How to build autonomous and sustainable supply chains
The pandemic has forever rewritten the rulebook for the global supply-and-demand economy, a delicate ecosystem that, until early 2020, was predicated on efficiency and productivity above all else.
Every industry has had to come to terms with titanic shifts during the pandemic: finance now faces a touch-and-go cashless future, while retail has become omnichannel-led and next-day-delivery by default.
Underpinning each of these pivots is the supply chain, where the only constant is adaptation. Ask any chief supply chain officer (CSCO) how the pandemic has impacted their day-to-day life and, unprecedented demand aside, they’ll tell you it’s been largely business as usual, but with a significant twist.
“What’s interesting is that the pandemic hasn’t necessarily created any new challenges for supply chains; it’s just magnified the problems that already existed,” says Glenn A. Steinberg, EY Global Supply Chain Leader. “In the US, for example, some estimates say we are short by about 80,000 truck drivers at this time. But three years ago, we were also short, just by about 61,000.”
Adaptation has been a career-defining concept for Steinberg, a former executive at GE, IBM and another Big Four who, for more than 30 years, has helped organisations evolve and thrive throughout periods of boom and bust.
“If you want to be successful in this industry, you have to have a thirst for learning – and that doesn’t end. Just continually stay out of your comfort zone,” he says. “If I look back on my career, all the critical turning points came when I got out of my comfort zone and took on something new. From the early days of process and strategy, to the rise of digital and ERP [enterprise resource planning] implementation, I still leverage those learnings, 20 years later.”
It is a mindset and lifestyle that Steinberg fully embraces, shared with thousands of professionals and students each year. He is a frequent and in-demand guest lecturer of MBA students at Columbia University. In conjunction with Columbia Business School, he helps lead a quarterly roundtable for CSCOs to share insights and experiences of the biggest issues they face, from global tax and tariffs to sustainability, digital supply chain and the future of work. He also sits on the advisory board of Columbia Business School’s W. Edwards Deming Centre for Quality, Productivity, and Competitiveness, whose mission is to train the next generation of managers, upskill the senior executives of today and support vital research.
Steinberg’s commitment to learning and sharing knowledge have also earned him a reputation as a trusted and valued advisor to the world’s biggest economies. When the pandemic broadsided governments around the world, Steinberg and his team were contacted by governments in Germany, the UK, the US and Australia. The assistance provided by Steinberg and EY teams was vital in one of the most acute periods of disruption in living memory.
Today, Steinberg leads more than 5,000 supply chain consultants across the globe, guiding clients by offering supply chain strategy, procurement, manufacturing, logistics and fulfilment, as well as planning and technology solutions.
It is a broad remit that demands collaboration, and he’s proud of the “collegial” culture he’s helped shape to foster an environment where it flourishes.
“We are focused on taking care of each other, collaborating and doing what’s right for our clients,” he says. “I want this to be a place where everyone can say, ‘I feel valued. I feel understood. I belong. I feel cared for and I can grow.’ This is the culture we have developed.”
“EY teams at a global level are very focused on doing cutting-edge work with emerging technologies,” Steinberg adds. "We’re doing innovative engagements with AI and blockchain, digital twins and smart factories.”
He adds that his team is “doing some of the most purposeful work on the planet”, carrying out shop floor digital manufacturing work at a global pharmaceutical company, delivering lifesaving medicines, as well as providing a trusted data-exchange platform and full suite of applications linking together all key players across the cell and gene therapy ecosystem.
“We are also working with one of the largest consumer products companies in the world, helping to decarbonise their value chain,” he adds. “This is really purposeful work that our people can be proud of.”
As much of the world begins to rediscover some form of regular cadence, Steinberg and his global team are turning their focus to defining the future of the supply chain. It's the start of what Steinberg refers to as an "investment supercycle", which has enormous potential for positive change.
“Supply chain reinvention is in vogue. It’s an exciting time for C-suites and CSCOs. The multiplicity of demands that are facing CSCOs is incredible. It used to be enough just to balance cost, service, quality and speed. Now you need to add resilience and sustainability into your supply chain.”
As global powers continue to vie for cultural and economic influence, tariffs, incentives and sabre-rattling will continue to impact supply chains. Sustainability, visibility and resilience will come to define the new standard for supply chain excellence in a world where, Steinberg thinks, “something broader is at play”.
“The world order is changing from a unipolar economic order to a multipolar one,” Steinberg continues. “This has a tremendous impact on the strategic architectures of the world’s supply chains. As a result, virtually every company in the world is re-evaluating their supply chain footprint, determining where best to place their physical assets such as manufacturing facilities, warehouses and more.”
Five key themes for resilient supply chains
“Resilience is a concept that is multifaceted, with most people not understanding how broad and deep it really is,” he says. “End-to-end visibility is foundational to a resilient supply chain, with agility built into the extended chain to enable action.”
Steinberg says five key themes of resilience have emerged in the course of stress testing clients’ supply chains to uncover both vulnerability and opportunity:
- Embedding end-to-end visibility by leveraging technologies such as internet of things, digital twins, simulation software, analytics, AI (including machine learning) and alerts for risk monitoring.
