Supply Chain Management: the key to success in the new normal

It has been over a year since much of the world began transitioning towards a ‘new normal’, in the hopes of alleviating the pressures businesses had faced since the onset of the pandemic. Yet, supply chains continue to experience a level of unpredictability reminiscent of those times, with company output constrained by shortages running 3.5 times the long-run average.

This disruption, compounded by events including the Russo-Ukrainian War, China’s zero COVID-19 policy, spiralling inflation and the ever-growing climate crisis, are making it increasingly difficult to meet the demands of the connected consumer. Businesses relying on traditional supply chain thinking, preoccupied with perfecting the balance between cost and service, are at risk.

Organisations must adopt a refined approach to supply chain strategy, one that takes a holistic view, with equal focus on agility, resilience, and sustainability, paving the way towards an intelligent supply chain.

The five features for supply chain success

The intelligent supply chain displays five key features:

Resilience: Global supply chains, shorter product life cycles and unpredictability have increased the probability of supply chain shocks. With more than 56% of businesses suffering a supply chain disruption each year, it is imperative for businesses to effectively weather these events.

Consumer focus and agility: Today’s connected consumer wants to be understood. Their needs must not only be met but exceeded and anticipated. If businesses are unable to meet these demands, half of consumers say they are likely to switch brands.

Integration: Connected ecosystems and systems integration provide businesses with visibility, transparency and harmony. Capgemini helps clients achieve this through its partnerships with companies such as SAP which provide end-to-end solutions enabling greater reactivity and predictive ability across the supply chain.

Sustainability: Sustainable supply chains are built to last. The Carbon Disclosure Project estimates that companies could face roughly $1 trillion in additional costs unless they take measures necessary to reduce their supply chain’s impact on the environment. Meanwhile, businesses that adopt sustainable supply chain measures could see reductions in cost by 9-16%.

Efficiency: Every minute counts. Supply chains that react quickly to volatility, whose processes are seamless, whose product movement is optimised and whose service operations are streamlined will be best placed to meet the demands of their consumers.

How can businesses tackle these features?

Businesses must begin by adopting a strategy that places the consumer at the centre of a digitally enabled supply network.

A critical component of this strategy is creating an automated end-to-end demand and supply planning capability that works on a continuous cycle. Connected autonomous planning achieves this through harnessing data and predictive planning technologies, allowing businesses to respond to demand in real-time with greater agility.

Meanwhile, connected manufacturing bridges the gap between inventory and product, leveraging digital factories to monitor production and maintenance activity in order to optimise processes whilst reducing failures and wastage. Such solutions allow businesses like Nike to successfully outsource and contract its supply chain across over 500 factories whilst delivering 39% of its sales through direct-to-consumer services with mass personalisation features.

In order for these solutions to be maximised, businesses must look at scaling their growth online, capitalising on the growing demand of connected consumers. This became a particular area of focus for businesses during the pandemic.

For these solutions to work in harmony, businesses must have real-time visibility across their supply chains. Cognitive control towers enable this by leveraging large swathes of data and using advanced analytics to provide insights and recommendations to a dedicated team of supply chain experts.

Pfizer’s distribution of its COVID-19 vaccine relied heavily on such solutions; vaccines were tracked from origin to destination using sensors capturing environmental information which was sent to a cloud-enabled software and analytics platform that allowed Pfizer to react in real-time to changes in these variables, ensuring vaccines were delivered successfully.

The end-to-end integration of these four components will enable businesses to navigate the current global landscape by addressing the key features of an intelligent supply chain, moving them one step closer towards a new normal.

Victor Fohn

Associate Consultant

Victor is an Associate Consultant in our Supply Chain team specialising in strategy and operating model transformation within the consumer products and retail sectors.