A Look at the Future of Supply Chain Logistics

The collapse of global commerce brought on by governments’ attempts to control the spread of COVID-19, followed immediately by uncertain geopolitical conditions, caused a tectonic shift in supply chain models.

The turbulence exposed vast vulnerabilities in traditional strategies that focused primarily on service, quality and managing the costs of procurement, production, logistics, storage and demand forecasting, and other supply chain components.

As a result, enterprises intent on future-proofing their supply chains emphasize “three new long-term transformation priorities [to] form a fresh focus for competitive advantage,” according to McKinsey & Company, which identifies those priorities as resilience, agility and sustainability. Business professionals, such as graduates of the online Master of Business Administration (MBA) program from Radford University, must understand these factors and how they will continue to shape supply chain logistics.

The Importance of Resilient, Agile and Sustainable Supply Chains

Early adopters of resilient, agile and sustainable supply chains withstood the storms of 2020-22, proving the model’s effectiveness and efficiency.

Toyota, for instance, took what it learned about supply chain disruptions that followed the Tōhoku earthquake and tsunami of 2011 to develop strategies that kept it operational during the pandemic, enabling it to surpass GM as the leading top seller in North America in 2021, Harvard Business Review (HBR) reported.

In the traditional supply chain model, an automaker might source a component from two suppliers for each model vehicle to create a price competition to keep costs down.

Toyota rethought that strategy after the 2011 “black swan.” Instead of two sources bidding on the component for one model, Toyota contracted with individual suppliers to provide the same part, each having exclusive rights to one model. To gain rights to new models, manufacturers would compete on innovation and stability instead of exclusively on price.

“For us it’s not a bidding war,” Chris Nielsen, executive vice president of Toyota North American, told HBR. Nielsen explained, “For suppliers to really invest in their people, in their facilities, in their technology development, they have to know that they’re going to have the business tomorrow.”

Similarly, companies that doubled down on investments in sustainable sourcing during the pandemic fared better than those that relied on the traditional supply-and-demand model.

Defined as a strategy incorporating social responsibility principles in a company’s procurement processes, Value Chain Innovative Initiative said ensuring suppliers meet those standards required buyers to have greater supply chain visibility into its business partners’ practices. In turn, that enabled them to identify potential disruptions before they occurred.

“Sustainability and sustainable procurement practices actually help companies improve their resilience and reduce risk,” the initiative said it found in a review of 350 companies’ supply chain operations during the pandemic.

How Are Enterprises Building Resilient, Agile and Sustainable Supply Chains?

Instead of siloing supply chain operations, companies looking to the future take a whole-business approach and create internal Supply Chain Centers of Excellence (CoE) to gain competitive advantages.

A CoE “should involve and empower your whole company … [to] help you build more resilient, data-led processes,” Slimstock advises, adding it “should be intertwined with your business goals.”

To optimize efficiency, cost savings and customer satisfaction while future-proofing their supply chain, business professionals in roles that once may have been ancillary to those operations are CoE key players, such as:

  • Marketing managers communicate sustainability initiatives to consumers, drive demand for eco-friendly products and collaborate with supply chain partners to reduce environmental impact and promote sustainable practices throughout the supply chain.
  • Financial managers role in making supply chains more agile extends to analyzing technology investments that enable real-time data analytics to support agility and resilience and provides greater visibility into business partners’ compliance with sustainability guidelines.
  • Business operations managers, although distinct from supply chain operations leaders, leverage their expertise in manufacturing, maintenance and workflow processes to identify potential disruptions in internal operations, developing contingency plans and optimizing inventory management systems.

The ongoing revolution in supply chain management is creating a huge demand for professionals in the field. According to the U.S. Bureau of Labor Statistics, companies will add 54,100 positions by 2031, an increase of 28%, much faster than growth in all other career sectors.

How Do Business Professionals Acquire Expertise Essential to Supply Chain Management?

The Master of Business Administration program offered online by Radford University provides a broad-based, cross-functional education in core business areas such as operations management, marketing, accounting, finance and strategic management.

Radford University’s AACSB-accredited online MBA program equips graduates with problem-solving skills designed to reduce uncertainty in decision-making for operations and production in manufacturing firms, which depend heavily on the development of resilient, agile and sustainable supply chains.

Learn more about Radford University’s online MBA program.

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