PAC Predictions 2021: Rebalancing supply chains – from efficiency to more resiliency
Companies in manufacturing and retail have worked hard over the past few years to optimize their supply chains. They have done everything to minimize costs, reduce inventories, and remove buffers. Efficiency has been king. Everything has to be delivered just in time. And this approach has worked well for many years.
In 2020, COVID-19 made obvious the fact that many global supply chains only work well in a ‘perfect world’ without major disruptions. Companies did not use to see the need to balance the efficiency and resiliency of their supply chains as equally important topics. This changed dramatically during the current pandemic, when factories and borders were closed and e-commerce boomed. Companies have come to realize that major external shocks are no longer theoretical; our highly connected and globalized world is much more vulnerable and fragile than many thought.
This is why, in 2021, we will see investments made by companies to adjust their supply chains accordingly. Their focus now is on balancing efficiency and resiliency much better than in the past. In concrete terms, this means investments in four areas to improve and modernize their supply chain management systems. First, improving overall visibility by establishing an integrated logistics control tower to achieve real-time visibility. Second, increasing transparency of goods delivery conditions (e.g. cooling) by leveraging IoT and analytics technology to predict in-time delivery. Third, evaluating supply chain scenarios by running simulations to predict when and where bottlenecks are likely to occur. Fourth, based on these simulations, increasing the delivery flexibility of the current supplier network. More options have to be available to overcome future crises, and the merging of logistics data in a shared, cross-company industrial cloud is a promising approach.