Unbreakable and Resilient: Supply chain and logistics of the future

A master jeweler will tell you that the tensile strength of a chain is no simple calculus, depending on factors as diverse as the wire size, cross-section, link style, metal used and load carried. Much the same, a supply chain is a complex, inter-woven lifeline that pulls a company forward with many moving parts—any of which can fail under multiple strains and pressures.

It’s no longer a question of how crucial the supply chain is to the fate of companies. The disruption caused by the pandemic amounted to the ultimate stress test, something confirmed by 81% of supply chain and logistics leaders in our research.

The pandemic put chief supply chain officers (CSCOs) in the vanguard of change and has empowered them to redefine resiliency and lead transformation in a responsible and sustainable way. It’s hardly surprising that nearly half of executives across the C-suite today see CSCOs as enablers and drivers of growth.

The former vision of the supply chain as a linear flow of goods and services has been replaced by the reality that it is a highly integrated network of systems, dependent on real-time visibility. And supply chain and logistics leaders now need to redesign their functions for a digital-powered, data-driven and sustainable future.

Yet, our research suggests that only 4% of supply chain and logistics leaders believe they are “future-ready”—the highest level of operational maturity a company can achieve—highlighting the urgent scale of the task as we recover in radically transformed post-pandemic markets.

The harsh reality is that most supply chain and logistics leaders don’t have clear visibility across the value chain and, at the same time, face significant resource, technology and funding limitations. While 81% agree technological change is happening at unprecedented speed and scale, they are constrained by aging legacy systems reliant upon a digital and non-digital patchwork.

Links in the chain

By taking specific actions, supply chain and logistics leaders can overcome these challenges and build customer-centric supply chains that stretch and flex without ever snapping.

Start by “thinking big.” Supply chains play a crucial role in meeting ever-changing customer needs—and companies need a holistic strategy that puts the customer at the center. Many leaders say the challenges they face begin with the lack of a cohesive strategy to execute integrated change across a notoriously siloed function.

Supply chain and logistics leaders need to go beyond incremental change to bridge traditional siloes and collaborate across business and technology operations. Our research shows that innovative companies make this a priority—86% of “future-ready” organizations expect business and technology to collaborate fully by 2023.

Automate to augment human talent. Most supply chains are using automation and bots to reduce manual tasks in areas like demand planning, logistics and aftersales service. As leaders invest further in automation, they must augment human talent with AI and integrated solutions, striking an optimal balance in the supply chain between people and tech.

Digital supply chains are not faceless exercises in data management, but wholly human. To take advantage of them, companies must invest in people, reskilling them to embrace radically new ways of working, from digital twins to the use of virtual reality.

Commit to data-driven decisions. As companies emerge from lockdown, the digital supply chain will be the new frontier of innovation and data the new currency of progress. CSCO decisions must be driven by high-quality, diverse, and integrated information garnered from the “digital data thread” that enables analytics to monitor every transaction across a supply chain for priceless, real-time insights.

In retail, for example, reconciling inventory with demand requires a unique balance: Accenture estimates companies getting this wrong hold 30% to 50% excess inventory. Cue analytics: A major grocery chain is using AI to transform the precision of its forecasts, ensuring accurate allocation to stores, and in some cases predicting demand eight weeks in advance. Another leading manufacturer foresees savings of $94 million by rethinking logistics management as it adapts to growing expectations and demand.

Apply a Cloud-first approach as the key tenet of digital supply chain transformation. Our research has found that only 20% of supply chain application workloads are in the Cloud today. By combining data analytics with the massive computing power of the Cloud, CSCOs open up greater possibilities to manage service levels and costs, reinforce resilience and take responsibility for environmental and social priorities. In fact, Accenture research shows that using the public Cloud decreases IT emissions by 5.9% or nearly 60 million tons of CO2 globally per year.

Empower the ecosystem. To ensure innovation remains in perpetual motion, supply chain and logistics leaders need to form and cultivate ecosystem relationships—something the pandemic has prompted many to do. We found that 39% of executives are focusing far more on links with partners because of the crisis. The power of the ecosystem is that no single player needs to own or operate all components of the solution, and that the value the ecosystem generates is larger than the combined value each of the players could contribute individually.

Catalyst for future-ready supply chains

The pandemic has been a catalyst in supply chain dynamics, increasing in equal measure the load they have had to carry­—and hence their importance to a company’s success.

As we emerge from a crisis like no other, it is the experience of adversity that offers supply chain and logistics leaders a unique opportunity to reinvent these business lifelines for a digital future in which a supply chain’s strength always exceeds the sum of its links.

Our research indicates that these leaders are optimistic about doing so—34% of CSCOs expect their operations to be future-ready by 2023, an eight-fold boost on today’s 4%.

It is well worth it. Forging relevant, resilient, responsible—and ultimately unbreakable—supply chains will allow companies to consistently deliver for customers, investors, partners and society as a whole.