Supply chain resilience : increase agility and reduce dependency to the Asian market

COVID-19 pandemic, Ukrainian crisis, recent reelection of Xi Jin Ping : all these events have an impact on global businesses, because they created disruption to global supply chain. Russia’s invasion of Ukraine, the greatest humanitarian crisis since the Second World War, has created supply-chain issues in various sectors such as agriculture, automotive, energy and food. For industrials, it became drastically harder to cope with these uncertainties and rising costs. According to McKinsey, five categories are facing challenges due to the situation in Ukraine: agricultural products, chemicals, manufacturing, metals, oil, and gas. They need to cope with shutdowns at many plants and logistics disruptions and lower their dependency towards Russia because of the sanctions. 

Recently, the political events in China and Joe Biden’s latest declarations have made it more difficult to have business relations with China.  

Structural reforms are needed to achieve optimal resilience 

It is of course possible to react to these events with a short-term solution, but in an unpredictable world, these solutions tend to be ineffective. Companies need to adapt to this new-normal and include uncertainty as a constant in their decisions and strategies. 

A good way to tackle this world of uncertainty is to build a resilient supply chain. What is a resilient supply chain? It means that your supply chain is defined by its capacity for resistance and recovery (source: SAP.com). In other words, you are capable to cope with disruptions and limit their impact on your business. 

What to expect from a resilient supply chain? 

First you’ll gain in efficiency, according to Bain and Company you will be able to shorten your product development cycles by up yo 60%. Then you’ll gain in productivity: in a recent survey by McKinsey, productivity is considered as being the main outcome of projects focusing on supply chain management. Finally, an efficient supply chain will help you to reduce risks and uncertainties, because real-time analytics will make you able to predict and quickly react to exogenous shocks. 

Invest in new technologies and more digitalized factories in order to improve your supply chain management

Resilient supply chains are based on data. The more data you’re able to collect and process, the more you can quickly respond to changes. Working with Big Data technologies such as AI and connected devices can help you leverage your strategic planning to be able to access real-time data for your operational data, as well as being able to better predict the future. Robots and drones can also help you with speed, efficiency and accuracy, because machines can adapt quickly to changing needs. Using IOT principles can also help you to interconnect all our objects, devices, and machines to have real-time data centralized in a system. Thanks to IOT it is also possible to implement workflow automations across your supply chain. In terms of CAPEX, you need to prioritize projects aiming to structurally change your supply chain management by focusing on implementing new technologies ! In others terms, it means fostering relocation investing in new digital factories, that will natively have those resilient supply chain integrated.

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