EPCA is proud to have professor Arnoud De Meyer on our new team of digital advisors, helping the sector navigate increasingly complex digital universe and identify right innovative pathways for a future-proof business transformation. De Meyer is world’s leading voice on innovation management. A professor (and former president) at Singapore Management University, he previously led the Judge Business School at the University of Cambridge.
Looking at the (post)pandemic developments from both general and relatively advanced vantage point of East Asia, De Meyer sets out nine changes in the supply chains that are here to stay and will require further digitalisation.
A slowing down if not reversal of the globalisation of supply chains. As the experiences in the early days of the pandemic lock downs have taught us, Europeans and Northern Americans had no control over or even understanding of the supply chains for what appeared rather basic products such as PPE or mouth masks. Governments will require increasingly better control over and transparency about the origins of critical/strategic products. This may lead to some on-shoring or near-shoring, of the production that had moved to China. To compensate for the increased cost because of on- or near-shoring I expect a much higher investment in automation.
2. Increased Traceability
The quest for transparency and control will require more traceability and only good digital systems can provide this. Many have indicated that distributed ledger or blockchain technology is a solution for this, though the real application to supply chains is still limited
3. Developing Robust Supply Chains
Until recently, we have seen a continued application of ever increasing lean operations to our supply chain. This lean approach finds its conceptual roots in the paradigm of the Japanese manufacturing methods, e.g. the Toyota Production System, developed in the 80s and early 90s of the 20th century. One of the basic themes of this was the reduction of waste, and the need to render the supply chains as efficient as possible. One of the consequences of the application of this paradigm was the development of very tight Just-in-Time (JIT) supply chains. Even before the pandemic, industry observers had warned that we may have gone too far in the application of Lean Operations, and that our supply chains have become very vulnerable. This was confirmed by the interruption of some of our supply chains. Therefore, I expect that in the near future the trade-off between efficiency and robustness of the supply chain will go more in favour of robustness.
4. Investing in Resilience
In view of the increasing VUCA (volatility, uncertainty complexity and ambiguity) with which business is confronted, supply chains will have to become more resilient and will have to withstand major upheavals. An interesting example of this was the hoarding of paper products at the start of the lock downs. Producers of toilet paper such as Kimberley Clark and Procter & Gamble had to scramble to get products out into the market. The shortage of paper products lasted several months in the USA because of the inflexibility of the production capacity and supply chains.