One of the notable characteristics of the digital economy is the ability to trade from nearly everywhere at any time. However, the COVID-19 pandemic revealed just how vulnerable the world’s supply chains are to disruption.
Coming into 2022, Gartner predicts that the risk landscape, future of work and digital business investment will significantly impact the supply chain agenda over the next year to 18 months.
The analyst advises chief supply chain officers to incorporate disruptions and opportunities within their vision for 2022.
According to Vivek Ramachandran, chief executive office of Serai, three fundamentals have reshaped much of 2020 and 2021: from physical to virtual – COVID has changed how businesses conduct business with each other; the rebuilding of global supply chains brought about in part by continuing geopolitical tensions – and COVID as well; and the big push for transparency.
Ramachandran believes the disruption is just the beginning and will continue in 2022 and further accelerate over the next three to five years. He also believes that whereas in the past companies focused on ‘ticking the boxes to meet the requirements, such choices (option) will not be accorded to businesses in 2022-2023.
“They are going to be expected to do this. They're going to expect to have this information and not having it will actually be a challenge to your overall business model,” he opines.
He predicts that supply chains will remain shaky for some time. Global supply chains were built to minimise cost – and have done this very well. “Unfortunately, they do it at the expense of resilience of stability of transparency. Now we need to do all of that, plus obviously – keep costs down,” he argues.
Importance of ESG and transparency
Ramachandran says the business world is divided into two camps: those that are embracing transparency, visibility, and sustainability because they think it is important and they want to. And businesses who are doing it because they're being asked to.
He described the former as being proactive and doing more than what is required – but doing so on their terms. “The second segment is being reactive. They plan to meet the requirements of every new regulation. They are trying to do what their buyers want and taking it one step at a time,” he opines.
Best practice in supply chain resilience
For Ramachandran, transparency (knowing who is on your supply chain) is the minimum essential requirement to achieving resilience and achieving sustainability practices.
“Unfortunately, it (transparency) is a high bar,” he laments.
He cites the KPMG-Serai study of the apparel industry which revealed that over 80% of industry players do not know who is on their supply chain and are unable to prove who is in the production clauses.
He posits that for the coming few years, “I think the best practice is achieving genuine supply chain transparency because if you can't measure it, there's no way you can manage it.”
Regulations – good or bad for supply chain
Asked whether regulation is a handicap for the supply chain ecosystem, he posits that it is a handicap only to those who are not ready. He cites regulation in some parts of the world calling for companies to take ownership of what their suppliers do.
“I think regulations will be a force for good if companies can actually get ahead of them. If you can think about technology to help you get the information, build transparency and do it before you're required to, then I think you can thrive in this environment,” he suggests.
“I don't think it will be a challenge for the supply chains. Overall, I think it (regulation) will be a challenge for players who are lagging behind!”
Vivek Ramachandran
What to do next
Ramachandran offers three things: get internal alignment on why transparency is important, collaborate with partners, use technology to help achieve these two.
Simon Bailey, a senior research director in Gartner's supply chain team, concludes with three key trends and challenges that CSCOs must pursue in 2022:
- Update supply chain risk management approaches and reassess the way your organization prepares for and responds to disruptions,
- Focus on your employees to ensure that your supply chain attracts and retains top talent. Reinvent the future of work to deliver better employee and business outcomes.
- Craft a multiyear, integrated digital supply chain roadmap to prepare for the digital transformation needed to accelerate your business and improve your supply chain.
Suzie Petrusic, director of research and another member of Gartner’s supply chain team, adds that CSCOs must assess the current environment and determine for their organizations how temporary or permanent and isolated or widespread the constraints are that they’re experiencing today.
“Based on that assessment, they will need to align with their enterprise partners on those assumptions and the scenario plans they choose to pursue to prepare. They must take a strategic leadership position to reduce the supply chain’s long-term exposure to this environment, and to reduce the impact it has on their organizations,” she concludes.
Click on the PodChat player to listen to Ramachandran discuss how organizations can improve their supply chain odds amid the continuing uncertainties brought about by a mutating pandemic and geopolitical uncertainties.
- Let’s do a quick recap of 2020-2021. Very briefly, what 3 significant changes occurred that impacted the supply chains in Asia?
- Do you expect further chaos to continue in 2022, or even in 2023? How will it affect business performance or consumer behaviour?
- Given all the learnings and adaptation that has occurred since the pandemic, how are businesses addressing supply chain visibility?
- a. Why is it important to address this concern in 2022, or even 2023?
- The resilience and sustainability of the supply chain are becoming the key drivers of the global economy. Can you cite best practices on how companies in Asia are addressing these concerns?
- Do you anticipate evolving regulations around privacy and security to handicap the supply chain ecosystem?
- What should leaders of industries do to address this lack of visibility across the supply chain and what is Serai’s value proposition?
