Our Q3 Index of Global Trade Health showed that trade activity across global supply chains was beginning to stabilize after falling steeply in Q2. But while the overall trend is pointing upwards, the trajectory remains volatile and unpredictable. We spoke to Marcus Fromm, Managing Director, Accenture, Switzerland, to get his perspective on how businesses can build organizational resilience in the face of uncertainty.
Why did COVID create such major issues for supply chains?
COVID represented an unprecedented disruption to the global trade system. The transport of goods was massively interrupted, especially out of China, due to additional hygiene protocols, quarantine requirements, lockdowns and even closures of borders– representing trade barriers which had not been encountered in previous pandemics like SARS or MERS. Many organisations did not have the appropriate plans, protocols and tools available to deal with a pandemic disruption of this magnitude.What gaps did COVID expose in terms of supply chain transparency and preparedness?
Apart from proper planning, an over-reliance on Chinese sourcing and a lack of real-time visibility and traceability were additional shortfalls that made many organisations struggle, especially on the supply side. The consequences of pent up demand could be coped with in a fairly short amount of time, as also the data of your Global Trade Health Index suggests. As a consequence and learning from the crisis, many organisations are considering the re-configuration of their supply chains to be closer to the points of consumption.
Could technology have helped organisations reduce the impact of disruption caused by the pandemic?
A combination of real-time supply chain risk management and global trading and sourcing platforms are the proper toolkit to support better planning and faster execution in times of disruptions of this kind. Cloud platforms can help manage fluctuations in business demand since they offer more flexible, consumption-based cost structures.
How can technology help support recovery and build in resilience to future disruption?
The “physical internet” represented by the logistics industry has demonstrated an incredible ability to adapt to the dynamically changing paradigms of this pandemic, making it a winner of the crisis. Combining the power of data platforms with the power of physical logistics networks is a key enabler for building stronger and more resilient supply chains. Technology advancements like shipment level traceability and real time supply chain risk management can further strengthen the resilience of supply networks.
How should businesses approach the question of return on investment?
Supply chain risk management follows the logic of the insurance business. The COVID pandemic has created a need to re-evaluate supply network risks and the associated damages in form of lost sales, reputational damage or even bankruptcy. The ROI of supply chain risk management can in most cases only be evaluated in hindsight, and it needs to be considered as an investment that is made into the future and longevity of a business.
How has COVID changed the conversations Accenture is having with its clients? Many of our clients expressed the wish that they had already been more digital, more in the cloud, and more variable in their cost structures to better cope with the fluctuations in business volumes that occurred during the pandemic.About the Author
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