It took less than four years of massive global turbulence to upend decades of business dogma about how to design and operate a winning supply chain. Now, the question CEOs must answer is no longer “Should we reinvent our supply chain?” but rather, “How should we reinvent our supply chain?”
Supply chains have weathered multiple large-scale disruptions the past few years, including the devastating Covid-19 pandemic, the global semiconductor shortage, and inflation. Now, the most effective business leaders are applying what they’ve learned to better manage through turbulence. At the same time, they’re grappling with the supply chain implications of several big shifts in the business landscape: labor challenges, stakeholder pressure to decarbonize and improve sustainability of operations, evolving customer expectations, and transformative technologies such as artificial intelligence. They all recognize that turbulence, and its effect on supply and demand, will not subside.
Successful supply chains must now balance trade-offs between a larger, more complex set of priorities.
Resilience, digital enablement, and sustainability are increasingly important supply chain goals, while cost is no longer paramount
The reality is that it simply won’t be feasible to make a supply chain 100% resilient, sustainable, responsive, and still cost effective. That said, making only incremental changes won’t be sufficient to compete. Reinventing supply chains for the new world order clearly requires making more complex trade-offs than most operations teams have ever encountered. They’ll need to work closely with teams across and outside the company to find the right solutions.
The bottom line is that reinventing the supply chain is a CEO-level problem—and opportunity. Supply chain operations no longer depend primarily on exceptional execution and continuous improvement; having the right strategy has become even more crucial. Companies that get supply chain trade-offs right will outperform strategically and set new standards of operational excellence. They’ll also find the breakthrough business opportunities that a supply chain reset presents, deploying capital toward bigger and bolder moves. For incumbent leaders, it’s a chance to solidify their position. For followers, this is an opening to leapfrog the competition.
Read the article by Hernan Saenz, Tracy Parker, Adam Borchert, and Joshua Hinkel / Baine & Company
