The last 12 months have created a new lens through which to understand inclusive supply chains and supplier diversity. At an artificial intelligence conference in 2018, I was leading a group discussing how to build the world’s most inclusive supply chains. For most of the group, it was a nice idea, but not an urgent need. Little did we know the scale and scope of change that was about to be thrust upon global supply chains, and the resulting mandate that they become more resilient, diverse, and inclusive.
Three major trends have led to the acceleration of this transformation.
- The first is health equity and the need to digitize the long tail of supply chains and distribution networks to deliver it. COVID-19 is a virus that requires intervention across the global population. Our efforts to respond to the current crisis have led to the understanding that many of our supply chains stop short of full delivery. We have optimization, real-time analytics and artificial intelligence between one point and the next, but before we deliver to the patient, and in many cases before we even enter emerging communities and vulnerable population,s all of those signals go dark. Small businesses in the United States are critical players in our economy and our job creation and innovation ecosystems and their roles in healthcare supply chains and resiliency are key to successful patient outcomes. SMEs are the limbs, digits, nerve endings, and the edge of our distribution networks. However, many of the recent innovations in supply chains have left SMEs out and therefore don’t work through the distributed network of SMEs that finish the job. The need to deliver health equity in response to COVID and beyond is forcing inclusion of SMEs who serve emerging communities and underserved populations, and demanding that we design ways that they can undergo the digital transformation needed to plug into modern supply chains.
- The second trend is supply chain resiliency. Vertically integrated and controlled supply chains have been identified as less resilient and, in some cases, as a risk to national security. A new model (what Deloitte calls Digital Supply Chain Networks) has the potential to be more adaptable and resilient to unforeseen external shocks. These networks are far more distributed than their linear forebears. They extend all the way into the communities they are designed to serve and require dynamic matching of solutions providers and a degree of interoperability that comes with a networked model. This all leads to a larger, more inclusive and locally intelligent network. A digitally included network of SMEs is more qualified to do this work than a wholly owned extension of a centralized corporation. Entrepreneurs are likely the leaders in their communities and including them in Digital Supply Chain Networks to gain local market intelligence and create inclusive and resilient supply chains is a strategic imperative.
- The third trend is a renewed focus on corporate social responsibility, supplier diversity programs and sustainable supply chains. Seismic shifts in society are influencing the way capital is allocated and the accountability structures asset managers and corporate boards are putting in place for corporate leaders. Acronyms like CSR (corporate social responsibility), ESG (Environmental, Social & Governance), SDGs (the United Nations Sustainable Development Goals) are becoming part of the vocabulary used to evaluate corporate performance and design investment policies and pensions, sovereign wealth funds and endowments. This creates a new set of opportunities for talented SMEs that have often faced challenges winning contracts with large corporations as suppliers and service providers. Corporate leaders and managers are funding programs seeking qualified suppliers that help them achieve the ambitious diversity and inclusion goals set by boards and demanded by shareholders.
These three trends present an enormous opportunity for SMEs to plug into and optimize. New technologies are helping facilitate these connections and making the data to prove desired outcomes readily available to the appropriate stakeholders. Major organizations have accelerated their digital transformation programs and have committed to digital first across their corporate strategies. Platforms are developing to help SMEs take advantage of this new normal and are helping global supply chains become more equitable, resilient and inclusive in the process.