Old global supply chains used to be notorious hotbeds of environmental, social, and governance (ESG) transgressions.
With numerous vendors spread out across countries, there was little visibility beyond the first tier of supply.
Down in the depths of tiers five, six, and beyond, executives didn't have an understanding of what was happening, but that's no longer the case.
Digital transformation is being driven by Industry 4.0 technologies, and it is changing everything as we know it.
There's an urgent need for organizations to walk the walk on ESG performance and not just talk the talk. Businesses know now that if they fall short on ESG compliance, then their investors, stakeholders, and customers will want answers fast.
Transparency of the supply chain is driven by data and analytics, and ESG data has the potential to make or break potential contracts, improve efficiency, and to secure the funding for new and existing operations. Sustainability is being embedded in every project undertaken, and this also provides cost benefits, too.
"As the frequency and severity of disruptions increase, the era of neglecting supply chains, trusting suppliers, and optimising for cost is probably over," says McKinsey Partner Knut Alicke, who has a leading role in digital supply chain and analytics for supply chain management.
"We're entering a new age of supply chain management, where sourcing capabilities are king and digital innovation is the bridge to resilience," Alicke explains.