Jabil: Why the Future of SCM is Risk Management

Grant Anderson, the Vice President of Supply Chain Management at Jabil, leads an organisation of around 650 employees responsible for the company's supply chain management and advanced planning functions across the Americas, Europe and Asia.

His global team is at the forefront of developing and implementing optimised, intelligent, end-to-end supply chain strategies that are aligned to our end-markets, customers and Jabil as a whole.

With more than 25 years of supply chain management experience in the manufacturing industry, he has lived and held leadership roles in Europe, Asia and the US. 

According to the 2023 "Global Risk Management Survey" by Aon, 62% of organisations globally have experienced a significant business disruption in the past year due to risk-related events.

Here, we speak to Grant about the significance of risk management to the future of the sector. 

For those unfamiliar with Jabil, what are the company's main activities? 

Jabil provides manufacturing, engineering and supply chain solutions to more than 400 of the world’s leading brands across almost every industry.

Our 140,000 employees, including more than 3,000 supply chain and procurement professionals, span 100 facilities in over 25 countries.

Jabil's strategic supply chain organisation supports customer-specific, tailored solutions for local, regional and global execution — from assurance of supply, on-time delivery, and inventory management solutions to distribution and logistics infrastructure, sourcing and supplier management and overall risk mitigation solutions.

We prioritise and continually invest in our digital supply chain capabilities, keeping us at the forefront of evolving technologies and helping our customers navigate inevitable supply chain disruptions.

How are businesses diversifying their supply chain footprint?

COVID-19 highlighted companies’ reliance on China to source many of their key materials and products, from the ingredients used to make cleaning agents to pharmaceuticals and personal protection equipment (PPE). As the country shut down during the pandemic, the importance of having a diversified global footprint became clear.

Since 2020, many complicated issues have impacted business operations in China. Government initiatives like the US Inflation Reduction Act and the European Commission’s Made in Europe partnership have encouraged companies to re-shore or nearshore their manufacturing domestically.

Corporate sustainability goals are also accelerating the trend of moving production closer to the points of consumption. These challenges, combined with geopolitical tensions between the U.S. and China, are driving diversification of supply chain systems to mitigate risks associated with potential trade disruptions.

The modern supply chain’s complexity means China will likely remain a major global manufacturing hub. However, companies are safeguarding their position with a diversification strategy called “China+1,” where organisations maintain their presence in China while building out a supply chain in at least one other region.

According to Jabil’s 2024 Supply Chain Resilience Survey, two thirds of those surveyed (63%) indicated they have a supply chain strategy outside of China, while 10% are developing one. The most common areas that companies are developing a supply chain footprint in are Southeast Asia, North America (excluding Mexico) and Western Europe.

To what extent does supply chain process and technology optimisation remain a strategic priority? 

Efficient, resilient and optimised supply chain processes are more critical than ever in this era of disruptions.

Optimising for resiliency is at the top of the priority list for 82% of Jabil supply chain survey respondents. This strategic priority — expressed most strongly among those surveyed in the cloud, consumer electronics and healthcare sectors — underlines the importance of supply chain resilience in risk mitigation.

Building a customised technology stack is a highly effective strategy for optimising supply chain and procurement processes. The overwhelming majority (93%) of respondents leveraged these technologies to achieve improved efficiency and cost reduction.

There remains a gap in recognising and embracing the value of supply chain processes and technology optimisation, however.

Only one in five survey respondents in leadership roles said they are seeing the tangible benefits of technology. Those in C-suite positions should provide the time, trust, and resources necessary for teams to achieve the desired ROI, while employees need to communicate the quantifiable results of supply chain technologies to leadership more effectively to ensure continued investments in these efforts. 

How crucial is visibility when it comes to unlocking predictability in the supply chain? 

Almost half (46%) of respondents in Jabil’s survey said enhancing supply chain visibility is a main goal for their organisation over the next 12 to 24 months.

