What every CEO needs to know about global supply chains right now

There’s a supply-chain revolution underway. It’s global, physical and digital. It’s changing where factories and warehouses are located and how they are managed. It’s being driven by the need to minimise disruption from geopolitical developments, wars, pandemics and climate disasters, and by rapid advances in technology. And it just might be the toughest topic boards need to get their heads around right now.

Which is why this year’s Gartner Supply Chain Symposium in Barcelona  is such a hot ticket. The event promises to bring together the cream of the world’s chief supply-chain and chief procurement officers. Capgemini will be there as event sponsor, showcasing the depth and breadth of its supply-chain services across consulting, engineering, applications and business services. This year, Capgemini will be co-presenting in partnership with L’Oréal, following last year’s successful co-presentation with Unilever.

A recent report from the Capgemini Research Institute (CRI) found that the world’s leading companies are reshoring in a big way, with dramatic implications for supply chains around the globe.

The report, The resurgence of manufacturing: Reindustrialisation strategies in Europe and the US, estimates that companies are poised to invest a mighty $3.4 trillion over the next three years in new or modernised capacity and 49 per cent of that will be onshore. The share of revenue invested offshore is predicted to fall from 26 per cent to 17 per cent over the same period; just three years ago, it stood at 35 per cent.

For companies, partial onshoring and near-shoring can tackle the growing risk of disruption arising from conflict, unrest, increasingly frequent and severe weather events – you name it. The pandemic and subsequent boom in demand exposed the risks of having too much production concentrated in one place and too far from consumers.

Rising protectionism is also driving this trend. Now that governments are keen to ensure national capacities in vital sectors such as medicines, vaccines, computer chips, green energy, defence and the like, the US and European Union are offering incentives to key industries that alter the economic location equation.

Additionally, wages for skilled workers have soared in places where they used to be cheap. This is driving a shift to replace men and women with machines, which cost the same to buy no matter where you install them.

Indeed, a bunch of new technologies are becoming cost-lowering enablers, from robots, AI and hyper automation software to additive manufacturing and computer vision systems that enable rapid physical stock counts in warehouses.

Last but not least, the 1,300 directors of companies with revenues of more than $1 billion surveyed by the CRI are getting serious about sustainability. Many are working towards zero emissions. They’re targeting the Scope 1 emissions from their own operations, Scope 2 from their energy suppliers and Scope 3 – emissions by suppliers and the users of their products.

The less they move stuff around, the better. And verification – of compliance, emissions and marketing claims – increasingly matters.

At Capgemini, with our partners and clients, we have been giving a lot of thought to all these issues.

Last September, we formed a strategic alliance with Kuehne+Nagel, a leading global logistics provider, to offer fully integrated business services across the end-to-end supply chain. As a result, we are now capable of running supply-chain planning, order management, cash collection, master data management, procurement and logistics services for our clients.

Together, we are delivering impactful supply-chain transformations, drawing upon the breadth of our knowledge, capabilities and capacity in the critical slew of digital enabling technologies.

One example we’re especially proud of is our multi-year relationship with Unilever, one of the world’s largest consumer goods companies. Unilever has over 400 brands, sold in over 190 countries and used by 3.4 billion people every day. Just think about the scale of its operations.

Key to Unilever’s supply-chain transformation was uniting its supply-chain and IT functions to create Unilever Business Operations in 2022. Within this, the newly formed Customer Operations team set out to digitalise the company’s end-to-end global supply chain. Instrumental has been the creation of seven global hubs. Run by strategic partners – including Capgemini – they offer simpler, standardised, digitalised processes to run core functions of the supply chain and provide the foundation and platform for the business to digitalise at scale and at speed.

The degree of simplification achieved by the implementation of these hubs is unrivalled. The enterprise resource planning (ERP) platform now runs just 10 core processes, down from over 150 country-specific ones. And it powers 20 fully integrated tech platforms and global process models (down from over 300 bespoke models) that undertake various functions, such as planning, customer interactions, promotion management and analytics, and cash collection. By establishing a standardised base layer of tech, Unilever can now roll out new technologies across the hubs over a single weekend (compared to the more traditional six- to 18-month period). The system gives Unilever’s supply-chain operators a holistic view of every aspect of the supply chain, right down to deciding which truck to use and the most efficient route for it to take.

Putting all the data together on a comparable basis in interactive systems enables Unilever to optimise the way it sources inputs and services tens of thousands of direct customers and, indirectly, billions of end consumers daily. This has unlocked huge value for Unilever through increased speed of digital innovation, world-class operational efficiencies and increased operational resilience.

Artificial intelligence is already playing a valuable role, for example in analysing demand volatility to forecast future needs. This leads to better inventory management and more timely distribution, reducing costs and the amount of slow-moving stock.

Sometimes supply-chain shifts arise because new technologies enable new products, more sustainable ingredients or materials and new ways of fulfilling consumer needs. Indeed, these shifts are moving L’Oréal into an omnichannel landscape, so we have been helping the company rethink its logistics strategy to meet – and indeed surpass – emerging customer requirements. This has included an ambitious target to modernise and optimise warehouse operations by deploying a new warehouse management system at 40-plus sites across four continents, building a common core solution for all internally run warehouses worldwide. We will be co-presenting with L’Oréal on this very topic at Gartner and can’t wait to share our story.

Best practice in supply-chain management today delivers three objectives: resilience, sustainability and customer-centricity. And that requires the right people with the right skills in the right roles, from the supply chief to the disruption director to the waste wealth manager.

Make no mistake, supply chains are evolving at lightning speed and this is impacting every company in every link of the chain. At Capgemini, we have the imagination, skills and capabilities you will need to make it happen in your business.