Transforming supply chains with foresight and insight

With disruptions a norm in today’s business environment, companies have been adapting quickly by shoring up inventories and shipping capacities “just in case”. At the same time, business leaders are also grappling with greater supply chain complexity, with more than half (57 percent) of industry executives finding it challenging to understand enterprise-wide risk exposures, according to a 2021 KPMG survey.

Yet, the demands facing supply chains are only set to intensify further, with the need to deliver superior customer experiences and meet fast-evolving consumer demands becoming a more critical business differentiator. To thrive in a new era of business, supply chains will need to do more than just adapt – they will have to lead with foresight and insight and be the very drivers of change.

This means that future-ready supply chains have to move towards an “outside-in” approach that continuously adapts to changing customer demand, instead of the current traditional “inside-out” operating model, with the focus on operational efficiency and cost management. To accelerate this, businesses will need to harness digitalisation to ensure visibility, drive forward-thinking innovation to enable agility and also win the support of top management in these efforts.

For supply chains to truly evolve ahead of trends and turn data points into actionable insights, leveraging digitalisation and emerging technologies, such as AI and blockchain, could just be the solution, according to Walter Kuijpers, Partner, Advisory, KPMG in Singapore.

Some organisations are already exploring supply chain control towers that give oversight in planning and execution, with digital twin simulations enabling real-time responses. But beyond that, there is immense potential for technologies like AI and blockchain to create more well-connected and trusted supply chains that provide greater visibility, security, and efficiency.

These technologies are also enabling the growth of new supply chain financial models and services, such as embedded finance and embedded insurance, to accelerate supplier diversification, channel growth and product security.

The use of predictive capabilities and data to help drive future-forward decisions are a departure from the usual post-mortem analysis. “The challenge with tracking past performance is that it gives you a rear-mirror view,” said Walter, who has over 20 years of operational and commercial transformation experience across various sectors and specialises in supply chain management, innovation and digital enablement. “Most of the time, companies cannot plan well because of the lack of visibility, resulting in understocking or overstocking.”

In today’s crowded marketplace, where consumers are offered a luxury of choice, supply chain management will need to be driven by innovative, digitally enabled and predictive networks with the customer at the centre. As Rakesh Agarwal, Partner, Advisory, KPMG in Singapore, who heads the supply chain practice in Singapore and Asia Pacific, noted: “Business leaders should be thinkers in supply chain, and not just executors.”

He added. “Sustainable growth in a digital world depends on recognising the power of the customer and ensuring that tomorrow’s enterprise supply chain is truly connected.” Traditional distinctions between marketing, sales, operations and manufacturing will be blurred, with all working together effectively to meet customers on their terms.

About 80 percent of business leaders agree that having a responsive supply chain is the biggest digital transformation priority, based on a 2020 study commissioned by KPMG. 

However, “organisations often struggle to prepare a business case when initiating a supply chain transformation project and often tend to eventually forget the purpose of the project in the end,” shared Rakesh, who has over 25 years’ of experience across large business transformation, including supply chain. “They may still ask: What are the pain points and the ROI (return on investment)?”

To capitalise on innovative technologies, Rakesh recommended first implementing focused pilot projects to identify the bite-sized pain points, before broadening the scope if it proves successful. Thereafter, businesses may even marry different types of solutions across the tech spectrum, from Robotic Process Automation to the Internet of Things (IoT).

It is also important for businesses to keep the project on track – which Rakesh noted is an often-overlooked aspect of the process. This is especially where strong Board support comes into play to see the project through teething issues.

For supply chains to be truly transformative, change must be led from the top, noted Rakesh. The process of bringing supply chain strategies and risks assessment to Board meetings will need to be accelerated.

“Supply chain strategies should be at the heart of Board discussions,” said Rakesh.

“Supply chain has always been considered at the backend, with discussions mostly around financial and cyber risks. But now is an opportune time for supply chain to be at the top of the agenda. At the Board level, leaders can drive strategies for a more nimble and predictive supply chain analysis, so that the business does not get caught by surprise.”

Keep looking in the rear-view mirror, and organisations could miss the danger-fraught road ahead. The pandemic, geopolitical tensions and global developments have brought supply chain considerations top of mind, but a new confluence of factors, including evolving customer expectations, have heightened the importance of supply chains even more.

By transforming their supply chains to be more digitalised and innovative, along with the buy-in from top management, businesses prime themselves to become the drivers of change. This approach, according to Walter, will forge resilient, future-ready supply chains capable of weathering any storm.

“Leading organisations are the ones that can quickly sense changes across their broader supply chain ecosystem – including suppliers and partners – and take effective action, similar to the role of the human nervous system,” said Walter.