How COVID-19 transformed supply-chain strategy amongst European businesses

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No single boardroom topic has seen more of a change in priority over the past year as the supply chain.

The COVID-19 pandemic has severely tested supply chains around the globe, as organisations scrambled to cater to customer demand given sharp reductions in transport and logistics services.

According to a survey of European supply chain decision-makers back in April, 78% agreed they had experienced negative short-term impacts to their supply chains as a result of the pandemic, with only 5% saying they weren’t affected in any way.

Although supply chains issues aren’t just reflected in top-line statistics; they’re having a real-world impact on businesses and people. The fractured international supply chain has sparked concerns over shortages in medical supplies and life-saving medicines, leading to EU investigations into reshoring local pharmaceutical manufacturing capability.

It’s worth noting supply chains also aren’t solely for product delivery. Consider the video conferencing or enterprise SaaS apps you rely on when working from home. Without strong network and bandwidth services and their associated supply chains, those applications – and your productivity – could be severely affected.

While many organisations successfully rejigged their supply chains over the last year, there is still a lot of work to be done. According to a new study from Telstra, in partnership with Vanson Bourne, only 27% of business and IT decision-makers highlight the agility of their supply chains (i.e. their ability to quickly and profitably adjust to new or varying demand) as being good enough, requiring no improvement at all, whilst 22% said they needed notable or significant improvements.

This is a cause for concern considering how crucial supply chain health will continue to be this year. Organisations will need to focus on how to enable these sprawling partner networks to be as robust and agile as possible if they wish to grow through 2021.

How are European organisations thinking about supply chains?

It’s well documented that supply chain resilience is more important than it has ever been, and this is reflected in our study. 41% of respondents reported that expanding supply chain networks is one of the main ways that their business plans to grow over the next five years.

Organisations within Europe have seemingly managed to adapt to changing conditions quite well, although there is still plenty of room for improvement. Just under a quarter (24%) of respondents believe that their organisation is already completely adapted to the changes necessitated by COVID-19 and its resulting impacts, while a slightly larger proportion (26%) say the same for their supply chain.

Across the regions, respondents from France (32%) and those within the UK and Ireland (29%) are most likely to consider their supply chains to be completely adapted to a post-COVID world. Interestingly, though, a quarter of respondents across those same two countries also reported that they needed notable or significant supply chain improvements.

This may speak to a distinctive gap in supply chain proficiency within those two regions, with those on the lower end of the spectrum likely to lose ground to more agile competitors.

Fusing supply chains with technological investment

Noting the currently fractured nature of supply chains, just under nine in ten (89%) of business and IT decision-makers agree that involving members of their supply chain within digital transformation and innovation projects could lead to improved success for their organisation. This is uniform across all the vertical sectors surveyed, although financial services (95%) was a notable peak.

This aligns with a report from Gartner, who says supply chain digital transformation has been proven to drive growth, mitigate risk and optimise costs. Despite this, the analyst says over 50% of organisations haven’t actively started to build a roadmap for supply chain digital transformation.

A great example of a company that was able to extend digital transformation initiatives to their supply chain is Hamburg-based retailer Otto.

Working with Telstra, the company used an AI deep-learning algorithm - capable of analysing billions of historical transactions across 200 variables - to transform its relationship with manufacturers, simplify stock availability and enhance customer experience.

The AI system has proven so trustworthy that it’s now able to purchase around 200,000 items a month from third-party retailers without any human involvement or decision-making.

Through increased digitisation and intelligent investments in technology and security, European organisations can take advantage of the huge opportunity presented by supply chains, enhancing business opportunity, increasing competitiveness and improving customer experience.

To get the full story of how organisations in Europe are managing digitisation, supply chain management and cybersecurity in 2021, download Telstra’s report here.