In the 2020s, end-to-end supply chain management will be on the board room agenda.
The typical supply chain is no longer there. Customer expectations are rising, products and services are expanding, supply chain partners are multiplying, supply chain environments are increasingly volatile, making supply chains vastly more complex with greater risk exposure. To understand and manage the implications of the top business risks as presented at WEF, companies need end-to-end supply chain visibility. And as such, supply chain management will be more and more on the board room agenda.
From climate change to trade wars and state collapse, risks to complex supply chains loom larger than ever. On top of this, supply chain management will require sharing greater amounts of data than ever before. The key is to know where to start in tackling the challenge of supply chain management as it is becoming an essential topic across all spheres of management (strategy, procurement, customer & innovation, technology, data & analytics, sustainability).
Achieving supply chain transparency is not an end in and of itself. It is about managing a company’s bottom line and enhancing long-term growth potential by increasing visibility, traceability and transparency. To build more resource-efficient operations, incorporating sustainability considerations is key as they will generate actionable insights on supply chain information.
Supply chain transparency and sustainability risks and opportunities extend through all tiers of the value chain, with a large focus on the supply side: cotton from Uzbekistan, tea in Malawi and mineral supply chains reaching deep into Central Africa. Action on supply chain transparency can be issue-led and provide assurance to internal and external stakeholders on topics ranging from forced labor, circular supply chains, and fair wages to deforestation and embedded carbon emissions. All of these issues and more can have direct impacts on brand and reputation in the global marketplace. The time to get ahead of them is now.
To help our clients prepare their supply chains for a brave new era of transparency, we launched KPMG Origins, a blockchain-based “track and trace” platform to support industries including agriculture, resources, manufacturing and financial services. Software is there for those who are ready. But the first steps are more basic.
Sustainability leaders can start with three easy steps: (1) understand consumer needs and how these are driving the push for enhanced transparency and sustainability reporting through the supply chain and across product lines; (2) map your value chain with a focus on the most critical raw materials and agree on the major pain points; then (3) identify trust points - you need to understand which data can best tell the story and can build a reliable narrative around your sustainability and transparency reporting.
As the number of products being traced expands into the hundreds of thousands, it will not be possible for suppliers to provide traceability on all ingredients and inputs. What suppliers should be asking for is clarity on pain points within the supply chain, creating a sequence map that indicates clear priority areas that they can report on to end users. This information can enable direct procurement, cut-out unnecessary agents, help to optimize stock flows through the supply chain, reduce currency risk, and increase efficiency and integration of system-wide logistics.
Download our brochure on Supply Chain Transparency: creating stakeholder value.
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