Advanced capabilities can boost supply chain resilience

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Overview

In the past, cost has been the primary driver behind many companies’ efforts to improve or digitise their supply chain. And though cutting costs is still important, some companies are now optimising their supply chain from a holistic perspective to improve return on capital employed (ROCE). Supply chain setups should be driven not just by cutting costs, but also by enabling sales and getting the most out of assets, to build overall resilience. How can companies get there?

Advanced supply chain capabilities add up to significant benefits

Source: PwC, Connected and autonomous supply chain ecosystems 2025

First things first

COVID-19 has had immediate impacts on supply chains. Across industries, companies have faced major shocks on both the supply side and the demand side. Demand volatility has significantly increased, and numerous companies have faced unprecedented drop-offs in demand. Some are adjusting their supplier base and looking to implement multi-sourcing strategies. Others are considering greater regionalisation and near-shoring of supply chain activities. For example, organisations with a manufacturing footprint in Europe are shifting their supply base towards European suppliers. According to an analysis by PwC, companies have been reassessing make-versus-buy decisions, and adjusting capacity by up to 20%. Still others have developed new go-to-market approaches and used different channels to reach customers.

All of these changes mean that the time is right to take a closer look at the overall supply chain strategy and make your supply chain both resilient and cost-effective. To do that, focus on optimising your footprint and enhancing your financial and cost resilience. And draw on the power of advanced supply chain capabilities. By making the most of these  capabilities, you can develop a supply chain ecosystem that’s both autonomous and integrated — so you can respond with speed and agility to challenges as they arise.

Advanced capabilities are critical to making supply chains resilient

Advanced supply chain capabilities draw on technology, but developing them can require much more than choosing a software solution. It also requires empowering your people to use the applications you choose and redesigning processes in order to take advantage of them. A recent PwC report, Connected and autonomous supply chain ecosystems 2025, took a closer look at how companies with the most highly advanced supply chain capabilities — the ‘Digital Champions’ — use those capabilities to improve supply chain performance and overcome key supply chain challenges. It examined those capabilities that are critical to managing supply chains when a crisis hits, and to ramping back up once it eases.

The report discussed a number of key capabilities, including supply chain transparency, closed-loop integrated planning and execution, dynamic segmentation and smart logistics — all of which are turbocharged by artificial intelligence (AI).

Greater supply chain transparency can help companies better identify and proactively manage risks

Having a 360-degree view of your supply chain — not just within your own organisation but along the entire value chain, from suppliers through to customers — can give you a competitive advantage during both turbulent times and times of relative calm. PwC’s report showed that Digital Champions are far ahead when it comes to this area; a full 62% of the group had implemented supply chain transparency.

Enhancing supply chain transparency gives organisations increased visibility over inventory and capacity, making it easier to identify and manage risks and respond to events, including sharp drops in demand or raw materials bottlenecks. Companies can manage stock levels more precisely, as information on the arrival of raw materials, components of production lines, or finished goods in warehouses is constantly updated. That’s especially critical for businesses operating in multiple countries, which could be facing varied operational restrictions.

Another aspect of supply chain transparency is near-real-time visibility over logistics flows, which helps companies manage unique challenges. For example, track-and-trace capabilities help attract customers and strengthen existing relationships by making it possible to estimate arrival times and continually update them based on near-real-time information, and to provide proactive alerts that keep customers aware of shipment status.

AI turbocharges transparency

Transparency can be significantly accelerated by the use of AI. In the PwC survey report, 43% of Digital Champions indicated they were making use of AI to generate transparency. By detecting relevant patterns in the vast amount of data flowing from the supply chain, AI can help supply chain managers improve visibility into key metrics and better understand the complex workings of their supply chain. This could be the first step on the way to an autonomous supply chain that is resilient to shocks.

AI-powered supply chain transparency solutions can help companies more proactively identify and manage supply chain risks, such as supply shortages, shipment delays or the financial risks of supply chain partners. By simulating different options to address potential threats (e.g., selecting an alternative supplier, rerouting shipments), companies gain a better understanding of their potential impact on service levels, lead times and costs. That makes it possible to take proactive measures that will minimise risks to the supply chain.

Stay the course so you’re ready to ramp up

As governments ease the restrictions they had put in place to combat the spread of COVID-19, transparency becomes increasingly important. Companies will need to be flexible with suppliers while still ensuring they can meet rising demand.

Cash flows are tight, and some companies may be tempted to cut their investments in the development of advanced supply chain capabilities. But that is likely the wrong approach. These investments can pay off, not just in lowering supply chain costs, but in increasing overall resilience.

To learn more about other advanced supply chain capabilities that can help you take your supply chain to the next level, take a look at PwC’s Connected and autonomous supply chain ecosystems 2025 report, and while you’re there, register and listen to the webinar recording from 21 April 2020. The webinar features representatives from some of the leading companies profiled in the report, who shared their insights into innovative supply chain solutions.

Contact us

Reinhard Geissbauer

Global Digital Operations, Partner, PwC Germany

Tel: +49 89 57905692

Stefan Schrauf

Operations and Supply Chain Europe, Partner, PwC Germany

Tel: +49 211 9815844

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