Businesses are increasingly looking to make substantial changes to realign their supply chains globally, a trend accelerated recently by the global pandemic. They are considering diversifying both the geographies, and vendors, upon whom they rely in order to reduce “concentration” risk. Some may go further and repatriate their supply chains. Rationalising supply chains may involve acquisition of lower tier vendors (some of whom may be distressed financially) or wholesale exits from particular supply chains.

Many supply chains lack the end-to-end visibility required in order to manage supply risk effectively. Sooner or later most businesses will address such concerns by digitalising their supply chains. That might include adopting a decision-making platform that provides for real-time supply chain visibility and predictive analytics. It may also involve implementing disruptive technologies (such as Artificial Intelligence, the Internet of Things, Smart Contracts, and Distributed Ledger Technologies).

Optimising supply chain management through robust governance and risk management practices has become strategically important for many businesses.  The focus is shifting from “just in time” to “just in case”, where driving down cost may no longer be regarded as the main imperative. It is increasingly the case that many supply chains must now be viewed through the prism of financial and operational risk management. From a regulatory perspective, they can have the effect of creating an extended enterprise over which the business has regulatory responsibility. Many of the regulatory considerations have cross-border implications for businesses whose supply chains - by their nature - have international reach.

Supply chains operate in an environment characterised by trade issues (such as sanctions, export controls, and tariffs), where national security is an increasingly important consideration. Businesses will need to navigate the often complex issues involved against a background of changing governmental trade and industrial policy.

 

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