The Ferrari Consulting and Research Group via its Supply Chain Matters outreach blog highlights a recently published survey sponsored by Accenture that provides findings indicating that companies are indeed investing in supply chain resiliency capabilities to mitigate business disruption.
As the month of October comes to a close, we revisit one of our 2023 Predictions for Industry and Global Supply Chains published at the beginning of this year.
Prediction Three of our research advisory indicated that more direct control of strategic and tactical direct materials sourcing would continue to be a prominent element of business strategy in 2023 and beyond. We stated that procurement and supply management leaders will be expected to lead in supply resiliency efforts across product and business areas.
In 2022, more U.S. based companies indicated in survey data and in concerted actions that termed China Plus materials sourcing strategies of either alternative, nearshoring, or reshoring efforts were being undertaken. In that same year, economists at Goldman Sachs indicated that supply chain resilience was now a top-of-mind topic for manufacturers and retailers.
Newly Released Accenture Study
Last week, global consulting firm Accenture released findings of a titled survey: Resiliency in the making- Turning adversity into advantage for engineering, supply, production and operations.
This survey’s Executive Summary begins with the observation that:
“Disruption has hit businesses hard in the last few years. Unforeseen fluctuations in demand at the height of the pandemic, geopolitical unrest driving up wages, material costs and energy prices, climate emergencies, and technology innovations have revealed dangerously low levels of resiliency within engineering, supply, production and operations. This vulnerability has caused businesses to miss out on a staggering $1.6 trillion in revenue growth opportunity on average each year.”
Accenture developed a framework of a reported 31 capabilities that enable resiliency and deploy this framework to a global-wide survey of over 1,200 senior executives from 11 industries in order to evaluate investment and/or maturity in these capabilities. This study’s framework defines resiliency in the context of materials sourcing, production and supply chain digital transformation, and on industrial automation.
Among the key findings were:
- Executives indicating that their businesses missed out on revenue growth opportunities ranging from 7.4 percent to 11 percent due to disruption in either their engineering, supply, production or operations units.
- Better resiliency reportedly enabled a competitive advantage that helped to achieve an additional 1.2 percentage points in EBIT margin compared to peers.
- An upwards of 78 percent of companies indicating plans for multi-sourcing strategies over the next three year, compared to 41 percent already doing so currently. The overall goal is stated as “localized, reconfigurable and decarbonized value chains in the future.”
- The Accenture analysis indicates that on average the companies surveyed exhibit a maturity score of 56/100 across all 31 capabilities for resilience.
- The average investment in resilience, consisting of either relocating, automating, digitizing- was $1 billion, with almost half of that investment being channeled to reshoring efforts.
Readers can access or download this study by accessing the Accenture report’s designated web page.
From our supply chain research lens, we were not surprised with the findings of this Accenture study. In August, we highlighted via Supply Chain Matters, a research paper authored by The Federal Reserve Bank of Kansas City titled: Global Supply Chains: The Looming “Great Reallocation”
The report’s conclusions were especially noteworthy:
“Rather than signaling a trend towards deglobalization, the available data hints at a looming “great reallocation” of U.S. supply chain activity. This shift is marked by a decline in direct U.S. sourcing from China, with a correspondingly rise in import share from low-wage locations, chiefly Vietnam, and regional trade areas, particularly Mexico.”
As we transition into our 2024 Predictions, we will feature additional research data and podcast conversation relative to supply chain resiliency and agility actions underway and their implications.
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