Building supply chain resilience

In this article, we examine how companies can reconfigure their supply chain strategies to build greater resilience and agility to quickly adapt to disruption.

Looking into the future, business leaders are coordinating across their organizations to reevaluate the resiliency of their end-to-end global supply chains. This includes developing strategies that consider changes driven by technology and enacting new ways of working whether though the adoption of machine learning (ML), artificial intelligence (AI) or the future of work.

Shift the global supply chain model

Since 2020, nearly all companies have experienced some level of business disruption and many have been transformed forever. The impacts vary significantly by sector. The manufacturing sector generally pivoted effectively to adapt to the crisis—quickly adopting digital technologies and using automation, and (depending on their location) rerouting where they source and manufacture their goods to bring production closer to consumer markets (nearshoring/onshoring).

Moreover, manufacturers with technological and digital capabilities (robotics, AI, machine learning, drones, advanced analytics, big data, digital twins, virtual/augmented reality) showed an advantage in their ability to more quickly adapt in response to disruption. Some companies also transitioned from dependency on physical retail stores to digital or hybrid selling models to deliver their products.

Key emerging themes

	Supply chain diversification Companies are seeking diversification of suppliers and geographies for sourcing raw materials and component products for better supply and capacity management, while at the same time focusing on cost savings, liquidity, and cash management. In addition, companies are seeking to address consumer concerns through more sustainable supply chains with ethical and socially responsible suppliers and practices.
	Digital transformation Business leaders realize that they can run aspects of supply chains remotely with digital solutions. Accelerated use of technology is requiring leaders to consider investments in enhanced digital capabilities.
	Enabling the future of work in supply chain management and operations The pandemic has caused the workplace, workforce, and the nature of work itself to undergo some dramatic changes. The notion of where work can be done (i.e., the workplace) will likely continue its move from a physical to virtual environment as organizations increasingly adopt tools for remote working.

Reconfigure for competitive advantage

To stay competitive in this new business and economic environment requires new strategies and practices. Companies must reevaluate the resilience of their supply chains—from planning for potential disruptions within their current geographical footprints, to a full review and transformation of their end-to-end supply chain models. Synchronization of the end-to-end supply chain through technology is key to enabling better decision-making to reduce the risk of disruption

Assess the tax impacts of supply chain planning and transformation

It is crucial that tax leaders are involved in the early stages to better assess the tax impacts of supply chain transformations. Success requires, combining supply chain transformation with operational tax changes which means tax teams must have full visibility into the digital innovation and supply chain strategies and their impacts on operations, profitability, and asset values.

Resilient tax leaders should assess the direct and indirect tax consequences of proposed changes to their company’s supply chains. Through value chain alignment—the process of integrating global tax strategy with business operating models—the tax department can provide business leaders with timely and effective input on the tax implications of supply chain decisions

Take steps to build resiliency

According to Deloitte’s 2021 Global Resilience Report, 6 in 10 Chief Operating Officers believe disruption on the scale of 2020 will recur in the future on either an occasional or regular basis. That’s why it’s critical for businesses to build supply chain resilience and implement business strategies that accelerate performance and mitigate risk.

Resilient tax leaders need to focus on three key areas:

Doing so will provide more strategic value, enhance resilience and empower organizations to invest in the right capabilities from technology to operating models to outperform their competition and operate boldly.