FutureScape: Crafting Tomorrow’s Supply Chain Today
We are thrilled to share our mid-year special report, FutureScape: Crafting Tomorrow’s Supply Chain Today. Click on the graphic below to download the full report and review the executive summary below.
We consider thought leadership a key focus of our consulting practice so that we can keep clients AHEAD OF changing conditions with strategies to not just successfully navigate volatile and turbulent environments, but to THRIVE. As we have discussed repeatedly, we believe there will be an opportunity like none other in history for businesses to secure the top position in their industry/ marketplace if they are bold, resilient, innovative, and willing to take the critical steps discussed in this report.
Overview of Current Economic & Business Environment
Volatility & Inflation
The current economic environment is characterized by VUCA (volatility, uncertainty, complexity, and ambiguity). Inflation has surged by 20% in the last three years, with some raw materials doubling or tripling in price. Businesses have passed on partial price increases, leading to internal challenges in offsetting these costs. Additionally, rising interest rates, higher employee wages, and
regulatory burdens have further complicated the ability to fund growth and meet objectives.
Talent Shortage
The labor market has not returned to pre-pandemic levels, and the labor participation rate remains lower. High-skilled talent is scarce, leaving executives frustrated with paying premium wages for average talent. Companies are automating low-skilled roles, resulting in a skills mismatch.
Customer Demand and Volatility
Despite the challenges, customer demand has remained relatively robust, though clients are concerned about pushouts, delays and gaps in forecasted demand. Customers expect immediate, Amazon-like service but often delay orders, leading executives to prioritize strategic and profitable customers while extending lead times and increasing prices for volatile, low-profit customers.
Business and Technological Risks
Geopolitical risks and cybersecurity threats are at an all-time high, prompting companies to reassess their strategies to navigate these complexities. Technological change is unprecedented, with AI driving markets and businesses leveraging these advances to counter the turbulent economic and geopolitical landscape. Only the strong will thrive in this VUCA environment, leaving their competition behind.
Key Strategic Shifts and Innovations
Future Scaping for Success
Thriving in the future requires more than just navigating the current business environment. Companies that focus on dramatic strategic shifts will position themselves as disruptors rather than the disrupted. They will craft tomorrow’s supply chain today.
Strategic Shift #1: Supply Chain Resilience
Global supply chain disruptions are accelerating due to geopolitical, economic and control strategies. In response, companies are moving away from JIT (just-in-time) inventory strategies towards supply chain resilience strategies, focusing on increasing profitably despite heightened risks and costs.
Strategic Shift #2: Talent Shortage
The shortage of high-skilled talent is worsening, exacerbated by the retirement of the Baby Boomer generation and a lower labor participation rate. The pandemic disrupted training and transitions, leading to increased automation of low-skill jobs through AI and robotics.
Strategic Shift #3: Technological Transformation
Technology is transforming customer expectations and organizational needs. Advanced technologies, including smart robots and GenAI models, are revolutionizing supply chain tasks and key performance metrics. Successful companies will have leaders who can balance detailed and big-picture thinking with strong judgment and systems thinking.
Strategic Shift #4: Reconfigured Supply Chains
Supply chains are shifting in response to geopolitical risks, elevated customer expectations and the adoption of advanced technologies. Regional supply chains utilizing reshoring, nearshoring, vertical integration and strategic partnerships will control their future success. Industries are reconfiguring, disrupting global supplies and prices while emphasizing sustainability. Logistics will realign to serve customers economically, leveraging advanced technologies and potentially
relocating to areas with lower regulatory burdens.
Insights from Trusted Advisors & Executives
To learn more about technology, global trade, risk management, market and the economy, marketing, real estate and infrastructure, regulatory and legal compliance, strategic leadership and succession planning, supply chain and logistics, and talent and workforce management, download our special report.
Summary of Key Insights
Navigating VUCA Landscape
Businesses face a volatile, uncertain, complex and ambiguous landscape, dealing with unprecedented risks, information overload and rapid change. This environment demands resilience as companies grapple with rising costs, minimum wage increases and regulatory challenges. To survive, investing and upgrading is crucial, driving an increase in owner-operator sales. Scale is essential for modernizing technologies, investing in talent, reconfiguring supply chains and fostering a culture of innovation. Consequently, large and forward-thinking companies
will thrive.
Technological Revolution
AI has transformed the technology landscape. Success now depends on modern ERP systems focused on automation, digitization and scalability. Technologies like artificial intelligence,
predictive analytics, robotics and digital twins are essential for proactive business management in today’s volatile environment. Although adoption requires substantial investment, it is the
only way to maintain customer value, profitable growth, and working capital objectives.
Transforming Talent and Workforce Planning
Rapid technological advancements are reshaping talent and workforce planning. With high-skill talent scarce and demographic changes ongoing, companies must build talent rather than solely
acquiring it. Smart companies invest in comprehensive employee value propositions, including career development, work-life balance and flexible work arrangements. Upskilling programs help workers acquire new skills to adapt to technological changes and evolving job roles.
Resilient and Adaptive Supply Chains
Supply chains will become more resilient, adaptive, sustainable and regionally focused to meet customer expectations while mitigating risks. Companies will reduce dependence on high-risk countries like China and reconfigure their supply chains for better control over risks, quality and cost changes. Those who move quickly and consider end-to-end supply chain impacts will be well-positioned to serve customers when their competition cannot.
Future Outlook and Recommendations
Future Scaping
Fast-forward five years, and the companies thriving amidst turbulence will have focused on the basics: defining their future value proposition and crafting tomorrow’s supply chain today. To achieve this, they will prioritize talent, upgrade business processes, leverage advanced technologies and reconfigure their supply chains.
Talent
Successful companies will view talent as their top asset. Retaining, upskilling, and using creative strategies for talent will separate the strong from the weak. Succession planning and developing future talent are crucial. Creating a culture that attracts and retains the best people and fosters collaboration is essential.
SIOP
Sales, Inventory, and Operations Planning (SIOP) processes will be key to driving strategic and tactical decisions, ensuring profitable growth and maximum customer value. For more on SIOP, refer to our ebook, “SIOP: Creating Predictable Revenue & EBITDA Growth.”
Supply Chain Optimization
Supply chain optimization strategies support customer value and profitable growth. Forward-thinking leaders focus on automating processes, leveraging “what if” capabilities, providing intelligent insights and enhancing customer value.
Advanced Technologies
Modern ERP and advanced supply chain technologies drive process improvements and bottom-line results. A continuous improvement approach to ERP upgrades is no longer sufficient. A modern ERP system, supported by business intelligence, predictive analytics, e-commerce, customer portals and supply chain control tower visibility, is essential.
Bold Leadership
In these times of volatility, uncertainty, complexity and ambiguity, strong leaders who look at the big picture, make tough decisions and invest wisely will outpace their competition.
If you are interested in reading more on this topic:
Right-Size Inventory to Thrive During Inflationary & Recessionary Times