The pandemic has led to turmoil across industries, creating a lot of disruptions and uncertainties. The dynamics of most markets have been altered in fundamental ways, requiring companies of all types and sizes to quickly reorient themselves to the changing market dynamics.
For years, the supply chain has been considered a backend function and supply chain operations were noticed only in case of a disruption. However, during the pandemic companies recognized that they need to strengthen their supply chain processes and technologies significantly to avoid being impacted by the disruptions and uncertainties. And hence, ‘Supply Chain Resilience’ surfaced as a priority being placed at the forefront of every boardroom discussion to build agile and sustainable businesses.
In order to reconcile with the new normal, it has now become critical to factor in the uncertainties while developing the supply chain of the future. In such a changing market environment, only the companies that are able to quickly reconfigure their supply chain, warehousing and logistics operations will be able to survive and thereby thrive. The supply chain management in today’s environment needs to build end-to-end synchronization between different stakeholders, so that the supply chain can be nimble to respond to a changing market environment.
This calls for a lot of learning and more importantly unlearning for the entire ecosystem.
Below are a few factors impacting businesses, all of which can largely be resolved by implementing a nimble and dynamic supply chain operation.
- Roadmap from Efficiency to Resilience
For any organization to continue on the path of growth, their supply chain must be undisturbed even if there is an issue at one or more steps such as raw material procurement, production, stocking and distribution.
Until now, disturbance in one step would lead to disturbances in the whole supply chain. This is primarily because there is heavy reliance on a few vendors/ service providers at every step. While the model has been reciprocated by companies so as to optimize ‘efficiencies of scale, the model of consolidating becomes a bottleneck when one or few of the stakeholder in the consolidated pool are impacted.
The pandemic has alerted companies to the risk of dependency in case the vendor or the region was disrupted. To de-risk their businesses and to build supply chain resilience, companies, therefore, have to diversify their resources, and move to a model which allows them to tap into a larger number of vendors/service providers – be it raw material suppliers, logistics providers, warehousing, distribution partners, etc.
The pandemic has accelerated the adoption of online channels for many categories and has created a truly multi-channel market. The dynamics of operating in an omnichannel environment are fundamentally different from the traditional offline (plus some online presence) environment that companies are generally used to.
For instance in the Omni-channel world, whether the consumer’s interest is generated online and the supply happens at an offline store and vice-versa is unknown. In other words, where the demand originates and where it is fulfilled is fluid. This unpredictability requires companies to redesign their stocking and distribution processes and create a nimble infrastructure. This will allow them to dynamically adjust to the points of demand origination and demand completion. In an omnichannel world, traditional companies with legacy systems are rapidly losing market share to emerging companies who are getting better at being discovered by consumers and providing them with a superior / quicker delivery experience. Many legacy companies are struggling to cope up with the omnichannel market, however many have proven to adapt to technology rather swiftly.
- Geo-political situation
The changed geopolitical realignments and regional conflicts have exposed the vulnerabilities of companies with a concentration in such regions. As companies with heavy dependency on Chain are pursuing a China+1 strategy, so are companies with a concentration on some geographies – whether they are international or domestic. You can imagine the complexity of re-distributing production or procurement, however difficult it sounds, needs to be done.
All the above-stated factors require significant technology adoption. Therefore, technology that enables them to quickly realign their supply chain dynamically and integrate multiple sources becomes critical. And as companies move to a diversified supplier base model, technology that synchronises seamlessly between all stakeholders becomes equally critical.
Digital transformation will help relieve the strain on the supply chain as companies are re-designing and reconfiguring their supply chains via technology, In today’s environment, they need these systems to be quick to deploy, move to the cloud, plug-and-play, connect to the other stakeholders and be dynamic/nimble. Some of the progressive minds are already using this disruption as an opportunity to not just make their supply chains nimbler, but to make their businesses sustainable and ESG compliant.
Interestingly, these innovations are largely driven by startups and emerging companies. From the lens of supply chain management in businesses, while it is indeed an opportune time, especially, for start-ups entering the space, at the same time the expertise becomes crucial to curate sustainable supply chains and thereby thriving business. An ecosystem that curates these innovations and provides them with the capital and expertise to help companies across the world can be a great enabler for creating competencies that are needed to survive and thrive in the changing business environment or the new normal as it is fashionably called.
The pandemic was indeed a lesson on many fronts. But it also gave us the opportunity to drive transformational changes and hence opened businesses to innovation and made them more adaptive to dynamic environments. In conclusion, for businesses to sustain, and grow the supply chain of the future needs to be agile and let’s say, surprise-proof.
Views expressed above are the author’s own.
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