New Delhi [India], November 14 : In a report released on Tuesday, S&P Global Market Intelligence delves into the complexities of global supply chains, emphasizing the critical need for resilience in the face of persistent disruptions.
The 2024 Supply Chain Outlook: Delivering Resilience in Adversity, a key instalment in the Big Picture 2024 Outlook Report series, spotlights a clash between the imperative for resilience and the harsh reality of dwindling corporate profits.
Chris Rogers, head of supply chain research at S&P Global Market Intelligence, highlighted the conundrum, stating, "Global supply chains won't have any respite from a decade of disruptions in 2024, making resilience-building more vital than ever. However, falling profitability and rising interest rates have meant costly just-in-case inventory strategies and multi-sourcing approaches are not in favor, though reshoring is. The good news is that technology investments and organizational enhancements can help build resilience".
Key takeaways from the report include the normalization of global supply chains in 2023 after years of tumult, with 2024 risks spanning trade protectionism, conflict, water stress, and labour strikes.
While the necessity for resilience is undeniable, the willingness and ability to invest in higher inventories and diversified sourcing face obstacles.
S&P Global Market Intelligence data projects a decline in corporate operating profits to 10.4 per cent of sales in 2024 from 10.7 per cent in 2022. Inventories are being trimmed, signalling a shift away from just-in-case models.
Multi-sourcing is also on the decline, with the number of suppliers-per-buyer among the top 500 US importers dropping below 2019 levels.
The report underscores the role of technology in enabling supply chain resilience, with generative artificial intelligence emerging as a critical tool.
Despite the abundance of available technology, companies seek short-term returns on investment, with some hesitancy stemming from previous experiences with block chain.
Organizational alignments are identified as essential for sustained supply chain resilience, encompassing increased engagement with labour unions, geographic diversification or reshoring, closer tracking of environmental profiles, and enhanced supplier engagement to manage tariff and geopolitical risk.
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