Disruption and costs driving supply chain strategies

Ongoing economic, geopolitical, financial, and regulatory changes will likely influence business decision making and supply chain resilience. Key themes for the months ahead will include cost and inventory optimisation, ongoing industry consolidation, potential variations to major shipping lanes and sanctions, cyber threats, sustainability concerns, increased automation adoption, and upskilling.

While the need for resilience and disruption preparedness remains, supply chain leaders must also address value chain cost pressures to enhance business competitiveness.

Improved data analytics and AI will drive better cost-to-serve models as well as inventory and working capital transparency to facilitate faster decision-making. Already, operating model optimisation and service diversification is being expedited through M&A and the acquisition of emerging technologies, geographical network expansion, synergies, and market share. Meanwhile, cyber threats persist. Vulnerabilities are emerging from heavily data-driven operations, increased connectivity, data sharing with counterparties, and new technology solutions.

Regulatory and stakeholder expectations will continue to increase, with social practices and circular economy considerations now seen as a differentiator. Increased governance and related legislation in ethical sourcing and compliance tracking is likely to influence investment decisions about fleet asset electrification, alternative fuelled vessels, and technologies that can validate both internal and supplier ESG claims.

Investments in automation are expected to drive efficiencies and help in de-risking staff shortages. “Rentalising” capex into the facility lease, or securing new direct provider leasing options, will allow SMEs to access sophisticated solutions and automation. These new tools will require a trained workforce to successfully implement and reap the full benefits.

As firms prepare for disruption and bolster supply chain redundancy over the next twelve months, flexibility, proactivity and scenario planning will be critical. Strategic planning and business continuity exercises must contemplate both upstream and downstream threats across the broader supply chain partner pool, as an overreliance on a single supplier can pose increased challenges.