With global supply chains being disrupted in 2020 due to COVID-19, many companies are looking to invest in strengthening their supply chains. By examining examples of companies like Walmart, Amazon, Unilever and more, we can gain insights into effective supply chain investment strategies in 2020. Factors like localization, digitization, sustainability, resilience and agility are key considerations. Supply chain visibility, flexibility and redundancy should also be prioritized when companies allocate budgets. Ultimately, balancing efficiency and resilience is crucial.
Localizing supply chains reduces risk exposure
The pandemic revealed how exposed global supply chains are to disruptions. Many companies are now localizing supply chains to mitigate risk. For example, manufacturers are re-shoring production back to domestic facilities or nearshore locations. Brands like Walmart have pledged to source more goods in the US, buying an extra $250 billion in American products by 2023. Automakers like Honda are also localization production in the markets they sell to. By having suppliers clustered closer geographically, lead times and risks are reduced.
Digitization and AI enable supply chain visibility
Investing in supply chain digitization and AI provides real-time visibility into inventory levels, production capacity, logistics bottlenecks etc. Unilever implemented AI across its facilities to gain insights and react quicker to changing customer demand during COVID-19. Amazon’s automated warehouses allow rapid order processing and delivery. Companies should invest in digital traceability solutions like blockchain to track goods across supply chains transparently.
Sustainability requires supply chain transformation
Sustainability is forcing companies to re-evaluate their supply chains. Initiatives like using renewable energy, ethical sourcing, recyclable packaging all require supply chain changes. For example, Nike is innovating materials and production processes to reduce waste. Walmart aims to become regenerative by eliminating waste in its supply chain. Companies need long-term investments in R&D and supplier partnerships to make sustainability viable at scale.
Building resilient and agile supply chains
Supply chain resilience and agility is needed to quickly adapt to disruptions. Companies are diversifying suppliers to have backup sources for critical components. Flexible manufacturing allows rapid switching between products. Excess inventory buffers smooth demand variability. Supply chain digitization provides the visibility to re-route orders dynamically. The key is balancing resilience with efficiency through a segmented approach – one-size-fits-all solutions rarely succeed.
In 2020 and beyond, companies are prioritizing supply chain investments to manage risk and disruption, while still enabling growth. Localization, sustainability, digitization and resilience are key focus areas, however agility and adaptability will differentiate the supply chains that thrive into the future.