Glenn Steinberg, global supply chain leader with EY, discusses the drivers behind the “great reset” of manufacturing and supply chain operations.
“The reorientation of supply chains is well underway,” says Steinberg. Disruption caused by the COVID-19 pandemic has placed a spotlight on supply chains as a critical area of focus, both for the public and private sectors. “I think we’re at the start of a multi-year investment super-cycle,” he says, “as organizations look to tackle supply chain issues.”
No longer can supply chains function in a linear fashion that is exclusively cost-optimized. “Resilience is not inherent in today’s supply chain structures,” Steinberg says.
On the shipping side, disruptions and delays continue. Against that backdrop, global companies face a multitude of issues, including taxation, tariffs, environmental concerns, the demands of the omnichannel, shortages of talent, and legislation to promote the reshoring of production. As a result, “leaders are accelerating their investments,” Steinberg says. “End-to-end supply reinvention is in vogue.”
Disruptions will persist even after the pandemic has receded. Supply chains must change in line with a shift in the world economic order, Steinberg says. After decades of the U.S. dominating the global trade scene, the rise of China and India as economic and geopolitical powers is creating a “multi-polarity” situation. Resilience in the face of such change becomes key.
One way to achieve that goal is to shorten supply chains and bring production back from Asia to the U.S. The practicality of such a strategy depends on the industry. “Every company on the planet is looking at the strategic architecture of their supply chain,” Steinberg says.
At the same time, companies must focus on ensuring supply chain sustainability. The effort does not conflict with the need for resilience, Steinberg says. “I see leading companies working on both in parallel.”
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