Supply Chains May Be Stalled

At the root of the supply chain crisis is a surge in demand for goods among consumers who have come out of lockdown and are holding $5 trillion in savings they are eager to unlock. The global spending boom has strained networks beyond their capacity, with additional demand translating to an estimated 119 million additional shipping containers between January and August.

Given this unique moment in time, it’s no surprise that goods are stuck in ports, with persistent delays and high inflation fueling fears among supply chain executives that there is no quick fix. Accenture’s recent survey of global C-suite leaders reveals that executives are concerned that the pandemic’s supply-chain fallout could last for years — as confirmed by the all-time record of more than 3,000 references to “supply chain disruption” in earnings calls in a single week. Last month.

However, there is opportunity amid the turmoil. Most executives believe that increasing customer expectations of fulfillment will prompt companies to restructure supply chains, shift production closer to demand, and embrace automation. This can pay off: Meeting customer expectations can lead to new value derived from greater certainty, better experiences, more sustainable operations, and consistent quality. Supply chains may be disrupted but they can still provide opportunity.

From crisis to certainty

Accenture’s survey of 866 companies in six countries also highlights concerns that the economic impact of the crisis may persist: Most respondents believe it will last more than a year, while 33% of executives say it could last three years.

However, the primary concern is uncertainty. Many companies currently cannot keep track of the movement of goods or know what is at risk of error. And their responses are shaped by the way COVID-19 has not only made supply chains a strategic priority but has also accelerated technology trends fueled by customer expectations.

In the short term, 43% of executives order supplies early and develop contingency plans to mitigate shocks, 35% are increasing inventory, and 37% have identified new suppliers. However, in the long run, supply chains are being reinvented to ensure flexibility and prepare companies to handle the unexpected: 43% of CEOs already do.

The key to flexibility are powerful digital tools that enable organizations to integrate diverse data across every function – often in real time. Successful companies will have a unified view of demand and will be able to constantly balance inventory while being prepared for any disruption.

Think about how difficult it is for supermarkets to order the right inventory. A major grocery retailer has transformed its ability to forecast demand using an AI-based system that orchestrates human-machine collaboration.

Similarly, Accenture and MIT have designed a stress test based on the “digital twin” supply chain, enabling users to avoid sudden spikes in demand, supplier shutdowns, material shortages, or port disruptions. This technology has always given pioneers like Amazon an edge, but shipping giants are also building their own software and AI companies are creating custom tools to order.

seamless and sustainable

The combination of analytics and the cloud is having drastic implications, providing huge potential for automation at scale and unprecedented possibilities to manage service levels and costs, enhance resilience, and take responsibility for environmental and social priorities. This will create better experiences for customers, stakeholders and employees and enable coordinated and seamless operations like never before.

Our survey indicates that the vast majority of business leaders (79%) expect a technology transformation to improve supply chain visibility in real time. This, in turn, will unlock new value in a number of ways, not least by allowing companies to increase their focus on consumer behavior. For example, a consumer goods giant saved $1 billion by switching to a data-driven digital procurement model, recouping costs in two years, and a global fashion retailer saw customer retention rise, market share increased by 28%, and profits doubled. Employment.

Moreover, sustainability priorities mean that customers and stakeholders now expect companies to dispose of excess inventory, reduce waste, or make and ship only what customers want. As a solution, a manufacturer creates a user-focused, demand-driven “made-for-sale” approach to production informed by real-time insights that are 20% efficient and 30% inventory lower.

Bringing production closer to consumption is more green, reducing the carbon footprint of the supply chain, and nearly three-quarters (73%) of company leaders expect this to happen. A great example of how this is being done is pioneered by grocery stores partnering with vertical farms to grow produce at points of sale, while others are reallocating space at local fulfillment centers.

Indeed, the evidence suggests that we can expect “think local” to become a mantra for production and fulfillment as many companies shrink global supply chains to regional networks. But these changes also have implications for the materials and parts manufacturers use, as leaders redesign products to avoid poor sourcing and ensure consistent quality.

Adapt to survive

The pandemic has put supply chain leaders to the greatest stress test ever, causing them to reconfigure operations so that they are relevant, flexible and accountable. Global supply chains have faced a perfect storm of challenges, but the devil isn’t just in the details – the fundamental problem is the model itself, which has evolved to improve efficiency in a timely manner with no room for error.

For a moderate investment, integrating data, analytics, and automation into intelligent processes can not only lower costs and increase revenue—but also increase customer retention. Digitization can transform customer experiences while providing new transparency — like Amazon’s view of product delivery times.

As Albert Einstein said, “In the midst of every crisis lies a great opportunity.” We stand on the brink of a supply chain revolution poised to capitalize on new layers of value, efficiency and sustainability.

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