Current crises are putting ongoing pressure on global supply chains. In this context, mastering the complexity of one’s own value creation network has become not only a decisive competitive factor but also a survival factor for industrial companies.
Crises in recent years have posed major challenges for industrial companies in all sectors. Their global supply chains broke down, resulting in long waiting times, bottlenecks and production stops. The effects continue even now and it is not expected to calm down anytime soon. Many see nearshoring as the solution to supply chain problems. At least some of the production facilities and supplier plants would then be located either in the same country as the company or in a directly neighboring EU state. Would this mean the end of globalization?
When selecting network partners: choose performance over cost advantages
No, a global network remains an important building block for maintaining international contacts in the long term and maintaining access to these markets. However, ongoing crises are forcing companies to reorganize their supply chains to identify disruptions at an early stage, minimize risks, and manage the consequences of crises. Moreover, a traditional supplier network is no longer sufficient to reshape the global footprint.
Companies will therefore fail by following a traditional idea that supply chains are linear. In our complex world, value chains are constantly transforming into global, multidimensional networks. These need to be coordinated with modern supply chain network management and the appropriate IT. Increased supply chain resilience requires a high level of transparency, reliable information sharing, and efficient collaboration between individual teams. Network partners are selected based on their capability for specific products and proximity to company sites, not only based on the most cost-effective option.
New supply chain law: sustainability will become a serious issue as of January 2023
It is already becoming apparent that competition in the future will take place between value networks and no longer between individual companies. Mastering complex supply chain networks is therefore becoming a decisive competitive factor. Companies that align their networks with the customer in an agile manner and whose network partners work together perfectly will come out on top.
In addition, creating transparency in the supply chain offers another benefit:
When the German Supply Chain Act comes into force on January 1, 2023, companies (initially with more than 3,000 employees, one year later with more than 1,000 employees) will be obliged to ensure compliance with human rights and environmental protection requirements along their supply chain and to document their activities in a sustainability report. A much stricter European directive is already in the works and is also supported by the German government. Transparency in the supply chain, partnership-based cooperation with suppliers, and professional risk management help companies meet legal requirements on time and comprehensively.
Staufen AG has developed an approach for modern supply chain network management. Several globally positioned companies have successfully increased the performance of their network and the efficiency of those involved using this approach. For examples and more information, see the latest Staufen Magazine.
This article was previously published in Creditreform
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