Supply Chain Management

Some statistics stipulate that more than 90% of companies’ emissions are directly or indirectly linked to their supply chain activities. Due to the global reach and increasing complexity of modern supply chains, visibility and transparency are frequently limited. And there is indeed a lot to focus on: CO₂ emissions, child & forced labor, unfair wages, workplace safety, waste disposal, damage to biodiversity, deforestation, single-crop dependency, and much more.

Simply put, not knowing what is happening along a supply chains poses an enormous and increasing risk to organizations. It limits the ability to participate in future opportunities and, at the same time, increasingly threatens existing business relationships. It is, therefore, a key driver for modern businesses to design, manage and operate fully transparent, visible, and high-performing supply chains. Once a supply chain achieves end-to-end transparency, further improvement and advancements can be realized.

The pandemic's disruptive impact on recent supply chain constraints was significant: As per the KPMG CEO Outlook, 76% of CEOs in Switzerland experienced negative supply chain impacts during the last 18 months. At the same time, 68% of Swiss CEOs are committed to acknowledging and incorporating sustainability as a critical future success factor.

Visibility throughout supply chains is the prerequisite for both transparency and traceability. Today, most mid-sized Swiss manufacturing companies are operating highly complex supply chains, involving hundreds and in many cases thousands of suppliers. Along this complex chain up to raw materials extraction, insights about handling, security for people, water usage and many others are often lacking.

Solving the information gap is not only vital to ensure efficient and effective production cycles but also securing future access and availability of products. In view of the Swiss Responsible Business Initiative’s counter-proposal by the Federal Council and continuous pressure from multiple stakeholders, transparent and sustainable supply chains will become the new normal. Legislations on various levels (national, EU, global) will certainly propel this development even further. These may include integrated strategic planning, risk management and due diligence on social and environmental matters, for example. The regulatory environment will expand the scope, expectations and requirements of reliable sustainability data and processes in the years to come. As will rapidly increase stakeholder expectations for reporting and disclosure by investors, customers, NGOs, and others.

To establish future-ready supply chains, a five-step approach to insightful transparency and visibility throughout supply chains is needed:

1. Identify all stakeholders along complex supply chains
2. Define clear roles & responsibilities for each stakeholder – and map all relevant processes
3. Identify and align on the overarching business values (beyond the pure supply chain function)
4. Advancing supply chains through the interaction model: how do the supply chain partners interact?
5. Finally, modern supply chains are powered by technology: gain transparency and visibility all the way from raw materials to the consumer.

Another way to think about transformation of a business is to think about the business model itself. The economic opportunities of circular principles are expected to be huge. Supply chains are an essential component in achieving circularity too. Circularity will become non-negotiable in a world where resources are finite, and the climate emergency is pressing.

However, a Circular Economy goes beyond and advocates reuse, recycling, refurbish and repair, and promotes the sharing of products and materials. Circularity is also about shifting people’s mindset towards cognizant consumption and bringing society towards an economy focusing on repurposing, repairing and reusing products. Supply chains play the role of (re)distributing, developing sustainable products from recycled and remanufactured sources, and sustainable manufacturing and sourcing of materials.

Ask yourself the following questions:

• How well do you understand the range of circular economy opportunities available in your organization?
• Are you able to identify circular opportunities that exist outside of waste management?
• Can you confidently incorporate circular economy principles into your strategic organizational plan?
• Are you engaging with the necessary stakeholders to truly maximize your circular economy impact?

Future-ready supply chains are customer-centric, can operate in the ever-changing digital world with agility and do so profitably in order to be a revenue driver for the business. We believe that future success for supply chain depends upon being purpose-built and built to last. Talk to our ESG experts.