The global landscape has entered a complex new era, characterized by growing political fragmentation and heightened geopolitical risk alongside unprecedented digital connectivity and the rapid adoption of AI. This evolving environment presents significant and multifaceted risks that demand proactive planning and navigation by supply chain managers, making resilience imperative for organizational survival and growth.
Build global supply chain resilience
Because of their end-to-end responsibility, supply chain managers are uniquely positioned to help their companies adapt and thrive in this new environment. There are five key risk-management tools to deploy:
1. Scenario planning. We live in a VUCA (volatile, uncertain, changing and ambiguous) world. Keys to successful scenario planning are maintaining a strong position in the core business, placing reasonable bets and establishing a repeatable process to consistently refresh, stress test and identify new scenarios. This proactive approach enables supply chains to anticipate and prepare for a wide range of future disruptions, bolstering their ability to withstand shocks and informing investments in alternative sourcing.
2. Regionalization and multishoring. Supply chain risk caused by geopolitical turbulence, shifting trade trends and climate instability can be greatly reduced by establishing redundant regional networks. Supply chain professionals can become much more resilient by planning smaller, flexible operations closer to customers. This necessitates the development of local ecosystems of suppliers and business partners. Keys to success include investing in local talent, developing a clear plan for social awareness and inclusion, and implementing appropriate technology to reduce physical assets and allow customization of products and services. Regionalization reduces reliance on distant, potentially vulnerable global links, creating more stable and responsive regional supply chains.
3. Hyper-digitization and AI. Big data and the internet of things (IOT) create tremendous opportunities to increase supply chain velocity and create new forms of customer value. The use of machine learning and control tower platforms enables faster, end-to-end decision-making to compete locally while managing globally. Supply chain professionals must develop a clear digital strategy, which links all partners and provides flexibility to respond to market needs. This strategy can include AI-powered predictive forecasting, digital twins, blockchain for traceability and the use of dynamic sourcing models. Hyper-digitization provides enhanced visibility, predictive capabilities and agile response mechanisms, enabling supply chains to react swiftly and effectively to disruptions and optimize scarce inventory.
4. Government advocacy. Governmental and international laws affect networks both operationally and financially. Government advocacy is primarily educating on behalf of customers, employees and shareholders to inform on issues important for your company; and building relationships to strengthen your company reputation and establish a climate of trust. Crucially, this now involves proactively navigating complex environmental, social and governance regulations and compliance mandates. It’s important to build the voice of your employees and stakeholders to tell the story of your company before key legislative and regulatory decisions are made. Proactive government advocacy ensures that regulatory environments support, rather than hinder, supply chain flexibility and stability in times of crisis.
5. Global diversity and inclusion. Diverse teams generate greater innovation and better resilience results. Global diversity is the variety of skills, training, experiences, perspectives and cultural backgrounds in a company. Supply chain leaders must be champions for global diversity and inclusion by increasing flexibility in the workplace; decreasing unconscious bias through education and awareness; and intentionally pursuing diversity and inclusion in recruitment, leader development and training, and cross-functional training practices to address the widening digital skills gap. Diverse teams bring a wider range of perspectives and problem-solving approaches, enhancing a supply chain's adaptive capacity and ability to innovate under pressure.
Resilience amid globalization
Achieving supply chain resilience in this complex global era demands the effective deployment of these five critical tools. By proactively leveraging scenario planning, regionalization, hyper-digitization, government advocacy and global diversity, leaders can fundamentally strengthen their networks. This integrated approach reduces political and market risks, unlocks growth opportunities, and enables companies to truly adapt and thrive amidst globalization's complexities.
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Editor's note: The information in this blog has been updated to reflect current research and insights. The original publication date was November 2017.
