A number of forces are putting strain on traditional global supply chains. Shorter business cycles, rising customer expectations and proliferation in the number of SKUs present significant challenges. As consumers get accustomed to same-day deliveries of highly personalized products, manufacturers recognize the need to produce, assemble and store goods closer to the point of delivery.
Macro trends are also making supply chain leaders question the wisdom in making huge batches in large factories in far-away locations. Volatile interest rates and exchange rates, tax regime change, trade tariffs and quotas, wage inflation and crop failure can all push up costs and interrupt sourcing.
The future-ready supply chain will respond to these disruptions by establishing micro supply chains, creating a new norm of decentralizing to meet customer requirements, and leveraging additive manufacturing, last mile advances and machine learning.
"Long-lasting and inflexible contracts can't meet the future customer's demands for transparency and adaptation." – Yatish Desai, Managing Director, KPMG Procurement & Operations Advisory
Partnering with the business, forward-looking supply chain leaders can help meet their company's growth objectives by focusing on:
Local production and assembly - To meet changing customer requirements, supply chains will need more local production and assembly to be first to market.
Contracts - Supply chains will be required to be agile and flexible, leading to the death of long-term, locked-in contracts. Short-term value chains will thrive as 4PLs begin act as a key coordinator across environments.
Collaboration - Collaboration across industries and competitors will increase as organizations seek to reduce costs and complexity of their operations. Platforms will be utilized to empower strategic decisions.
Technology - Advancements in technology will allow supply chains to more efficiently and effectively improve last mile, local production and reverse logistics functions.
The biggest limitation for supply chains is no longer technologies and what they can do, but rather the imagination of the people who leverage them. As enterprises around the world are facing a perfect storm of change, today’s supply chain leaders must transform business models, organizational structures and operations to thrive today and in the future.