In a post-Brexit, post-pandemic environment, vulnerability in traditional supply chain models will be top of the agenda for businesses. Exports of UK goods to the EU dropped by more than two-fifths in January, according to figures from the Office for National Statistics, and the longer-term impact on supply chains will depend on how attractive the UK remains and the competition from other locations within the EU. Add increasing consumer and investor demand for ethical, sustainable and transparent supply chains into the mix and it’s easy to see why this issue is now top of mind for consumer businesses.
The pandemic shone a spotlight on how little visibility many businesses had on their supply chain relationships. Now, with Brexit decided and increasing consumer demand for ethical supply chains, businesses will need to understand how they can create resilient, digitally enabled supply chains that reinforce ethical and sustainable goals.
As businesses started the deep dive into what the pandemic taught them about their supply chains, it has become increasingly apparent many were highly reliant on one small-button supplier, while others went too far in ‘just in time’ sourcing. Diversification is now very much on the agenda.
Meanwhile, new Brexit arrangements have found many businesses struggling with issues around documentation, upcoming new regulations and sending products across borders. Not only is the security of supply chains being stretched, but the new rules of origin and rising cost in the logistics of moving products around is having an impact on already tight margins.
So what can businesses do now to ensure their supply chains are fit for the future?
- Think data to ensure you’re not exposed to logistical costs. It’s important to have access to supply chain data across the whole of your operation. Having end-to-end visibility will help you to really optimise and evolve your supply chain to those new future fit changes as they come.
- Think digital. This is about more than just putting robots into a packing station. If you’ve got the data right, you’ll be in a situation where you’ve got digital twins across your supply chain, which will enable you to model different scenarios in real time and make database decisions.
- Think sustainable across your network. You need to understand the ethical and environmental footprint of the supply chain. Consumers, investors and regulators are demanding it, and if you are redesigning your supply chain for the next five to 10 years, making sure it’s ethical will be a crucial part of the new arrangements. Research shows those businesses with more ethical operations also have higher profits.
- Think resilience. Having learned a lot about the vulnerabilities over the past year, you need to think about any points of vulnerability going forward. Data-driven penetration of where everything comes from and how you can manage those flows is powerful.
- Think together. Commercial and operations need to be joined up. Decisions made by one without the input from the other could have huge impacts on profitability.
- Think long term. Redesigning a supply chain is a big exercise and it can be expensive. Don’t just focus on the next 12 to 24 months, you need to think longer term!
As the UK starts to look to recovery, having resilient, sustainable supply chains will be central to continuity planning and getting your business fit for the future. To do so requires a new way of thinking.