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Supply Chain Resilience After COVID Times

Supply Chain Resilience after COVID Times

Having experienced the aftershocks of COVID-19, organizations have already sought to invest in intelligent technologies to make their supply chains more autonomous and predictive. Businesses today realize the importance of building capabilities that let their supply chains sense and adapt to changes or disruptions quickly, to achieve supply chain resilience.

Supply chains are becoming increasingly agile and flexible, as organizations recognize that they must be. Some trends have emerged:

1 - Major companies have been forced to adapt their business models in response to COVID-19.
PepsiCo, for example, built two direct-to-consumer websites - pantryshop.com and snacks.com - in less than a month to provide consumers with direct access to Pepsi's top-selling products. In another case, Kraft Heinz introduced its first direct-to-consumer ecommerce website, heinztohome.co.uk

2 - The crisis also prompted companies to turn to service-oriented business models for new revenue sources as well as to continue servicing existing customers remotely.
For instance, US-based industrial manufacturing firm Munters has accelerated its transition from selling products to service (i.e., a service-oriented business model) for its energy-efficient air treatment systems. Chairman and CEO at Cisco Systems Chuck Robbins said that Cisco is evaluating its entire product suite in the wake of the financial crisis as it moves towards a consumption model focused on as-a-service.

3 - Developing supply chain resilience is one of the key priorities for organizations, according to recent research

View on Resilience

Source: Capgemini Research Institute analysis, Supply Chain Survey 2020

4 - Only a small percentage of organizations that experienced the financial crisis did not change their supply chain strategies, particularly those in health care and life science
The life sciences sector, which experienced comparatively less negative business impact due to the crisis, makes up the majority of the 14% of organizations who do not see the need for a change in supply chain strategy following the crisis

Companies Getting Back to Business Post-COVID no Change in Supply Chain Strategy

Source: Capgemini Research Institute analysis, Supply Chain Survey 2020

Evaluating Organization preparedness for future disruptions
Further, it was assessed if the actions organization are taking in the response to crisis are sufficient to better withstand future disruptions, should one occur in the next three years. Research highlighted:

Improving Crisis-Preparedness through Simulations

Source: Capgemini Research Institute analysis, Supply Chain Survey 2020

Conclusion:
During the COVID crisis, the need for faster crisis response times intensified. In order to respond quickly and effectively, organizations need to be able to run simulations and test multiple scenarios proactively. Researchers found that improving crisis-preparedness through simulations is a key focus area for organizations. It was a priority for 84% of organizations post-COVID compared to 62% of organizations before the crisis.

Adoption of Digital Twins for Scenario Planning

Source: Capgemini Research Institute analysis, Supply Chain Survey 2020

It remains a challenge, however, that only 16% of organizations use a digital twin to conduct regular scenario planning exercises, while another 26% use it on an ad-hoc basis. Due to this limitation, simulations cannot be run and there is not a quick and optimal decision making process for supply chain resilience following the COVID crisis.

In addition to determining the right mix of resilience to build into products, companies should revisit their supply chain strategy to ensure that resilience is woven into every domain - research and development, product design, and planning. A comprehensive approach to supply chain resilience will prepare organizations for the uncertain future.

References:

1. Capgemini Research Institute, ‘Rethinking supply chain resilience for a post-COVID-19 world’

2. Capgemini Invent, “Global Supply Chain Control Towers,” July 2017.

3. BRE Review, “COVID-19 will revolutionise global supply chains,” May 29, 2020.

4. Food Navigator, “PepsiCo launches two direct-to-consumer websites for snacks and beverages to meet demand for at-home eating,” May 2020.

5. Daily Mail, “Beans on post! Heinz opens its first UK online shop as it launches £10 food bundles including tinned tomato soup and spaghetti hoops,” April 2020.

6. Capgemini Research Institute, “Upskilling your people for the age of the machine,” November 2018.