17 Nov 2023
Four years into the COVID-19 pandemic, supply chain leaders are prioritizing risk and resilience, leading to a significant shift towards nearshoring and regionalizing supply chains. Companies are focusing on advanced techniques for supply chain planning, execution, and risk management, with an emphasis on end-to-end visibility, high-quality master data, and effective scenario planning. The McKinsey survey reveals that nearly all supply chain managers have faced significant issues in the past year, resulting in increased inventory buffers, dual-sourcing strategies, and nearshoring to mitigate disruptions. There's uncertainty about the future of high inventory levels, with companies divided on whether stocks will rise, stay the same, or return to pre-crisis levels. The digital-planning revolution is evident, with an increase in the use of advanced planning and scheduling systems to match supply and demand in complex networks. Supply chain leaders are facing challenges in obtaining the necessary talent to support their digitization ambitions.
Consumer products and retail organizations are preparing to tackle supply chain challenges, including potential stockouts and late deliveries during the upcoming holiday season. A recent study by the Capgemini Research Institute found that a significant number of these companies expect disruptions during the crucial shopping period. In response, CPR companies are diversifying and localizing their supply chains, with 79% diversifying their supplier base and 71% investing in regionalization and localization. "Friend-shoring," aimed at reducing risk exposure, is being actively pursued by 83% of organizations in response to global supply chain challenges such as inflation, geopolitical tensions, over-reliance on specific countries for components, fluctuating freight rates, and port congestions.
According to a recent survey by Blue Ridge and SmartBrief, supply chain leaders are currently facing challenges related to complex customer demand patterns and increased volatility. Despite these challenges, the industry experienced a 9% year-over-year sales growth in 2023. Managing disruptions due to macroeconomic trends and inbound cost pressures has become more difficult, affecting their ability to meet sales goals. Revenue growth remains a top priority, with companies focusing on aligning with consumer demand and customer service to drive revenue growth. Technology and advanced analytics, such as machine learning, are gaining traction, although some companies are uncertain about their value. Rising costs and the ability to pass on higher costs to customers have been identified as key challenges affecting margins. Inventory levels have increased since the pandemic, but this hasn't necessarily improved product availability or customer service, possibly due to misplaced assortment or product location.
"Cloud supply chain: Integrating Industry 4.0 and digital platforms in the "Supply Chain-as-a-Service"" by Dmitry Ivanov, Alexandre Dolgui, Boris Sokolov (2022)
"A cloud-based supply chain management system: effects on supply chain responsiveness" by Mihalis Giannakis, Konstantina Spanaki, Rameshwar Dubey (2019)