Global disruptions have exposed vulnerabilities in fragile supply chains, prompting more C-Suite leaders to prioritise the strength of their networks. Peter Jones, Managing Director at Prological, explains the developing role of logistics and supply chain as a strategic growth strategy in boardrooms across Australia.
No longer the sole responsibility of operations departments, supply chain has quickly become as complex as businesses taxation and foreign exchange, matters that have long been in the boardroom. The advent of integrated systems, automation, AI, next generation warehouses and B2C’s new capability in fulfillment and customer visibility demands a clear and aligned business strategy. Once tactical tasks, these modern technologies are now necessities for the battle to win and retain customers, says Peter Jones, Managing Director at Prological.
According to Peter, its not just the complexity that has escalated in the last few years, but the scale of supply chain investment now required to be an industry sector leader.
“For many businesses, supply chain is the highest level of investment, which will only escalate as capital investment opportunities continue to drive down operational costs, open up customer facing visibility and expedite order fulfillment,” Peter says.
“A simple example is next-generation, highly-automated warehouses enabling rapid fulfillment turnarounds, with very high CapEX’s but very low OpEx’s. These facilities can run into hundreds of millions in capital, requiring careful operational expense forecasting and solid medium to long term business strategies. This is a new reality and beyond the remit of every functional logistician in the nation, requiring understanding and approvals from the C-suite and often, boards.”
Unleashing Agility, Growth & Competitive Advantage
By tightly integrating logistics mastery with boardroom vision, companies can transform supply chain functions from nodes of risk and costs into critically leverageable assets for competitive advantage. When optimised, agile supply chains unlock new revenue streams, fuel expansion into new markets, and catalyse game-changing innovations.
“Over the next 5-10 years, we’ll see a clear delineation between the ‘haves’ and ‘have-nots’ in supply chain capability and market share,” predicts Peter. “The ‘haves’ invest in sophistication, robustness, and flexibility while the ‘have-nots’ revert to pre-pandemic practices.”
Peter advocates viewing supply chain as a core business competency requiring long-term planning and investment – a shift from traditional cost-cutting mindsets but one that fortifies resilience.
“Those businesses continuously refining logistics for resilience and responsiveness will find opportunities for growth, even among daunting headwinds, and in the good times, will thrive, win market share and will be respected by their customers,” he says. “Businesses relying on outmoded, brittle supply chain infrastructure and models will be constantly reacting – bleeding revenue, profits and market share with each new disruption. This pivotal strategic divide will reshape industries in the next few years.”
Until recently, supply chain management was an undervalued corporate function – traditionally viewed as an operational necessity but rarely seen as a strategic asset. Those days are rapidly fading into the rear-view mirror, however, with a series of catastrophic global disruptions mercilessly exposing the vulnerabilities of fragile, inflexible supply chains, delivering a reality check to businesses worldwide.
The COVID-19 pandemic was the precipitating event, creating a “perfect storm” of logistics nightmares as lockdowns, labour shortages, and historic consumer demand swamped the intricate network of suppliers, manufacturers, transportation providers and distribution centres required to move goods to market. This initial chaos was then compounded by the geopolitical shockwaves of the Russia Ukraine war, snarling global trade routes and energy supplies.
Peter recounts how companies were left dangerously exposed, with product lead times skyrocketing from weeks to over nine months as pipelines stalled. “Businesses found themselves very thin on inventory as their supply chains had been built on a ‘just-in-time’ strategy with minimal buffers. It put businesses under great financial stress very quickly,” he says. “That’s what took supply chain disruption right into the C-suite and boardroom conversations.”
The rapid awakening of severe disruptions has jolted senior executives around the world out of their lack of detailed awareness of supply chain, in turn making it a top priority.
The 2024 Prological Supply Chain Pulse Check Survey found 57 per cent of over 200 logistics professionals believed the C-suite is now more focused on supply chain resilience than before the pandemic.
“With supply chain now a critical focus for the C-suite, visibility is more important than ever,” Peter states. “The survey shows driving new investments and improving end-to-end supply chain visibility are key focus areas for business leaders this year. It is clear businesses have seen the importance of a strong supply chain. In response, evidenced by the survey results, we are seeing rapid upgrades in supply chain capability and investment in preparing for an organisation’s next period of growth.”
The C-Suite Imperative: Transcending Silos
As supply chain strategies become more vital to the health of the entire enterprise, C-suite leaders can no longer afford to view logistics operations as separate, functionally-siloed workstreams. Creating truly resilient, adaptable supply chain capabilities requires a baked-in, continuous synchronisation between logistics and the overarching corporate strategy.
“Supply chain is an area of businesses that touches the customer,” Peter noted.
“Business-to-business companies need to emulate the seamless fulfillment experience of online retailers and provide full transparency from order to delivery. B2C focussed companies are pushing into new supply chain capabilities, further broadening the capability gap between companies treating supply chain as strategic versus those who see it as tactical.”
Executive leadership is critical for embedding supply chain agility into the organisational DNA.
“The big shift is a mindset change where supply chain professionals own their ability to drive value,” Peter says. “The pandemic showcased numerous examples of supply chain experts shaping internal narratives and earning C-suite roles themselves, which is a trend likely to continue.”
This convergence of supply chain resilience with corporate strategy futureproofs the business from the increase in disruptions. According to McKinsey research, supply chain shocks equate to 45 per cent of one year’s profits lost every decade without mitigation, highlighting how C-suite leadership helps prioritise and align logistics with operational and financial objectives.
Recent Accenture research found 43 per cent of supply chain executives cite lack of strategic alignment as the reason they can’t unlock more enterprise value. The C-suite partnership overcomes this barrier while tackling other roadblocks like inadequate skills (48 per cent), legacy IT systems (44 per cent), and securing resources to build resilient operations.
Shoring up supplier pipelines
“Businesses will be well served by holding discussions with primary suppliers to understand the robustness of their supply chain end-to-end,” Peter advises. “They should conduct audits, secure backup suppliers and invest in technology for full transparency.”
As supply chains grow increasingly complex with geographically dispersed, multi-tiered supplier networks, Peter stresses the need for C-suite oversight and comprehensive risk mitigation. Too often, businesses solely hold Tier 1 vendors accountable without grasping potential chokepoints from secondary and tertiary providers.
“If a primary supplier relies on a single source that fails, they won’t be able to meet demands,” Peter explains. “Companies must deeply evaluate their supply chain’s end-to-end resilience, auditing and securing backup suppliers across all tiers, even if costlier initially.”
From global crisis to existential threat, a perfect storm of compounding pressures has ushered supply chain strategy into a new era of criticality for the C-suite. Enterprises prioritising logistics resilience, agility and digital visibility will be equipped to surmount even the most turbulent conditions. Those failing to adapt will be left treading water, always reacting, never fully recovering, says Peter.
“The awakening has sounded – boardrooms can no longer ignore supply chain mastery as a non-negotiable imperative for lasting success.”
For more information on Prological, click here.