Building a supply chain that enables and fuels growth in the post-pandemic world

Emerging from the restrictions of the Covid-19 pandemic was heralded as something of a turning point for businesses around the world. Freedom to work, buy and sell was back, and with it the promise of a brighter and more prosperous future.

However, the return of societal normality wasn’t the end of the challenges; in fact, it was only the beginning. The past year has seen unprecedented inflation, energy price rises, geopolitical tensions and more having a significant impact on global trade, and the resulting difficulties and uncertainties aren’t set to go away any time soon.

Don’t fear disruption – embrace it

Global supply chains have been the subject of extensive disruption over the past few years, and while the immediate aftermath is rarely a good thing, could there be positives to take in the long run?

Restrictions and lockdowns in China during the pandemic – including after the western world had opened up – caused significant issues for European businesses.

Consumer demand was increasing to new highs as people found time and money to shop online, but without parts and goods coming in from the east, the demand could scarcely be supplied – all in all having a detrimental financial impact.

Rather than simply sourcing materials from the cheapest possible location, Head of Global Logistics Anders Zobbe outlined how the brand adopted near-sourcing strategies for many components.

By having less European reliance on Asia and instead sourcing where they produce, Volvo has built a supply chain with fewer risks to manage that can now be proactive against disruption.

What that effectively means is that disruption has been turned from a threat into a competitive advantage, with complexity reducing and flexibility-enhancing incentives allowing the Volvo supply chain to keep moving in all circumstances.

Without a crisis bringing about the need for evaluation, companies perhaps wouldn’t understand where their logistics operations are broken and in need of attention. So while disruption is something we’re all apprehensive about, embracing it can lead not only to survival, but success.

The level of pressure from consumers certainly varies across different sectors, but one that stands out from the crowd is fashion. The industry as a whole accounts for approximately 2.1 billion tones of greenhouse gas emissions per year, so it’s little wonder 67% of consumers consider sustainable materials to be an important purchasing factor when buying fashion items (McKinsey).

At the SCM Forum 2023, Jonas Eder-Hansen (COO, Global Fashion Agenda) and Dorte Rye Olsen (Head of Sustainability, BESTSELLER) acknowledged the mountain that needs the be climbed within fashion, before saying that sustainable logistics could well be the catalyst behind industry-wide action.

Fashion supply chains themselves are relatively complex due to a number of factors involved up and downstream in production, distribution and retailing, but Jonas and Dorte see opportunity with such broad areas to work with.

From sourcing and production to global distribution – as well as returns – there are environmentally progressive gains to be made across the board in fashion, and logistics can undoubtedly play a central role.

It’s a prime example of how improving logistics from both the side of the business and the provider can make a real impact on the world.

Companies like the Global Fashion Agenda and BESTSELLER have visions of a perfectly circular fashion industry that has minimal impact for the environment and is positive for society globally. And while single fashion entities adopting more sustainable practices are a mere drop in the ocean, collective efforts across the industry with the right logistics partner can turn those drops into waves.

Human-proof your future

Changes to consumer behaviour have been the talk of just about every industry since the start of the Covid-19 pandemic – and for good reason. Tough economic times have provoked significant fluctuations in demand throughout Europe, leading to overstocking and weak financial performances for businesses.

Not being prepared for such changes can be when the impact is at its most severe, but for Aljan De Boar (Head of Inspiration Trends, Active & Community Director at IRG), recent consumer demand unpredictability comes as no surprise.

Using psychological and sociological theories, Aljan explained that humans are uncertain beings by their very nature; and according to the World Uncertainty Index, widespread uncertainty is often the result of a major disruptive event – such as the Iraq war, Brexit and indeed Covid-19.

Now in the wake of the pandemic, uncertainty has changed the way consumers spend money, with more of a focus on environmental, social and governance (ESG) strategies than ever before.

So how do you navigate uncertainty and human-proof your business to keep consumers coming back? The simple answer is through trust, but gaining that trust is far from simple.

Consumer behaviour is indeed changing all the time, but Aljan argued that’s just because society is also changing all the time through the different generations. Companies must understand the differences between these groups and continue moving and changing themselves to gain a competitive advantage.

Throughout the day at the SCM Forum 2023, logistics was labelled as the facilitator when it comes to driving change in the world for all businesses. What we do our don’t do at this very moment will define our future, so it’s clear that companies have a great responsibility on their shoulders to come together and act.

Though we cannot predict the future, collaboration and unified goals can be the difference between one single business achieving its sustainability goals and an entire industry – which is nothing but good news for all.

New risks and new disruptions will always exist in this post-pandemic world, but with frequent evaluation and adaptation while always considering environmental impact, companies will flourish and grow to be a big part of the future they help to shape.