Worldwide pandemics and, more recently, military conflicts in Eastern Europe are continuing to cause significant disruption to global commerce, supply chains and consumers. However, in an unexpected turn of fortune, these very same events present an opportunity to rethink many of the approaches that have facilitated rampant consumerism and exacerbated the climate crisis.
In due course, this ‘rethink’ could well be the spur that brands and governments need to kickstart a sustainable green revolution in manufacturing, supply chain and retailing.
As both brands and governments look to allay future supply chain disruptions and the very real ripple effects inflation is having on businesses and individuals, moving supply chains closer to consumers as a topic of discussion (and all the associated potential long-term consumer and environmental gains) is garnering more attention.
Moving Supply Chains Closer to Consumers: A Case Beyond Economics
Increased flexibility, access to larger workforces and reduced operational expenses are just three of the most commonly cited reasons why tens of thousands of North American and European organizations have moved significant business operations overseas. And while the expansive global supply chains that had gained prominence since the turn of the millennium have undoubtedly bought cost efficiencies, they have also introduced a level of fragility which, until recent events, was not entirely understood.
While offshoring and the acquisition of raw materials and products from single, dominant markets might have been a good idea from a financial perspective, having factories that produce 90% of global semiconductors and microchips, or countries responsible for the supply of 30+% of global wheat yields has shone a spotlight on the vulnerability and costliness of single points of failure in global market conditions.
As a result, many organizations (state and private sector) are weighing the benefits of moving their manufacturing and supply chain functions closer to consumers in an attempt to guard against the inevitability of future market volatility.
Nevertheless, there is far more to like about the potential for bringing supply chain and manufacturing processes closer to the consumer than simply economic and security incentives. The ‘onshoring’ or ‘rightshoring’ movement of entire manufacturing processes and supply chain networks offers a tantalizing opportunity for brands to reimagine and reinvent their entire approach to sustainability and environmentally responsible products and services, from the ground up.
It is a well-known fact that restructuring business processes and implementing any new (let alone more sustainable) approach can cost millions of dollars in both time, technology and change management. However, it can also pay long-term dividends, according to Mahadeva Matt Mani of Strategy&, part of the PwC network.
Building a New Digital Foundation
Expensive though it may be, consider this: the chance to reimagine and implement more flexible, resilient digital supply chain and omnichannel commerce technology and processes (buoyed with benefits) is a once in a lifetime opportunity that most brands will never have.
It is a chance to future-proof manufacturing methods, supply chain processes and delivery networks, not only catering to the demands and expectations of modern consumers but also ensuring that these practices are aligned with environmental sustainability goals too — a prospect surely everyone from the CEO down to the end consumer can get excited about.
Greener Supply Chains as Important as Sourcing and Manufacturing
While sourcing raw materials from fair trade and eco-friendly suppliers is a key element to offering greener commerce options to consumers, it is equally important to recognize the importance of operating more sustainable supply chains to deliver these types of goods too. Failing to do so adds up to a huge opportunity missed.
Whether it’s Manhattan’s unique approach to three-dimensional cubing (packing goods for shipment and shipping less air); smart packing and dunnage reduction; empowering consumers with greener order modification, shipping and return options; or combining shipments and reducing unnecessary returns, greener supply chains mean less packaging waste, more efficient warehousing, fewer trucks on the roads and less planes in the skies.
It’s a win-win for not just bottom-line profitability, supply chain efficiency and customer experience, but crucially the environment too — another example of how the application of ‘smarter’ digital technology can drive ‘greener’ outcomes across entire supply chain networks.
Building for the Long-Term
World events are continuing to have a profound and lasting impact on the way we think about global supply chains in terms of resiliency and environmental credentials. As brands and governments look to mitigate against ‘the next’ significant event, the idea of moving manufacturing processes, goods and distribution networks closer to home/consumers is gaining traction.
The key to success for this new strategy rests on the ability of brands to continue to innovate at a supply chain level, and to deliver the types of networks and solutions that are not only resilient and reliable but also agile and responsive enough to deal with changing consumer and environmental needs in the future.
Having a chance to start from the ground up, away from any requirements to retrofit legacy solutions and processes into existing business environments (often actually slowing down workflows rather than speeding them up), is the thing of dreams for CEOs, COOs, CTOs and supply chain directors all over the globe.
While the cost of relocating, building new factories and implementing new technologies and processes may impact shoppers’ pockets in the short-term, the chance to rethink our entire approach to global commerce and the opportunity to drive a green retail revolution is an opportunity we surely cannot afford to pass up.
Ann Sung Ruckstuhl is Manhattan Associates’ SVP and Chief Marketing Officer. In this role, she is responsible for generating awareness and demand for Manhattan’s supply chain and omnichannel commerce solutions. With over two decades of high-tech marketing and product management leadership, Ruckstuhl is an established Silicon Valley executive who has built successful start-ups and transformed Fortune 500 companies.