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Supply chain 5.0 is not optional – ‘It’s the only way’

Experts are predicting a new era of supply chain management, focusing on consumer centricity, sustainability and human rights, and advanced digitalisation.

With a re-imagined era for supply chains here already, industry insiders warn that the new generation of supply chain management is not merely a consideration or nice-to-have.

Instead, the authors of a recently published book exploring supply chains of the not-so-distant tomorrow say that, with shifting consumer expectations and global demands for responsible practices, a new business model for supply chains is “the only way for organisations to thrive and shape a profitable and sustainable future”.

“The book, entitled ‘Supply Chain 5.0 – The Next Generation of Business Success’, is a response to the profound shifts in global supply chains brought about by the pandemic,” authors Prateek Jain, a 25-year business veteran and Lean Six Sigma Master Trainer, and Mabel Chou, an associate professor in the analytics and operations department at National University of Singapore (NUS), told Ingredients Network.

A holistic approach to food manufacturing

In the book, the authors reveal that the business model for the next era of supply chain management, dubbed 5.0, rests on three core pillars: consumer centricity, sustainability and human rights, and the interplay of advanced digitalisation.

Going beyond the technological focus of its predecessor, Supply Chain 4.0, the new book advocates a holistic approach by integrating these elements together, the authors say.

Amid the evolving supply chain environment, food and beverage (F&B) businesses will need to accept, address, and align these elements of their business to transform their operations. Transformative changes of this nature are needed, the authors say, to provide the value consumers want from their chosen brands and to stay competitive in a novel and burgeoning landscape.

Co-authored by Jain, from business consultancy Evolve With Us Now, drawing on his industry experience, and Chou, from NUS Business School, the book is a result of research and interviews across industries and academia.

“Their collaboration adds depth and perspective, making the book a compelling read for those interested in the future of supply chain management,” a spokesperson for World Scientific Publishing, which released the book, told Ingredients Network.

Several years of sizeable shifts

The impact of the Covid-19 pandemic, technological advancements, evolving customer expectations, sustainability and human rights considerations, and the influence of geopolitical and environmental factors are all drivers behind supply chain changes, prompting the new 5.0 era.

“These drivers have collectively prompted a re-evaluation of traditional supply chain models, leading to a transformative period in supply chain management and the emergence of supply chain 5.0,” the authors say.

Following this re-evaluation and the subsequent emergence of supply chain 5.0, the authors saw how new F&B supply chains will need to integrate customer centricity, sustainability, and advanced digitalisation into the core of their business operations.

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Supply chain shortages have driven agile at-home choices for F&B consumers in recent years, signified by the 2023 trend of adaptable cooking. In Mintel’s 2024 Global Food and Drinks Trends, the market intelligence company predicts a new era of convenience will emerge as technology seeks to make meal planning, shopping, and cooking easier for consumers.

As we head into 2024, consumers’ learned ingenuity in the kitchen for switching out favoured brands and replacing ingredients will remain, prompting their interest in technology to maximise convenience and stay informed about cooking adaptations.

Change, complexities, and cost prove problematic

In confronting supply chain 5.0 goals, the sector faces numerous core challenges. Resistance to change among stakeholders, including production, processors, and distributors, is present, especially in altering established processes, the authors say.

A shortage of skilled talent for advanced digitalisation also restricts the pace of change and the ability of supply chain 5.0 to thrive. The complexity of managing and examining large volumes of data presents issues, as do the costs associated with adopting new technologies and sustainable practices. The intricate nature of global supply chains is also a considerable problem facing food supply chains, making transparency and ethical practices challenging.

“Overcoming these hurdles necessitates a collective effort, involving businesses, governments, and consumers to promote innovation, investment, and education in supply chain management,” the authors say.

Impact on global production and distribution

“Implementing supply chain 5.0 holds the potential to revolutionise global production and distribution,” the authors say.

Leveraging advanced digitalisation and data-driven insights can enhance efficiency and optimise processes. Integrating sustainability and human rights into global F&B supply chains can promote responsible sourcing and ethical practices, contributing to global sustainability, the authors say. In addition, improving transparency and collaboration boosts resilience, supporting effective risk management.

“A customer-centric approach influences demand patterns, while the fusion of customer-centricity with digitalisation drives innovation, impacting global competition,” the authors add.