Supply chain disruption: Three capabilities to embed today.

Around the world, we continue to traverse rough waters regarding supply chains. Disruption is today's business as usual. Leading a discussion panel at the 2023 National Summit for the Australian Institute of Project Management, it became abundantly clear that we need to build more confidence and resilience into supply chains. More consistency around reducing one of the largest risks to the successful delivery of on time, on budget and value outcomes promises both much improved project delivery and organisational performance.

A recent poll of 400 senior project manager professionals reveals that managing logistics, procurement and manufacturing of products and services has never been more challenging. Respondents felt that their organisation is either not equipped or unsure if it is prepared enough to handle ongoing supply chain disruption. What are the two most pressing issues holding organisations back? Labour shortages and rising costs.

While organisations are faced with holding on tight and riding out the macroeconomic wave for the next couple of years, much can be done to reprioritise efforts to meet immediate business and commercial needs.

Getting hold of the people and skills needed to operate is challenging and more costly. For example, emerging from the pandemic, governments and organisations are attempting to stimulate their economies through infrastructure projects. It is the same story in the private sector across the manufacturing, transportation, water, healthcare, and freight markets.

While skilled labour shortages make it tough to execute strategy and plans, applying cut-through digital solutions that help with transparency, visibility and automation across the supply chain offers immediate gains. Intelligent automation that combines robotic processes and artificial intelligence technologies offer quick business processes wins.

Across all regions and sectors, we see more clients digitally enabling their supply chains to adapt and evolve to labour challenges. This is not about replacing people with robots but establishing new and better ways to get things done and introducing efficiency into the lifecycle. Advanced automation provides organisations with a means to improve performance through increased productivity, lower cost, and more reliability.

Making changes earlier in the supply chain process is cheaper and more impactful. Every leader's secret weapon should be embracing digital tools that allow decisions to be made earlier and more efficiently. This means collecting accurate and relevant information curated consistently and meaningfully that can transform at scale — or introducing digital twins as online replicas of projects to experiment with alternative processes in a collaborative cloud-based environment before rolling it out across the business.

Access to materials and equipment for organisations to build and grow is a worldwide challenge. When money is simply not stretching as far as it once did, the solution is to reprioritise. How do you decide which projects get the chop and which ones to fast-track?

Outside of aligning to organisational objectives and goals, arming leaders with scenario planning, frameworks and methodologies that prescriptively step through reasoning to re-shape priorities offers a more viable path forward. We are increasingly working with clients to reprioritise projects in a way that negates many of the weaknesses of a traditional multi-criteria analysis, particularly when it comes to subjectivity and proneness to optimism bias. Leaders should stick to a criteria that can be demonstrated to be true and eliminate options that do not reach a certain level of performance.

This approach quantifies the decision-making of investments by removing gut feeling and subjectivity through a defined criterion. We are working with multiple clients to help them better prepare for future cost fluctuations across their supply chain. In one case, the team worked with a major transport client to help them review over 350 projects that ranged in size from $50,000 to $600 million. Using a reprioritisation tool, the client was able to determine the list of projects to pursue for funding. Price risk management and forecasting expected cost growth based on priority projects help focus supply-side mitigations for stronger outcomes.

A thorough sustainability strategy includes transparency and accountability across the supply chain. Pledging to work with sustainable suppliers is no longer enough; ESG (Environment, Social and Governance) metrics and reporting need to reflect efforts and actions. If they are not doing so already, organisations will soon likely be obligated to address the sustainability of their supplier ecosystem, from the top tier right through to small partners.

Establishing a solid strategy, risk identification, and mitigation planning for the supply chain is critical. Supply chain related ESG activities should cover material indicators and disclosure practices, with reliable baseline data and updated metrics to inform ongoing measurable performance targets. Organisations must address the integrity of their supply chain sustainability practices upfront ahead of any detrimental hits to their brand or bottom line.

As organisations face increasingly complex challenges alongside the need to drive better outcomes, strengthening your supply chain through improved digital capabilities, strategic reprioritisation, and sustainable practices keeps you on course for future changes.