Nearly half (46%) respondents to a PwC survey believe that there will be an increasing frequency of severe supply chain disruptions to 2030.
Nearly half (46%) respondents to a PwC survey believe that there will be an increasing frequency of severe supply chain disruptions to 2030.
The widespread upheavals in global supply chains are forcing business leaders to fundamentally transform their business models. However, just 8% of industry leaders (champions) have fully transformed their supply chains to meet disruptive trends.
“Market turbulence will continue to impact supply chain performance, requiring serious interventions to avoid operational downtime, higher costs and loss of revenue”
This is according to PwC’s Global Reinventing Supply Chains 2030 study published in Ireland today which surveyed more than 1,000 supply chain executives around the world, including in Ireland, about the key supply chain trends and developments across all major industries.
The study findings reveal that geopolitical crises, climate change and technological advancements are the main factors causing continuous disruptions that constantly destabilise global supply chains.
External shocks are the ‘new normal’
The study highlights that business leaders feel pressured to rethink their entire supply chain concept to make it more adaptable, sustainable and intelligent – essentially building “thinking” systems that learn and evolve.
Their plans include increasing transparency, integrating AI and robotics and collaborating with all stakeholders to identify and resolve issues more quickly. However, according to the survey, only a minority of companies have fully transformed their supply chains to succeed in these endeavours.
At the same time, over half (52%) of all respondents surveyed said that they have initiatives ongoing to manage an increasing frequency of severe supply chain disruptions.
Technology advances
Just 4% have fully adapted their supply chains for evolving technological advances (champions: 27%). A further 50 percent of all companies surveyed have such initiatives ongoing.
The most successful transformations are characterised by end-to-end integrated approaches but are very complex and, according to the champions, require advanced skills, technologies and new ways of working. Additionally, a clear vision and roadmap, resource capacities and employee commitment are essential.
“The report highlights that the pace of transformation of supply chains to manage the onslaught of future disruptions needs to quicken,” explained Áine Brassill, Supply Chain and Operations Transformation Partner, PwC Ireland.
“The industry leaders or champions are setting the example. According to the report, market turbulence will continue to impact supply chain performance, requiring serious interventions to avoid operational downtime, higher costs and loss of revenue. Continuous disruptions are the ‘new normal.’
“Companies must, therefore, take steps to completely rethink their supply chains. Adaptability, sustainability, and a new cognitive ecosystem are key. Companies need to move to more service-orientated, sustainable and circular supply chain models to be competitive.”
The survey reveals that four out of ten (40%) global companies have initiatives underway to regionalise their supply chains. At the same time, a large majority (83%) of champions consider it crucial to relocate supply chains to manage future disruption. 28% of European companies say that relocation is very important now and will be even more important in the future. The impacts of the ongoing polycrisis, stemming from geopolitical conflicts, climate change consequences, rising costs and prolonged inflation, are keeping supply chain executives on their toes.
ESG and CSRD compliance
Companies must comply with ESG regulations (such as CSRD and pending new EU Supply Chain Regulations), which are growing in scope and complexity and are posing new challenges. More than 40% of surveyed companies recognise that making their supply chains more ESG-compliant is highly disruptive now and in the future.
However, only 12% of all companies reported that their supply chains have been fully re-modelled to be ESG compliant (63% for the champions). This means that they have largely implemented key capabilities like ESG-driven circular network design and ESG supply chain planning. A further 65% of all companies surveyed have such initiatives ongoing.
Over half (51%) of champions said that supply-chain wide visibility and transparency is a foundational capability for ensuring ESG compliance.
“Legislators globally are tightening regulatory requirements while consumers are increasingly expecting companies to push their environmental and social efforts,” Brassill added.
“These trends are giving strong impetus for new more sustainable supply chain models and competitive environments.”
-
Bank of Ireland is welcoming new customers every day – funding investments, working capital and expansions across multiple sectors. To learn more, click here
