As businesses quake under the weight of coronavirus uncertainty, a new organization hopes to add order to their supply chain chaos.
Leading experts in finance, retail and fashion announced the formation of the Sustainable Future Foundation (SFF) this week, with the goal of supporting standout sustainable practices across the finance, technology, fashion and retail sectors. The group will help U.K., U.S. and E.U. businesses streamline their supply chains in response to the pandemic.
The organization will leverage the know-how of not just business minds, but experts in virology, epidemiology, public health and disaster management at the forefront of scientific research on the virus and government responses.
“SFF was created as a response to the unfolding COVID-19 pandemic that has highlighted the need for broader change at many levels,” co-founder and fashion entrepreneur Masha Hanson said, adding that the group would attempt to address the “acute unpreparedness of the global economy” for this unprecedented event.
SFF will focus on mapping and implementing leading sustainable practices and processes throughout global supply chains, in an attempt to drive large-scale industry transformation, the group said.
Businesses of all sizes “faced an initial supply shock, then a demand crisis as politicians locked down their populations at home to suppress the virus,” highlighting “fragility of the modern supply chain,” said co-founder and digital transformation leader Asia Tumasian.
“The urgent need to design smarter, stronger and more diverse supply chains is been one of the main lessons of the crisis and is the rationale behind the launch of SFF,” she said.
The crisis has highlighted the dangers of supply chain inefficiencies that come with a globalized manufacturing system, the group said.
“Our goals in the medium term should be making [supply chains] more regional, modifying the supply chain as a key business driver and putting back the human asset as the most important factor for an agile business to succeed,” the group said, adding that global trade tensions have created financial barriers that make this goal even more pressing.
A shift is already taking place in the industry, they said, toward more “flexible and multi-level sourcing.” In the near-term, the group will focus on three key areas of interest.
First, logistics hubs should be made more regional as the difference in cost between offshore and near-shore labor has shrunk. Companies should reduce dependencies on single country sources, and instead establish flexible, diverse supply chains, and assemble and deliver their products more locally.
Second, companies should stress test their logistics and supply chains—similarly to the ways financial institutions test their balance sheets to ensure that they are prepared for unforeseen economic circumstances. Tech companies have also implemented penetration tests to assess their cyber security preparedness. After the crisis, situational testing will become the new norm, according to SFF.
Third, the group believes that automated processes must be tempered by human judgment. In rebalancing the global supply chain, they argued, people need full visibility into its mechanics so that they can make complex decisions.
SFF cited Toyota’s concept of “autonomation,” where up to 90 percent of processes are automated but between 10 percent to 20 percent are driven by human expertise, should be looked at as a model for improving operations, the group said.