Opportunities will open up as supply chains adapt to crisis
DECISIONS on how to organise supply chains focused in the past on scale effects and lowest cost. Risk was seldom a consideration. But this has changed because of the Covid-19 pandemic and in light of Brexit.
Global supply chains have proved vulnerable. According to the World Economic Forum, 75pc of the world’s manufacturing output has been hit by Covid-19.
While not all industries in Ireland will be able to go entirely regional, and certainly not in the short term, both Covid-19 and Brexit will speed the transition toward shorter regional supply chains that are closer to customers. Indeed, it’s already happening.
Individualisation and impatience by consumers are driving faster delivery expectations. Take, for example, Amazon Prime and its products specifically designed for the customer. The only way to make these viable is via more local production and logistics.
Covid-19 has accelerated the adoption rate of new technology, both in its maturity and our willingness to use it.
The current geopolitical landscape – with its trade wars and tariffs, both real and threatened – have reshaped global trade. We have already seen many companies relocate operations because of this.
As companies come out of Covid-19, and question how they can restart operations, we will see supply chains transform more fundamentally.
How can your business prepare to succeed in uncertainty with shorter supply chains, and to what extent can you leverage regional suppliers? Here are some important pointers.
:: Build in supply security – duplicate critical supply sources and increase safety stocks on core resources and products.
:: Gain real-time transparency, map supply chains with new track-and-trace technology, including key resources, suppliers and customers.
:: Get closer to your customer, evaluate strategic product portfolio with the new insights you’ve gained.
:: Invest in advanced manufacturing technology (Industry 4.0), increase automation in production, logistics and administration, and embrace the Internet of Things to optimise operational visibility and management.
:: Adapt your footprint – identify local production sites and connect them via a digital backbone.
:: Review tax implications of the changed footprint and related supply-chain flows.
:: Build a connected supply chain using technology, with video-conferencing, track-andtrace solutions and integrated business planning tools.
:: Investigate the circularity of your operations and their ecological impact.
:: Develop multiple channels to market, especially direct to customer online.
:: Use the gig economy in more traditional industrial environments such as supporting a new channel to market.
Many risk-reward decisions loom for businesses in this new landscape, with its more localised supply chains driven by technological and operational innovation.
While this will have impacts on employment and upskilling, a fundamental change on supply chains is on the horizon – and opportunities are waiting to be harnessed.