With spring just around the corner and rising hope that the vaccination rollout will eventually bring some relief to restrictions, it is time to start thinking about how the world of work should move forward. While the pandemic forced us to adopt new ways of working, we have learned some valuable lessons in the last year that should not be quickly forgotten. In fact, some of these new strategies should continue long after the crisis subsides as we have come to the realization that the workforce, the workplace and work itself will never be the same. Here are three concepts to consider as you plan for the future.
The evolution of supply chain business models has been accelerated by unprecedented disruptions. As a result, there has been a clear shift from analog supply chains models of the past into a trajectory towards a digitalized ecosystem. These new business models recognize and necessitate the move to a digital and integrated supply chain that provides visibility and ease of use for consumers.
This journey is about moving towards a world where all parties participating across your network are connected to a single version of the truth. Supply chain thinking is shifting from ‘linear supply chains’ to ‘supply chain eco-systems’ propelled and supported by digital technologies.
Gartner has established a five-stage model of the journey to supply chain maturity, ranging from manual, analog systems to a fully digitalized ecosystem. Key differentiators along this evolutionary chain include consideration of data and collaboration, with the ultimate goal of integrating data across multiple systems to achieve a fully connected ecosystem that provides transparency and visibility for your company both internally and externally.
For supply chain professionals in your organization to receive the flexibility and agility they need to increase speed, drive down costs, and satisfy customers, there are four critical components your company must possess. These include real-time visibility, predictive insights, prescriptive decision support, and real-time collaborative execution, all of which can be achieved through the implementation of supply chain control tower.
Deploying a network model to achieve real-time, end-to-end visibility
Visibility is the foundation of every control tower capability, with all advanced decision making and responses within the execution window relying upon the quality and timeliness of visibility. Keeping order, shipment, and inventory status updated for all parties to see in real time is critical to success., but this often proves a core challenge for control towers, since highly dynamic supply chains can change at a rate of over 50 changes per second.
B2B transaction data from the Infor Nexus network shows a major shift in supplier payment terms following the onset of COVID-19 in March of 2020. In the first three months of last year, the majority of payment terms were 30-45 days. In March, 66% of all orders were on terms less than 60 days.
By July, the buyer-supplier payment dynamic had completely flipped, with 65% of orders on terms greater than 60 days. This trend continued throughout the year with 60 day, 90 day, or even longer payment terms in place as buyers moved to preserve their own capital. As a result, many suppliers found themselves in need of a lifeline. For many buyers and suppliers, supply chain finance programs became that solution, removing risk and stress from supply chains by ensuring suppliers access to early payment.
The International Finance Corporation (IFC), the World Bank’s private sector arm, set out to provide relief to businesses in emerging regions as the 2020 pandemic roiled global markets. Stephanie von Friedeburg, MD and COO of the IFC, looks back on the year in a recent podcast where she reflects the following:
“There's been a substantive hit on supply chains, trade shocks. And so our trade finance business, which has always been a core of our business, has grown very substantially. And we've seen it in the poorest countries in particular, where we know that we need to continue to keep trade flowing. So we've seen an increase in trade finance in that relief piece. We've also seen many of our existing clients needing working capital and needing liquidity, and we believe it was important for us when we typically don't do a lot of liquidity or working capital, but important for us to step in and help our existing clients to withstand the crisis, keep them solvent so that when we come out of the crisis, we can rebuild faster and better.”
No vertical market appears to be immune to the hardships and challenges resulting from the unprecedented uncertainty and volatility of today’s geopolitical strife, climate disasters, and global pandemics. Which makes it even that much more challenging for organizations to try to meet consumer preferences and requirements that are always changing.
All of this uncertainty underscores the importance for organizations to focus on optimizing all facets of their supply chain costs—including cost-to-source, cost-to-procure, cost-to-manufacture, logistics, and handing. Supply chain optimization must also factor in the direct labor that drives supply chain activities in manufacturing, distribution, and retail. Total cost has never been more critical to understand and control—regardless of an organization’s industry or sector.
Digital technology is changing the world, one industry at a time. With these changes comes a reimagining of the supply chain, from the systems businesses use to communicate and interact, to the strategies they deploy to move goods around the world. Along the way, our expectations for speed, service, and quality go up, forever altered.
Digitalization gives rise to new business models, in which real-time connectivity, greater visibility, reactivity, and anticipation become the underlying characteristics of our supply chains. But this kind of change isn’t easy, and transformation doesn’t happen overnight. While many businesses have adopted technology to augment or enhance existing processes, they’ve still got a long journey ahead.
By taking a staged approach to digital transformation, and building greater connectivity across the supply chain, businesses can pave the way toward a fully-connected future, while still being able to tackle the biggest challenges they face right now.
The year 2020 approaches with promise amidst a backdrop of innovation and transformation occurring at a speed never witnessed before. We’re experiencing a digital revolution that is changing the way we live, work and interact with one another. The power of information is just beginning to blossom as more of our decisions are based on data and use cases for artificial intelligence are delivering significant value. Meanwhile, global movements to protect the planet and operate responsibly continue to grow in importance. And an undercurrent of de-globalization continues to change the way countries and companies interact with each other.
Here’s a look at some of the emerging trends and themes you can expect to take shape in 2020.
For the longest time, procurement and supply management teams have focused on cost-savings and providing accurate supply for their businesses. More specifically, their value was primarily limited to efficiency (the minimization of cost for procurement services) and effectiveness (the maximization of business value). In recent years, there is an increased focus beyond price reduction, with concentration towards contribution to total cost of ownership (TCO), and the management of overall value and demand.
Today, it’s about the value experience: the optimization of procurement relationships, engagement and collaboration for employees, customers and suppliers. In doing so, start to consider ways procurement and supply management teams provide value to the rest of the organization, outside of cost cutting.
This time last year, we looked at the Fashion Revolution movement and its clarion call for transparency across fashion supply chains. Since then, the movement has gained even more momentum; 2017 numbers reflect greater participation on social media with more consumers asking #whomademyclothes, and more workers posting photos of themselves replying, #imadeyourclothes.
Crucially, more brands are responding to the demand for transparency. 2017’s Fashion Revolution Week had over 1,000 mainstream clothing brands respond to #whomademyclothes, up from around 400 the previous year. It’s a safe bet that this form of engagement will keep growing in the coming years. So the real question becomes, what’s next?