In the past five years, traditional procurement models are struggling to keep pace with advancements, shifting consumer expectations, and geopolitical disruptions. Companies now face heightened complexities in supply chains, pushing them to adapt by diversifying sourcing strategies, leveraging new technologies, and prioritising sustainability. As businesses navigate these challenges, they are re-evaluating their approaches to stay resilient in an interconnected world, says Shubhankar Chatterji, Chief Supply Chain Officer, Cummins India.

In recent years, conventional procurement models have encountered challenges in keeping up with the demands of a fast-paced and interconnected business world. Driven by a combination of rapid technological advancements, shifting consumer expectations, geopolitical factors, and evolving market conditions, the dynamics of sourcing have undergone significant changes. Suppliers play a critical role in enabling business strategies in these disruptive environments. Some key trends that have impacted sourcing strategies are:

Increased supply chain complexities: With shortened time-to-market and complex product life cycles, business supply chains have become more intricate. Companies today face challenges related to managing multiple suppliers, navigating international regulations, and addressing logistical hurdles. Customer expectations have changed over the last few years and demand products in the shortest time with the lowest possible cost and customised service levels. 

Geopolitical disruptions: Recent global supply chain disruptions have underscored the importance of supply chain resilience and robust risk management strategies. As a result, many companies are diversifying their sourcing strategies with near-shoring and reshoring sourcing initiatives to reduce lead times and transportation costs and mitigate risks associated with long supply chains. Global OEMs are revisiting their sourcing strategies considering risks associated with trading with suppliers in China and this situation is providing opportunities to countries like India, Vietnam, and Thailand.

Technological transformations: The adoption of digital technologies has transformed sourcing practices. Data analytics and cloud-based platforms have enabled organisations to make data-driven decisions, enhance supplier relations, and optimise sourcing strategies based on real-time data. Additionally, automation in procurement has upgraded task-handling processes making them more efficient and faster. Advanced Analytical capabilities like Gen AI, Blockchain, and Machine learning will enable the supply chain to be more resilient through predictive analytics. 

Focus on sustainability: Supply chain sustainability strategies have long been integral to achieving corporate environmental, social, and governance (ESG) initiatives. There is a growing emphasis on sustainability within sourcing. Companies are increasingly adopting sourcing strategies that prioritise sustainability and are prioritising suppliers that adhere to ESG criteria. Countries are adopting regulations to improve compliance with sustainability across the value chain. SEBI brought the BRSR (Business Responsibility and Sustainability Reporting) code in India and Suppliers are improving capabilities to comply with the ESG requirements. 

Talent and skill evolution: Role of procurement professionals have evolved, with greater emphasis on strategic thinking, negotiating skills, and data analysis. Hence, talent management becomes vital to attract top talent across the specialties, while continuous learning and upskilling have become essential for existing procurement professionals to remain competitive and develop a future-ready workforce.

Supply chain managers today face a multitude of challenges that have evolved due to recent global events, technological advancements, and changing market dynamics. Some are:

Technological integration: Replacing complex operations with the implementation of advanced technologies such as AI, Internet of Things (IoT) and automation presents wide-ranging challenges. Many organisations struggle to operationalise these technologies effectively, leading to inefficiencies and potential cybersecurity risks. Further, poor data quality and governance can hinder analytical capabilities, impeding real-time decision-making capacities. 

Skilled workforce constraints: The supply chain sector is grappling with a significant shortage of skilled labour and a lack of qualified candidates. This shortage impacts operational efficiency. Further high turnover rates in logistics and warehousing can disrupt operations leading to delays and increased costs.

Increased costs: Rising freight prices and logistics expenses have become a significant concern, driven by increased demand and limited shipping capacity. Additionally, a shortage of critical materials is one of the most pressing challenges faced by supply chain professionals. These shortages can increase costs for supplies, cutting into profits and often leading to increased production timelines.  

Demand forecasting challenges: Modern businesses often use a combination of historical data and market research to forecast demand accurately and prepare for any fluctuations. However, rapid changes in consumer demand make accurate forecasting difficult. Effective and complex demand forecasting can reduce the likelihood of overstocking, which can accrue higher carrying costs, and stockouts, which can lead to hampering production. 

Increased risk profile across the value chain: Supply chain managers today must navigate a complex landscape filled with labour shortages, technological challenges, rising costs, and sustainability goals. Addressing these challenges requires strategic planning, effective risk management, and a commitment to continuous improvement.

To ensure a resilient supply chain amid a highly uncertain global environment, companies must adopt advanced technologies and prioritise workforce development. AI-enabled forecasting, control towers, and end-to-end visibility tools are essential for anticipating disruptions and managing supply chain complexities. These technologies provide real-time insights and predictive analytics, allowing companies to respond swiftly to changing conditions and maintain operational continuity. Additionally, companies should focus on building a skilled workforce capable of managing these advanced technologies. Diversification of suppliers, strengthening relationships with logistics providers, risk assessment, effective scenario planning, and integrating sustainability into supply chain practices are some of the other strategies that companies can deploy to ensure enhanced resiliency in supply chains. 

The adoption of modern technologies such as automation, collaborative robots (cobots), Artificial Intelligence (AI), Machine Learning (ML), Internet of Things (IoT), data analytics, and digital twins has significantly improved supply chain efficiency. RPA (Robotic Process Automation) elevates productivity and quality by handling repetitive tasks, while cobots enhance safety and operational efficiency. Control Tower and Digital Twin technologies improve end-to-end visibility, and the organisation can make decisions faster with real-time data. Cummins India's investment in Manufacturing Execution Systems (MES) and advanced data analytics demonstrates a commitment to managing complexity and ensuring product quality. To enhance supply chain efficiency, Cummins India uses tools such as Rough-cut Capacity Planning (RCCP) and Advanced Supply Chain Planning (ASCP) tools to be proactive in managing risks and enable effective fulfillment of demand.

As factories evolve to become smarter, the implications for supply chain management (SCM) are profound and transformative. With Industry 4.0, companies are transitioning to IoT-based technologies, smart manufacturing, condition monitoring systems with remote access, and so on. Cummins is making great progress in this area as well and connected critical machines digitally to access real-time information pertaining to machine downtime/idle time to improve OEE (overall equipment efficiency). With continuous monitoring of critical machine health-related parameters, we plan to implement proactive maintenance practices using CBM (condition-based maintenance) methodologies. 

Deploying the right talent at the critical machines is critical in achieving best in class quality performance. Combining machine data and quality systems information helps in planning the talent management and deployment of the right skills at the required machines in a timely manner. We expect RFT (Right First Time) throughput increase with the use of these technologies on the shop floor. 

Moreover, edge computing minimises latency and enables real-time data analysis, allowing for faster and more accurate responses to supply chain disruptions. Technologies like AR and VR improve training, maintenance, and assembly process design, leading to more skilled workers and optimised processes. Blockchain technology enhances supply chain transparency, traceability, and product authenticity, reducing the risk of fraud and ensuring compliance. Additive manufacturing (3D printing) supports rapid prototyping and customisation, enabling more flexible and responsive supply chains. These advancements collectively drive efficiency, innovation, and competitiveness, making SCM more resilient and adaptive in the dynamic manufacturing landscape.