Businesses of all types are contending with a myriad of both new and ongoing supply chain challenges: geopolitical conflicts such as the war in Ukraine, shortages of critical materials like semiconductors, and disruptions in global trade. The impacts of these difficulties — cost pressure, lost sales, and tight working capital, just to name a few — can pose an existential threat to any organization.
To better understand how companies perceive risk and prepare to face the challenges ahead, we surveyed more than 100 top executives from nine industries across North America and Europe. From the responses, we identified the organizations that stood out from their peers (“leaders”) and three ways they differentiate themselves: adopting a comprehensive strategy that is prioritized throughout the company, proactively deploying advanced levers, and using technology to enhance their supply chain capabilities.
Leaders implement comprehensive supply chain strategies
According to our survey, 55% of leaders have executed an end-to-end supply chain resilience strategy, nearly double the percentage of organizations that were significantly behind their peers and targets in supply chain (“laggers”).
Overwhelmingly, the strategy and supporting initiatives are valued at the board level, which trickles down throughout the rest of the organization and helps it overcome the usual barriers of insufficient money, talent, and capacity. Leaders also make sure to mitigate common obstacles, looking beyond any single initiative or function, and determine the impact across the whole supply/value chain.
Leaders deploy proactive supply chain levers
While it is important to assess the impact of supply chain difficulties, leaders care more about mitigation than developing playbooks to manage damage control. They are more than twice as likely as laggers, who often gravitate toward inexpensive, easy-to-implement levers, to focus on proactive rather than reactive capabilities (69% versus 32%). Similarly, leaders tend to concentrate on measuring key performance indicators (KPIs) that are more actionable in nature, such as the percentage of locally sourced supply or supplier performance/scorecards.
Leaders are quick to adopt new technologies to augment their supply chain capabilities
Nearly two-thirds of leaders said they have used a tool to provide end-to-end supply chain visibility, compared with just over one-third of laggers. Leaders especially stand out from their peers when it comes to the application of generative artificial intelligence (AI) to supply chain risk and resilience. Far more than laggers, they view the technology as relevant for a host of use cases, especially ones focused on improving risk monitoring and visibility.
Three steps for improving supply chain resilience
The survey results provide the outline of a three-part approach for building winning supply chain resilience strategies:
1. Embrace supply chain resilience from the boardroom to the shop floor
The effort to combat supply chain risk must be on the agenda — constantly, not just when there is a crisis — at the highest levels of the company.
2. Pick the right levers and follow up relentlessly when deploying
Levers need to do more than simple inventory build-up or double-sourcing. That means revisiting the company’s sourcing and/or manufacturing footprint and focusing on solving large “pockets of risk.”
3. Embrace AI and technology to win in the long term
Work with your ecosystem, integrate your IT and planning systems, and augment critical operational capabilities with digital solutions to increase competitiveness.
A better way to derisk supply chain management
Many industries still have less-than-ideal processes for allocating the responsibility for supply chain risk management. With constant disruptions becoming the new norm, every organization is now compelled to work toward resilience by optimizing their capabilities and adopting proactive, cross-functional strategies.
