Sustainable supply chain with a resilient backbone

Have you read the 2022 edition of Fjord Trends, Accenture Interactive’s annual research report on customer behavior and its resulting impact on society, culture, and business?

It’s got me thinking about the impact these trends are having on supply chain management, especially after the two years of disruption we’ve experienced.

Take the emergence of the metaverse, the convergence of physical and digital worlds.

It marks the next evolution of today’s control towers and digital twins, which significantly improve supply chain planning. Imagine strapping on a virtual reality headset and “flying” around the globe. After checking out a Tennessee warehouse, you watch the ships come in at the Port of Long Beach; you end your day monitoring production runs in Taiwan—all without leaving your office (or home, as you might still be working remotely).

We see five major trends emerging that have significant implications for the year ahead.

We’ve had two years of disruption to the systems on which society is run, and it’s taking its toll. There are challenging times ahead, but we believe there are also great opportunities to design new systems, and new ways of being. This year, the dominant theme throughout these trends is about the need to respond to changes in all relationships. We should define how we—collectively and individually—consciously stitch together positive relationships to create a new fabric of life that’s good for people, business and the planet.

Curious to see what my colleagues think, I spoke with Pierre-François Kaltenbach, our Europe market lead, and Vivek Luthra, who heads up growth markets. Here’s what they had to say:

Renato: Pierre-François, from a European perspective, what’s the biggest supply chain trend of 2022?

Pierre-François: Supply chain is now at the top of everyone’s agenda. Heads of state are talking about it, which has never happened before. There are a lot of reasons—COVID, tariffs, trade wars, a greater focus on sustainability—but the fact is, there are greater expectations for supply chain professionals from the very top. And a big element here is a push for more visibility across the supply chain, greater agility, and the ability to predict and respond to disruptions in real time.

Renato: Vivek, here in the States, we’re seeing a shortage of truck drivers. Autonomous vehicles may one day be an answer for that. What do today’s unprecedented challenges mean for the workforce in growth markets?

Vivek: Talent is a major issue in growth markets this year, just like elsewhere around the world. There’s a huge amount of pressure to retain workers, at every level of an organization, and to keep them motivated.

A lot of people over the past 24 months have been thinking about what they're doing and why they're doing it. They’re re-evaluating their options, and concluding they want to do different things. People are still having to quarantine as the virus spreads, and that has led to severe staffing shortages, especially among employees who can’t work remotely.

Australian retailers are being hit particularly hard—store shelves in many cities are empty because workers aren’t available. One of Australia’s leading retailers is addressing this challenge by taking advantage of a program launched by the Victorian state government to recruit people for roles including shelf stacking and distribution. We will likely see other public-private partnerships to deal with talent shortages.

Renato: Pierre-François, you mentioned sustainability as a major factor in supply chain management. Can you elaborate?

Pierre-François: It’s critical—the supply chain is responsible for as much as 70% of the world’s carbon footprint. Companies can’t just do green “window dressing” anymore. Or, as our Fjord colleagues have written, corporate decision makers need to adopt “nature positive” business practices.

It’s time for big companies to build and follow a sustainability road map. To get an idea of what this looks like, check out what ArcelorMittal is doing.

In terms of a collective approach to sustainability, we’re going to see companies—even competitors—share resources to reduce environmental impact. For example, we’re working with leading oil and gas companies on a program to share platforms, helicopters, vessels, and boats.

Renato: Vivek, is sustainability a big issue in your region?

Vivek: Absolutely, especially as more countries pass environmental legislation.

Australia, for example, has implemented several new rules governing how the country deals with certain types of plastic waste. The country can no longer send it to developing countries such as Thailand, the Philippines, and Indonesia. While that is good for those Asian nations, it also puts a lot of pressure on Australian companies to get serious about reducing landfills.

And this kind of thinking isn’t limited to Australia. In Japan, the country is pushing forward on its net zero agenda by 2050 with a strong uptake from both public and private sectors. More than 200 cities have committed to achieving zero carbon emissions by then. In the fashion sector, large corporates are implementing sustainability strategies focused on turning the “power of clothing” into a force for good.

Renato: How are the developing markets in your region approaching sustainability?

Vivek: The situation here is a bit unique due to the diversity of the markets and the progress they’ve made.

Countries such as Australia and Japan are making great strides. Other markets, such as China and India, are further behind in sustainability, but they have ambitious goals. They are likely to take advantage of technology to accelerate their progress and possibly leapfrog developed countries in the region. That ties into a general focus on aggressive digitalization of the overall supply chain, which we’re seeing at companies around the world.

Renato: I agree, Vivek. Digitalization is also a big trend in the US Pierre-François, what’s the situation in Europe?

Pierre-François: In the past two years, many of our clients have begun to accelerate their digitalization efforts, and that will continue in 2022. We’re increasingly relying on advanced technologies and data analytics to meet ever-higher expectations for resiliency, agility, and sustainability.

Importantly, this isn’t going to be incremental change. I see more companies looking beyond best practices in their sector and wanting to replicate the digital natives’ way of working—to quickly bypass what their peers are doing. The burning platform for digital change is stronger than ever, and supply chain leaders will need to move even faster to help their companies keep pace.

Renato: Gentlemen, thanks for sharing your views with me. While we might be oceans apart, it’s clear we’re having similar conversations with our teams and clients – and at every turn, using advanced technology to build customer-centric, resilient and sustainable supply chains.