Companies across nearly all industries have faced some type of unprecedented supply chain disruptions over the last 2-3 years. Whether that meant importing delays, lower-than-normal inventory in their warehouses or the inability to fulfill customer orders promptly—or any other supply chain-related roadblock—companies are looking at where things stand and what can be done to avoid such problems in the future.
According to a new report from Capgemini Research Institute, today’s organizations aren’t very confident in their ability to ward off or tackle new supply chain disruptions that may be lurking around the corner in 2023. In fact, it says less than 20% of the 1,000 consumer products, retail, manufacturing and life sciences companies that it surveyed feel equipped to handle disruptions in the global supply chain.
In How Greater Intelligence Could Supercharge Supply Chains, Capgemini details this and other findings that paint a picture of a business world that’s not overly confident in its ability to address disruption. The firm sees sustainability and resilience as two primary focuses for companies right now. It says that sustainability is a priority for all stakeholders, who are putting pressure on organizations to reduce CO₂ emissions and improve labor practices all along the supply chain.
And, it says resilience is essential for organizations to overcome the external, global black swan events – such as the COVID-19 pandemic, the war in Ukraine, the recent blockage of the Suez Canal and rising energy shortages – which are becoming more frequent and severe, impacting both top and bottom lines.
“Imperatives arising from consumer preferences and a societal push for localization are also exacerbating these issues,” Capgemini states in its report, which also found that:
- Over half (54%) of organizations acknowledge that their supply chains have altered significantly in the past two years.
- Less than 40% of the firms surveyed have adapted their IT infrastructures, adopted a data-driven culture and established collaboration systems for suppliers, customers and other partners.
- Over the next three years, organizations plan to increase their supply-chain transformation investments by 17% on average, and expect to double their business outcomes in terms of growth, profitability and sustainability.
- Just 27% of firms are implementing end-to-end supply-chain transformation that will integrate front and back offices.
- 45% of companies absorb a significant portion of the cost increase due to resilience, sustainability and customer-centricity efforts, while remaining unaware of their true end-to-end baseline.
- 35% find it difficult to balance objectives that may be ideologically complementary but often compete for resources, particularly in a period of high inflation.
- 95% of firms surveyed recognize the need to reduce CO2 emissions across the entire supply chain, but just 13% feel “well prepared” to handle these changes.
“While supply chains have changed a lot under the pressure of events, the foundations from which to move forward are not yet in place,” Capgemini points out. “Organizations have an opportunity to build intelligent supply chains that are more efficient, resilient and sustainable, allowing for a focused customer-centricity.”
Learning from the Front-Runners
According to Capgemini, supply chains currently account for over 90% of an organization’s greenhouse gas emissions (GhGs). Knowing this, companies are increasingly reshaping business strategies to prioritize sustainability, with many setting top-line targets to improve the overall environmental impact of their products and services. “There is a clear need for supply chains to be at the core of these sustainability initiatives,” the firm states.
On a positive note, Capgemini says that a small group of companies—about 10% of the organizations that it surveyed—have already laid the foundations, consolidated their investments and begun to realize at least 20% higher benefits from those efforts. “Organizations could learn from the best practices of these front-runners,” the company adds.