As Supply Increasingly Edges Out Demand in Shaping Supply Chains, How Ready Is Your Enterprise?

Over the past two and a half years, global commerce has undergone seismic shifts as a result of locked-down cities, idled factories, logjammed seaports, and quarantined workers.

The reasons are as familiar as the news headlines: just as the pandemic recedes in one part of the world, it seems to reemerge in another. Russia’s invasion of Ukraine has severely constrained exports from the two countries, including vital agricultural commodities. As climate change reshapes national energy policies, electric vehicle manufacturers have exhausted traditional sources of lithium and other battery metals, turning to Africa and Latin America for new ones. At the same time, the ongoing microchip shortage centered in Southeast Asia has upended automotive supply chains, shifting the focus from lean manufacturing aimed at driving down costs to developing sourcing redundancies to ensure sales. Not to be outdone, retailers too have experienced prolonged volatility. War and inflation, meanwhile, have roiled energy markets.

Consider, for example, the predicament faced by Germany as it seeks to reduce reliance on imported natural gas. Its options, while few, are entirely supply-driven. So too the African nations seeking alternatives to wheat grown in Russia or Ukraine – and the electric car manufacturers in search of new ore to mine or recycle for power storage. But the trend toward regionalization in supply chains runs deeper than commodities alone. The availability of labor can also play a decisive role in reshaping supply chains and logistics patterns. Cloud-based solutions for managing the external workforce can help to augment traditional sources of labor at factories, ports, and carriers affected by quarantine, lockdown, or other disruptions. Even as the pandemic subsides in many regions, labor market volatility remains high. Visibility across all aspects of the supply chain, from raw materials to labor and everything in between, remains paramount for business leaders in shaping more durable, more regional supply chains.

At a time when global supply chains are gradually realigning into regional ones, with terms like “near-shoring” and “friend-shoring” becoming commonplace, businesses and their trading partners require the 360-degree visibility and collaborative capabilities that only digital networks make possible. Operational resilience is a measure of the extent to which businesses and their trading partners can jointly plan and execute as they weather shifts in supply and demand.

With resilience and visibility in mind, SAP last year launched the world’s largest business network, bringing together procurement, supply chain, logistics, and asset management into a unified, collaborative, intelligent network to help our customers confidently adapt to changing market dynamics and future-proof their businesses. Through SAP Business Network for Procurement, trading partners can reap process efficiencies, improve supply assurance, and achieve business process and regulatory compliance by increasing operational transparency. With SAP Business Network for Supply Chain, companies can achieve supply chain visibility by enabling plan-driven automation and optimizing capacity and inventory. Aided by SAP Business Network for Logistics, organizations can collaborate with shippers and carriers, share insights, and gain transparency throughout the supply chain by optimizing logistics processes, increasing on-time deliveries, and mitigating third-party risk. Relying on SAP Business Network for Asset Management, asset owners, operators, and service providers can strengthen collaboration and the flow of shared information through a single, consistent version of asset master data to streamline asset servicing processes and reduce maintenance costs.

If anything, the need for predictive analytics and transparency across integrated, interconnected operational processes becomes even greater when supply chains fragment than when they circumnavigate the globe. That’s because as supply chains regionalize and sourcing options diminish, supply increasingly supersedes demand in shaping procurement decisions and steering the logistical flow of business-to-business commerce.

By linking together the operational processes of trading partners, cloud-based networks extend not only visibility but integrated planning and execution capabilities as well. When buyers, suppliers, and logistics providers share accurate inventory forecasts and business process data with each other in real time, they can create mutual value and plan ahead with confidence, continuity, and enduring resilience.

For further information on SAP Business Network and how we are addressing resilience and visibility for enterprises large and small, visit sap.com/business-network.


Paige Cox is senior vice president, chief product officer, and head of SAP Business Network.