. However, the report says that only 57% of companies claimed that they had sustainability plans that met the criterion.
Corporate Philanthropic Acts Can Preserve Future Relationships
During such a prolonged crisis such as we saw in 2020, processes that seemed non-essential were blindsided by the critical processes by failing to respond to demand leading to a failure to provide vital products and services.
High-performing companies are building strategic resilience within the supply chain by fostering strong long-term relationships with suppliers, customers and stakeholders. Forward thinkers work together with their supply chain partners to share best practices and promote joint long-term planning, emphasising financial resilience to look after the supply chain network.
One positive outcome highlighted that over 55% of benchmarked companies stated that they helped suppliers remain solvent during crisis times by directly involving themselves in financial injections and strategic help. These philanthropic acts will preserve future relationships.
The pandemic has accelerated change in the supply chain without exception. Not only has it affected companies who are looking for products to be delivered it has also affected the future of other supply chain industries, such as the air cargo industry.
One such change is automation. Automation was always part of every forward thinking company’s longer-term strategy as it improves efficiency and resilience. Plans for automation that organisations were to implement within the next five years are now greenlighted for early adoption due to the unforeseen events of 2020/21.
Technological advancement such as 5G connectivity, artificial intelligence (AI), robotics, and machine learning are making total automation a reality. “Smart’’ services, such as the internet of things (IoT), are seen as the way forward and will not seem an unusual concept in as little as 12 months.
If we look at Amazon.com Inc who’s net profits have increased by 84% because of demand and supply chain efficiency, reliance on people has been offset with an increase in automation. Amazon will go one step further and look to automate every part of the supply chain.
The future of the automated supply chain features drone delivery and, eventually, self-driving delivery vehicles. As far fetched as automation sounds, the rollout of AGVs (automated guided vehicles) to move stacking pallets and crates, and automated storage and retrieval systems (AS/RSS) that store goods in large warehouse racks and use rail-shuttle robotic devices to move the goods along is already a supply chain feature.
What is the future for the Supply Chain?
The last year has shown that supply chains have evolved, and the future lies in automation in both physical (staff) and digital formats (loT). The potential to combine strategies with technology must be forefront in the mind of any adverse risk companies in order to create a sustainable supply chain and increase end-to-end visibility.
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