Future of business 2030: The impact of ESG on today’s supply chain

Understanding the external factors shifting the world is only the first step in becoming primed for success in 2030. With this knowledge, supply chain leaders can identify the weaknesses and strengths of their operations to plan for the future of business, whatever the future may bring. Otherwise, they’ll be left struggling to catch up with companies driving the leading edge. But supply chains commonly operate in a linear and static manner, and they’re in need of a serious overhaul. It is critical to have an agile supply chain strategy for a competitive advantage.

Building on the environmental, social, and governance (ESG) strategies introduced earlier in our series, these core steps are crucial to stay competitive in 2030.

Integrate the supply chain across the product life cycle

Supply chain teams need to be intimately involved in every point of the product life cycle. Decisions about products need to be guided by ESG strategy, which should be closely linked to the supply chain’s ability to deliver. Connecting new product development from procurement through marketing is paramount, not just for overall business health, but also for the supply chain to be in sync with life cycle progression.

For instance, consumers expect materials to be ethically sourced. Supply chain strategists need to be involved in those decisions so leaders can manage supplier planning and selection. Sustainable sourcing requirements will change over time and require continuous engagement with suppliers, and in some cases, even with suppliers’ suppliers.

Supply chain teams can more effectively balance supply and demand when they’re in sync with the product’s life cycle. They need to track and support new product introductions or end-of-life scenarios to properly allocate resources and operational plans to balance supply and demand. More often, supply chain managers will be required to introduce engineering change orders for existing products to support sustainable sourcing goals. Having the agility to manage this change and still meet production or assembly targets will ensure cost, profit, and service goals can continue to be achieved.

Collaborate with every stakeholder

Beyond keeping the supply chain in sync with product life cycles, staying in close collaboration with each business unit of the organization is fundamental to responding to supply chain disruption.

Using Connected Planning, each stakeholder from finance and workforce planning to supply chain and sales can keep up to date with overall performance. From there, advanced forecasting and scenario planning can ensure every department has the information they need to make competitive decisions with confidence.

If the supply chain team can forecast a disruption, marketing can prepare a strategy to manage demand and avoid overpromising to consumers. Similarly, marketing can provide their operational plan and forecasts to inform the supply chain team of projected fluctuations in demand so they can prepare accordingly.

For example, according to an article by CNBC, the automotive industry is projected to lose a staggering $210 billion in 2021 revenue due to a microchip shortage. Demand is there but supply is not, thanks to ongoing production issues in Asia and distribution bottlenecks that are an effect of COVID-19. Supply chain leaders may have their hands tied, but with additional forecasting and planning, the marketing and sales teams can align with the supply chain to rework their incentive and retail plans.

Company leadership needs to make informed decisions to not only survive the shortage, but also to provide reassurances and information to the public to maintain their position in the market. Improved collaboration around available inventory and alternative shipping costs (air freight) would provide supply chain leaders with the right information to help inform assembly, marketing, and sales teams of what is available to promise customers under these difficult circumstances.

Increase resiliency

Any “what-if” scenario needs to be coupled with a solution. Guided by ESG strategies, supply chain leaders need to diversify their external resources. At a high level, sustainability-focused practices will become increasingly important as climate change and global resource shortages become more serious by 2030. Making sustainability a core tenet of your operations will not only better position your business to be on the leading edge of manufacturing trends in the future, but will also improve consumer perception and loyalty, while ultimately lowering operating costs over time.

To avoid major disruption caused by environmental disaster, supply chain leaders should ensure every third party is providing the information necessary to pivot quickly. Using Anaplan, a supply chain team and their partners can share and collaborate using real-time information and forecasting to shift production as necessary.

If a primary manufacturer experiences a labor shortage and production will drop by 50%, supply chain leaders should be prepared with a contingency plan in which a different manufacturer increases their production by 50%. Using Anaplan, these data points are compiled in a single location, allowing leaders to make decisions quickly without falling behind.

Conclusion

The future of business 2030 isn’t simply a conversation about technology. It’s about shifting norms, values, expectations, and relationships. Businesses need to pivot quickly to respond to climate, social, and political change to meet customer expectations and financial goals.

However, without the right technology, businesses will quickly fall behind the competition. An agile supply chain strategy is non-negotiable for a competitive advantage.

By moving away from the disparate data spreadsheets and limited visibility and collaboration of piecemeal solutions, companies will find themselves ahead of the pack. With Connected Planning, enterprise supply chain teams can be proactive in using cross-departmental and third-party data to create informed, accurate projections and forecasts. This unleashes the potential to grow, evolve, and thrive within the changing world using a holistic approach to business operations.