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Supply chains a priority post-Covid, research finds

Published:  24 November, 2020

Reconfiguring supply chains will be a key objective for businesses as they emerge from the Covid-19 crisis, a new study from the Capgemini Research Institute has revealed.

Nearly three-quarters (72%) of all organisations surveyed reported a negative impact on their supply chains during the crisis, a figure that rises above 80% for businesses in the retail and consumer-product sectors.

Difficulties encountered during the crisis included shortages of critical parts/materials (68%), delayed shipments and longer lead times (77%), adjusting production capacity in response to fluctuating demand (65%), and planning while customer demand experienced such volatility (69%).

Over half (51%) of those surveyed have taken between three to six months to recover from supply chain disruptions, while another 17% expect to take six to twelve months to do so.

Some 60% now believe their supply chain strategy will need to change significantly in order to adapt to the new trading environment, with supply chain resilience a key driver for 65% of businesses.

There is a growing consensus that in future, supply chains will have to be more flexible and more agile so they can react and adapt quickly to potential disruption.

Only 9% predict a return to business-as-usual.

Businesses are also having to adapt to changing consumer preferences: 68% of consumer-product and retail consumers prefer locally produced items in the wake of the crisis; 79% report the influence of sustainability on purchases.

As a result, 76% of organisations are actively investing in localising or regionalising their supplier and manufacturing base to reduce risk and be closer to their customers.

Relatedly, 81% of businesses are investing in diversifying their supplier base and 58% in diversifying their manufacturing base.

A combination of pandemic response and shifting consumer sentiment is also accelerating the drive towards sustainability in the supply chain, with 77% of respondents investing more heavily over the next three years.

Perhaps unsurprisingly, 84% of businesses now report that improving crisis-preparedness is a priority.

Supply chain issues have loomed large in the drink trade's woes this year, with Miles Beale, chief executive of the WSTA, calling on the government to extend its cash grants to the hospitality sector to the supply chain.

Capgemini’s research involved a survey of 1,000 supply chain executives at director level or above among global organisations with revenues above $1bn in the last financial year.

The survey was conducted between August and September 2020.

The report is titled Fast forward: Rethinking supply chain resilience for a post-Covid-19 world.