3 minute read 7 Mar 2019
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How to reinvent your supply chain for the digital age

By

EY Americas

Multidisciplinary professional services organization

3 minute read 7 Mar 2019

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Disruption is coming at us from all directions.

In a 2018 survey, 67 percent of participants across a number of Asia-Pacific clients in dedicated supply chain and manufacturing functions cited digital disruption as the most pressing challenge facing their operation.1

From a market context, customer expectations are evolving rapidly, as people have more information at their fingertips than ever before. Today’s consumer is fickle, price sensitive and at the same time demanding of a high-quality experience. Companies have to navigate exponential change, anticipate a range of consumer futures and stress test all their assumptions.

Other disruptors are also reshaping entire industries. 

Technology is creating new trading platforms and dismantling old ones, and trade flows are being redefined by changes to foreign policy and tax regimes.

And in a globalized world, where climate change and human rights issues are everyone’s business, there is a greater spotlight on ethical sourcing and environmental sustainability. In this context, organizations must work harder than ever to maintain their social license to operate and encourage ethical behaviors across their extended supply chain network.

Traditional methods of manufacturing goods and moving them from place to place no longer work in a digital age. Companies need to evolve their supply chain strategies to deliver against the demands that omnichannel (any time, any place) requires of the consumer value chain.

At the same time, organizations are faced with “duality of growth.” Business leaders must transform their processes to achieve short-term objectives, while looking to the horizon to an entirely new business model, purpose-driven, with a differing competitive landscape.

Is it any wonder business leaders are struggling to adapt?

Increasingly, large multinational companies have little supply chain visibility, leaving them unable to meet customer demands and exposing them to more risk. Inventory levels are misaligned, there is leakage of materials and high running costs, not to mention low customer satisfaction and service levels.

Today, supply chain reinvention is not something restricted to manufacturing or logistics. Instead, the entire customer journey is at the heart of the process – which means everyone in the business must be involved in reinventing how the operation supports the growth of the business.

The goal is to identify quick wins – and to realize those wins quicker than ever before. 

Technology is creating new trading platforms and dismantling old ones, and trade flows are being redefined by changes to foreign policy and tax regimes.

And in a globalized world, where climate change and human rights issues are everyone’s business, there is a greater spotlight on ethical sourcing and environmental sustainability. In this context, organizations must work harder than ever to maintain their social license to operate and encourage ethical behaviors across their extended supply chain network.

Traditional methods of manufacturing goods and moving them from place to place no longer work in a digital age. Companies need to evolve their supply chain strategies to deliver against the demands that omnichannel (any time, any place) requires of the consumer value chain.

At the same time, organizations are faced with “duality of growth.” Business leaders must transform their processes to achieve short-term objectives, while looking to the horizon to an entirely new business model, purpose-driven, with a differing competitive landscape.

Is it any wonder business leaders are struggling to adapt?

Increasingly, large multinational companies have little supply chain visibility, leaving them unable to meet customer demands and exposing them to more risk. Inventory levels are misaligned, there is leakage of materials and high running costs, not to mention low customer satisfaction and service levels.

Today, supply chain reinvention is not something restricted to manufacturing or logistics. Instead, the entire customer journey is at the heart of the process – which means everyone in the business must be involved in reinventing how the operation supports the growth of the business.

The goal is to identify quick wins – and to realize those wins quicker than ever before. 

The duality of growth demands that companies keep doing what they do best, while also looking at the long term – and focusing their future not so much on what their competitors are doing but at how their customers’ expectations are evolving.

Manufacturers in the consumer products industry have always been close to the customer to observe how people use and interact with their products, but in recent years, one of the leading players has accelerated their process of product development further. Using leading edge technology, big data and behavioral science, and by cultivating an innovation culture, the manufacturer is able to better understand customers’ behaviors and the contexts that shape those behaviors. This resulted in them getting a first profitable case faster and pushing new products into market as quickly as in 90 days. Meanwhile other industries, such as construction and aviation, can take five years to transform a new idea into reality.

So, is your organization ready for supply chain reinvention? Ask yourself:

  1. Identification: How easily can I identify the areas of our supply chain that cause the biggest challenges for our business?
  2. Information: How do we harness the power of our own data and tap into insights from suppliers and customers to understand how our supply chain is performing?
  3. Integration: Is advanced technology, such as AI and blockchain, integrating into our supply chain to optimize end-to-end performance?

Change is coming even faster than we can predict. Don’t sit back and wait for the market to decide what happens next. Act to transform your business and reinvent your supply chain so that whatever comes next, you are prepared and agile enough to take advantage.

  • Show article references

    1. This survey was taken in an EY webcast "What does supply chain reinvention mean to you?" held on 4 December 2018.

Summary

Supply chain reinvention is not something restricted to manufacturing or logistics. Instead, the entire customer journey is at the heart of the process – which means everyone in the business must be involved in reinventing how the operation supports the growth of the business.

About this article

By

EY Americas

Multidisciplinary professional services organization