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The pandemic has exposed traditional supply chains’ fragility and inherent inefficiencies. Leaders need to reimagine ones fit for the future.
The COVID-19 pandemic was a test of supply chain resiliency and most organizations fell short.
Before COVID-19, global supply chains ticked a lot of boxes: lower labor and operating costs, wider product ranges and greater reach to new markets.
The vulnerabilities and visible failures of global supply chains during COVID-19 were there for all to see. Lead times expanded exponentially. Manufacturing capacity stalled. Ports became congested. Transportation ground to a halt. Excessive reliance on one location or one supplier caused a domino effect of expensive downtime along the line.
But COVID-19 is just one of dozens of disruptors that are driving business leaders to reimagine their supply chains. Labor and energy costs have risen sharply over the last two years, as have the costs of raw materials. Freight rates have jumped more than 400% from their 2019 levels too.
Trade flows are being redefined by changes to foreign policy and tax regimes. Customer expectations are evolving rapidly. And in a globalized world, where climate change and human rights issues are everyone’s business, there is a greater spotlight on ethical sourcing, sustainability and corporate social responsibility.
When supply chains are so complex and redesigning them is so costly, where do business leaders begin?
Against this backdrop, EY teams developed the white paper “Supply Chain Reinvention: What you need to start and stop now” in which we discuss a range of supply chain challenges, and most importantly, recommend the next steps:
- New supply chain solutions
- Technology and transparency
- Transformation brought by talent
- Supply chain sustainability
- Avoiding taxation trap
Supply chains fit for the future are founded on broad interconnectivity. Business leaders need to address the big question for every organization — am I taking the right steps to bring the visibility, build resilience and ultimately reinvent my supply chain?
Let us navigate the landscape.
Summary
The supply chain challenges exposed by the pandemic – the complexity of supply chains and the enormous redesign cost – show that the old models are no longer fit for purpose. When reinventing the supply chains, businesses leaders can adopt supply chain resilience through end-to-end transformation of their supply chains and operations through digital tools/products/services, and tax implications around it.
How EY Teams Can Help
EY-Parthenon professionals recognize that CEOs and business leaders are tasked with achieving maximum value for their organizations’ stakeholders in this transformative age. We challenge assumptions to design and deliver strategies that help improve profitability and long-term value.
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