Indeed, visibility keeps you up to date with knowledge about your inventory management and supply chain operations, leads to improved performance, and helps you reduce errors. While enhancing visibility and communication across the value chain is crucial, this alone doesn’t ensure proactivity in the face of future disruptions.

Predictive and actionable intelligence is key to enhanced supply chain visibility. More than two thirds (69%) of decision-makers admit to limited visibility into the product lifecycle, further highlighting the need to build future visibility through the predictive modelling of supply chains.

In the past, the supply chain industry has been more reactionary than proactive. People often move on from past challenges too quickly and disregard future disruptions until the next crisis emerges. We’ve come to the realisation that managing supply chain is less about how well you can react than how well you can make predictions. 

The answer lies in usable, specific, and high-quality data. Two thirds (66%) of respondents are using predictive analytics, artificial intelligence, or machine learning models to inform strategic supply chain decisions in recognition of this trend.

Enhanced supply chain visibility helps us better capture high quality data, which in turn, allows for better predictive measures before pitfalls occur. In other words, improving visibility is the first step to unlocking predictability in the supply chain.

What's next for AI and automation in supply chain risk management?

I think we can expect AI and machine learning (ML) technologies to make a positive impact on supply chain organisations’ top pain points. Some of the biggest effects that survey respondents anticipate from AI and ML include: 

• Increased visibility into the entire supply chain (76%) 
• Reduced labour costs through increased automation and efficiency (70%) 
• Increased accuracy in the demand planning/S&OP process (64%) 
• Improved procurement efficiency (62%) 

As I mentioned previously, AI and automation are already integrated into supply chains in the form of predictive analytics to improve decision-making and mitigate risk. I also expect that, with the rapid development of Generative AI, automated technologies will be increasingly adopted to parse the vast amounts of data supply chain organisations gather over time.

This is part of the manufacturing industry’s larger evolution to Industry 5.0, which will digitalise routine and calculation-heavy tasks. It’s important to note that Industry 5.0 puts humans at the centre of what we do; it is an extension of our skills to optimise our workflow. Automation is by no means a replacement of, but rather a partnership with, skilled workers.

To stay ahead of today’s — and tomorrow’s — disruptions, supply chain organisations must establish effective data governance strategies to ensure AI models are fed the most structured data streams possible. This will improve the consistency, efficiency and predictive values of AI-powered risk management processes across teams and sites.

How can sustainability and resilience go hand in hand? 

Sustainability and resilience are closely intertwined in supply chain management and they are becoming increasingly critical for businesses navigating today’s complex global landscape. 

The relentless focus on enhancing the customer experience has sometimes overshadowed sustainability considerations in the past. However, this paradigm is shifting as companies evolve to meet regulations in reducing carbon emissions.

The global supply chain is facing critical challenges posed by an ever-increasing number of regulations aimed at reducing greenhouse gas emissions. The European Union is rolling out stringent sustainability requirements across logistic modes, from aviation to maritime transport.

Logistics providers are facing surging operational costs caused by the ReFuelEU law that mandates the sustainable use of aviation fuel (SAF) and the inclusion of maritime emissions in the Emissions Trading System (ETS). Across the board, logistics providers will have to pass these costs on to their customers. We anticipate the U.S. will experience similar ESG regulations, making sustainability of products and supply chains a priority.

While still in their early stages, I believe sustainability measures will be steadily incorporated into business models to reduce waste, energy consumption and emissions throughout supply chains. Nearly eight in ten (79%) survey respondents said processes to reduce supply chain carbon footprints are already in place across their organisation.

I predict this number would continue growing as more countries implement their own laws regulating companies’ carbon emissions, water usage, and waste generation.

The investment in sustainable practices not only helps companies mitigate environmental impact but also enhances their resilience in case of regulatory changes and disruptions. Strategic partnerships with specialised providers can further support organisations in these future directions.

By collaborating with supply chain partners, organisations can optimise their processes, develop more resilient supply chains and better prepare for market disruptions while contributing to a more sustainable future.

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