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ANALYSIS: Changes Come Slowly to Supply Chain Management

March 22, 2021, 8:12 AM

Supply chain networks are still being dealt with the traditional way, according to Bloomberg Law’s recent survey of lawyers who deal with supply chain relationships at their organizations.

More often than not, efficiency, risk management, and cost reduction are the principal goals in supply chain management, and few on the legal team are focusing on technological innovation or process improvement. In fact, among the survey’s 51 respondents, more than a quarter indicated that their business has not adopted any specific supply chain goals, and about one fifth said that they do not use technology to manage supply chain logistics.

But there are glimmers of hope: About one-third of lawyers said that their CEO or board were responsible for setting supply chain strategy, suggesting that these issues are getting attention at the highest levels. And a notable number of respondents said that they were working to ensure that they (20%) and their supply chain partners (38%) meet environmental, social, and governance (ESG) goals.

Many respondents indicated that they use technology to manage supply chain logistics, but they were uniformly uninspired by the effectiveness of the tools.

Examples of technological strategies put to use by survey respondents include: inventory management (21 respondents), inventory tracking (19), warehouse automation processes (14), improving deliveries (14), enhancing responsiveness (14), creating transparency (13), and scenario planning (12).

The use of more specialized or novel technologies was much rarer. These included artificial intelligence and machine learning, robots for labor-intensive tasks, omnichannel (fully integrating online and in-store experiences), and modeling networks. None of these were used by more than three of the 51 respondents.

Regardless of use, hardly any respondents commented that the technologies they identified were working very well. And only a small minority thought that certain technologies (led by inventory tracking and management) were working well.

As one might expect during the pandemic, lawyers have been prioritizing efficiency and risk management over supply chain management. In terms of risk management, the lessons from 2020 are salient: Lawyers are focused on minimizing Covid-related business or facility closures, delay of planned projects, and increased cost of raw materials or inputs.

With assistance from Linda Ouyang, Research and Data Analyst, Bloomberg Law.

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