COVID yanked supply chain from mailrooms to boardroom

Adapt2Market Uncategorized

… In 2022, it needs to deliver beyond the proverbial last mile.

 


 

Intuitively, the most efficient way to travel between 2 points is a straight line. This is the principle followed by most supply chains for 100+ years. Efficiency, reliability, and costs were the KPI’s to track and standardization within supply chains was the mantra for success. While its importance for economies & even armies is well documented, fact remains that it was mostly grunt work noticed only for its missed SLA’s and not when it shined.

The watershed year for this domain was 2020, when traditionally linear supply chain models focusing on efficiency & scale were disrupted and suddenly, the topic jumped up in importance from the mailrooms to boardrooms. It suddenly became a key differentiator, sometimes the primary one in the eyes that matter, ie, Customers.

 

The year 2020 was plagued by broken models, obstacles, and plain uncertainty about the future. How did they respond to this shift in 2021?

By focusing on: Survival. How to deliver the demand, without getting bogged down by the operational and logistical feasibility challenges. Most of them ignored the financial viability of supply chains, with one of the leaders mentioning that for the first time “we have an open cheque book to get the materials from wherever we can get them”. For meeting the demand, supply chains transformed from linearly sequenced links to mesh networks at every major node of the journey from procurement to last mile delivery. Direct-to-consumer models, coupled with operational towers for visibility and responsiveness became mainstream, delivering anything from used cars to fresh dairy at your doorstep.


 

 

 

 

 

 

Besides focus on technology, analytics and API’s, lot of new partnerships were forged with new mode of logistics providers.

Last year, the story took a new twist with realization that the disruption was not a one-off phenomenon (even with multiple vaccines / boosters) & in the new normal, the expectations of work, consumers and organizations are being defined afresh. The leaders responded by scaling-up the logistics, so that it became more feasible to deliver, accepting that there will be glitches along the way, differential pricing and becoming part of the overall customer experience.

One way smart leaders are thinking of supply chain function is to scale it as one of the utilities business consumes: essential to business, variable in costs and differentiated by its usage.

So, is 2022 going to be more of the same? Talking to multiple supply chain executives, its NOT.

Some of the leaders have started seeking the missing 3rd leg, ie, sustaining in a business environment which goes beyond the traditional take-make-waste cycle .

 

It may mean differently in various contexts, here are key takeaways:

  1. Few of the leaders now are looking to balance the experience with cost to serve, picking niche areas where they can have reliability of service at a reasonable price point.
  2. More broadly, there are a lot of eyes on the sustainability in the supply chain, even questioning how it will support the new, circular economy. For sure, sustainability of profits, planet and people using supply chains will be repeated pattern from here onwards. This is not a small shift & will probably define many business models away towards a more regenerative consumption.
  3. Currently, supply chains account for 90% of global industry’s environmental impact. That itself presents a huge opportunity, but in combination with the end of limitless sourcing and constrained logistics, its “The Perfect storm” which needs to ride.
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