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Are you running an analogue supply chain for a digital economy?

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COVID-19 has exposed long-standing weaknesses in how we make and sell goods. The solution is digitization and automation, in four steps.

In brief; the global supply chain, in its current form, is incapable of withstanding the disruptive forces of tomorrow.

Fast-changing consumer preference, environmental disruptions and intrinsic changes to the global order are key drivers of change.

There are four imperatives for digitizing and automating the supply chain: intelligence, architecture, operational excellence and planning, and resilience.

The global supply chain is a creation from the past, ill-suited to today’s fast-changing world. It was designed with linearity in mind: a singular focus on minimizing transport costs through building high-capacity, point-to-point distribution infrastructure. These existing infrastructures can be repurposed even as newer, faster alternatives have been and will continue to be developed. And as global trade has accelerated in recent decades, greater levels of investment and manpower have been dedicated to expanding capacity to achieve cost efficiencies.

Yet the disruption of COVID-19 has been a wake-up call: the global supply chain is increasingly ill-equipped for today’s world and needs to become digital and autonomous if it’s to be able to automatically identify and respond to external events.

The case for modernizing the global supply chain

Three factors are driving the obsolescence of the global supply chain. First, change in consumer demand is accelerating. EY’s Future Consumer Index, launched at the beginning of the pandemic, revealed that consumers around the world are progressively shifting their expectation toward products and services that are digital, local and sustainable. The vision of truly universal, lightning-fast internet access is being realized thanks to continued smartphone adoption, the emergence of Internet of Things devices, and next-generation telecom infrastructure such as 5G and low-earth orbit satellite constellations. The future envisioned in Megatrends 2018 expects consumer purchases and decisions will increasingly be voice-driven and machine-augmented, with companies’ relationship with customers machine-to-machine, values-based and digital-first.

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