An analysis by IFS, the business consulting firm, indicates that large global companies are increasingly adopting innovative measures to address supply chain disruption.
According to the report, two-thirds (66%) of large companies worldwide state that they now have more stocks on hand compared to the period prior to the pandemic, with almost one in five in total (18%) saying they have significantly more actions to achieve it.
Further highlighting the impact of supply chain disruption, seven out of ten respondents (66%) said they had increased the number of material/product suppliers they use in response to recent supply chain issues. In addition, nearly three quarters (72%) of the survey sample stated that they have increased the proportion of materials/products they source from domestic suppliers as a result of these problems.
IFS notes that these innovative measures are likely to also add more complexity and waste to the supply chain, at a time when regulatory burdens are on the rise (highlighted by the 18% as one of the main contributors to its current business disruption) and the need to harness the many benefits of the circular economy that are making supply chain management more complex. In line with this, the report points out, “it is positive that 93% of respondents said that their organization was adopting the circular economy today or planning to do so in the future” .
However, many face challenges in terms of meeting their goals, with around 39% of who say they are in the process, still developing goals; yet to plan programs; or they have their goals on hold. Even among respondents who are already embracing the circular economy, 23% felt their customers’ expectations of circularity had no impact on the experience of the customer or were detrimental to it, although over time the benefits of circularity in delivering a better customer experience are likely to become increasingly clear.
The survey indicates that many large companies have redesigned their supply chain in innovative ways to reduce the risk of this disruption. These include: offshoring to improve security of supply; keep more stock on hand to ensure they can always meet demand and increase the number of suppliers they use to eliminate any chance of disappointing customers.
Maggie Slowik , Global Industry Director for Manufacturing at IFS, said: “Large companies are likely to incur much higher costs and other negative financial impacts due to the measures they are taking to mitigate the interruption. Relocating the supply chain will often lead to having to invest in more expensive raw materials or product components, especially as inflation rises, while keeping stock on hand will tie up significant sums that might otherwise be ‘working’ for the business. ”.
The survey also reveals that many large companies suffer from a shortage of talent. 65% of respondents say their organizations find it difficult to fill open positions (with a lack of qualified candidates and qualified talent being the most frequent reasons ), and 39% think that the disruption related to skills shortages within their organization will last beyond the end of 2022.
According to Slowik: “Companies urgently need to find a solution that helps them manage this disruption, which with price volatility is increasing more and more , transition to a circular economy, and address the supply chain complexities we face today.”
The survey was conducted with more than 1,450 senior decision-makers in large companies in France, Germany, the Nordic countries, the US, the UK and the United Arab Emirates.
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