- Creating agile networks by re-evaluating the geographical and strategic architecture of the supply chain. “It is a simple question to ask what should be local, regional or global, but in a complex partner ecosystem, reconciling a network of warehouses, manufacturing plants, logistics, procurement and the other pillars of the supply chain is never easy.”
- Securing alternative sources of supply. “This means not only spreading your bets among additional suppliers, but also including diversity, equity and inclusiveness (DEI) commitments in your sourcing efforts.”
- Developing a resilient workforce “by preparing employees to have the skills required in the next five years and embedding a problem-solving mindset into the ways of working right down to the shop floor machine operators.”
- Building a trusted, secure supply network. “In an era where everything is interconnected by technology, cybersecurity is paramount if a supply chain is going to be resilient.”
Steinberg’s other focus is supply chain sustainability, and he says innovation around this important topic goes hand-in-hand with the fundamentals of resilient supply chains.
“A resilient supply chain requires that you embed end-to-end visibility, simulation and risk monitoring into your business, while a sustainable supply chain requires traceability, visibility and disclosure. These are two different, but related, topics that are being worked on in earnest by companies across the globe. Similarly, resilience requires that a company secure alternative sources of supply to be ready for the next disruption, while sustainable supply chain management requires sustainable and diverse sourcing strategies.”
Supply chain in the C-suite
The final major post-pandemic shift in supply chain is the rise of the CSCO and the elevation of supply chain as a constant boardroom agenda item. Some draw parallels to the rise of the chief information officer in the mid-2000s: once a nice-to-have advantage that is now an imperative skill set for every growing business.
“The best CEOs are fully versed in the importance of technology,” Steinberg says. “They have to stay abreast of it as it’s moving very fast, and, otherwise, they can miss a pivot and easily be disrupted. Now CEOs, frankly, need to understand supply chains as well. It used to be a cost of doing business, but now it’s in the boardroom, and if you do it right, it can be a competitive advantage and a revenue growth driver. For example, think about the largest online retailer, they can get you the product the next day, maybe even the same day. That’s all about using the supply chain as an engine for growth by quickly meeting customer needs. That is a differential competitive advantage.”
Supply chain expertise can also come from sources beyond your company’s four walls, Steinberg points out, through a partner ecosystem where companies can collaborate and gain scale by accessing the talent of thousands of talented supply chain professionals globally.
This, he says, is why the EY organisation collaborates with best-of-breed innovators: industry solutions providers such as SAP and Blue Yonder, and technology giants like Microsoft.
Typical of this spirit of collaboration is the EY teams collaboration with Nottingham-Spirk, a Cleveland, Ohio, innovation specialist that acts as its supply chain innovation hub. It has a centre to demonstrate how its own technologies and EY assets work together to solve client business problems.
“But I have to say, above all in the supply chain space, Proctor & Gamble (P&G), is a very important collaborator for us,” Steinberg says. “They are annually rated one of the top five supply chains in the industry by leading analysts. We formed a global arrangement with P&G, so while our competitors can tell you what great looks like, we can show you what great looks like.
“We bring EY clients to P&G sites; we walk the factory and talk to the machine operators. We can embed P&G leaders on our projects, and we have access to their IP [intellectual property]. It’s been wildly successful in helping EY clients see into the future and what the art of the possible really is.”
Where is this all headed?
Which leads Steinberg to the question he’s asked most often by clients: what is possible in the future, and where is this all headed?
“There’s all this disruption,” he says. “We’ve got geopolitics shaping supply chains for years to come. We’ve got industry 4.0, and the interconnected society we’re living in. Consumer buying patterns are uneven and shifting, providing the opportunity for some companies to tap into analysing real-time data to match supply and demand. And there is disruption from events ranging from weather to global semiconductor shortages. It is no wonder why CSCOs and the C-suite want to know how all these things will converge.”
EY teams research points to the rise of digital and fully autonomous supply chains. EY teams researchers surveyed 500 senior-level executives at organisations of more than US$1b in size. One key finding is that 2025 will be the year mostly autonomous supply chains will begin to emerge to replace the hybrid processes common today.
“We’re already on a path to an autonomous future. We have self-driving cars, where people’s lives are at stake. There’s no reason we can’t have an autonomous and self-organising supply chain. In the end, it’s just about mastering the power of data.”
It’s an exciting future, a journey that EY clients are keen to embark upon – and for good reason.
“We’re already doing projects to help clients get to their future state, to show them what the roadmap for a digitally networked and autonomous supply chain looks like. Consider this: today, a change in customer demand has to work its way linearly back through the supply chain to get to the OEM [original equipment manufacturer], the supplier, to the supplier’s supplier, all through the tiers. That could take months before people change their production plans.
“Supply chains are headed towards digitally networked ecosystems with shared data in the cloud,” he adds. “This way, everyone can see what’s happening now, immediately adjust to real-time events and even predict what happens next. Finally, we have all the tools and technologies at our fingertips to make this a reality. There has never been a better time to be a supply chain professional than right now.”
The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organisation or its member firms