Strategies in supply chain management for risk reduction
According to a recent SCM study by McKinsey, automotive companies are increasingly adopting dual-sourcing and nearshoring in response to growing disruptions in their supply chains. In 2023, more companies plan to use end-to-end transparency platforms than in the previous year. These findings were published in the press.
McKinsey conducted interviews with supply chain management executives in April and May of this year to assess companies’ responses and strategies to challenges such as the COVID-19 pandemic or the Russia-Ukraine conflict. In total, approximately 100 managers from various industries and countries participated in the ‘Supply Chain Pulse Survey.’ The main focus of the study was how companies aim to reduce risks and enhance the resilience of their supply chains.
Enhancing the resilience of supply chains
The evaluation reveals that companies can adapt better to current issues than in the previous year. Key measures include increasing inventory levels, dual-sourcing, and nearshoring.
Nearshoring is gaining importance, especially in the automotive and consumer goods industries. According to the information provided, percent of suppliers plan to establish operations closer to primary markets. 64 percent of companies have already begun the regionalization of their supply chains. However, 42 percent of companies also intend to carry out production in nearby foreign countries.
The study, according to McKinsey, indicates a ‘technological revolution in supply chain management,’ as 71 percent of the respondents intend to realign their planning and control processes in the next three years.
Knut Alicke, Partner at McKinsey in Stuttgart and a Professor of Supply Chain Management at the University of Cologne, emphasizes: “End-to-end transparency, effective scenario planning, and access to IT professionals are the three crucial factors for enhancing the resilience of supply chains.”
Not enough IT professionals
The study highlights that the use of Advanced Planning and Scheduling (APS) systems has greatly increased, with 76 percent of companies employing them. ‘APS systems assist companies in aligning supply and demand in complex networks,’ explains Alicke.
However, access to qualified IT professionals remains a challenge, as only 8 percent of respondents indicated having enough experts for their digitization goals. Consequently, supply chain technologies have not been introduced thus far.