'Now is the time to invest in supply chains'

In our previous monitor, we highlighted the ongoing geopolitical tensions and climate risks that are putting pressure on supply chains. While these issues remain, the indicators in our supply chain heatmap show an easing of pressure on supply chains since the first half of 2024.

Relief in pressure differs from 2023

‘This period of relief gives companies the opportunity to move from reactive to proactive strategies, with a focus on a strategic transformation of critical parts of the supply chain. Now is the time for companies to invest, by reviewing their supply chain configuration, inventory levels and supplier network and making them to become more resilient', says PwC expert Rolf Bos.

The current relief from supply chain pressures differs from the relief we saw in the first quarter of 2023. Despite ongoing geopolitical threats, overall perceived uncertainty has lessened while different sectors than before are now feeling the pressure. For instance, food, aerospace, and defense are experiencing greater pressure compared to last year. Additionally, manufacturers are reporting fewer material shortages, suggesting a trend toward more predictable economic stagnation rather than global disruptions. As inventory levels stabilize, companies have the opportunity to reevaluate their sourcing, planning, and production strategies.

A shift in mode of transportation

Transportation has been a critical concern over the past year, influenced by tensions, fuel price fluctuations, labor shortages, and freight rates. This is leading to a notable shift in transportation modes, with shipping volumes increasing while air travel is declining. As a result, businesses can focus more on cost reduction, advanced planning, and establishing sustainability goals.

The global transportation industry is expected to grow, with road and rail seeing accelerated growth due to innovations in efficiency and greener modes of transportation. Companies can use data from the pandemic period to redesign a resilient and sustainable network.  

Companies have the natural tendency to look for cost saving opportunities when supply chain pressures decrease. It is recommended to seize this period of relief to recalibrate their supply chains from reactive to proactive through investment in resilience to better navigate future uncertainties. Embracing automation, advanced technologies, and integrated operations across business units and geographic regions will be crucial for long-term success. By doing so, supply chains can become more adaptable, capable of responding to challenges while also capitalizing on new opportunities.