2020 proved that nothing is certain in supply chain (and the world at large). However, it has taught (or forced) us to re-evaluate and adapt all channels of operations to simply keep pace with today’s demand. Moving forward, those organizations who adopt analytic automation will stand out from the competition and experience true digital transformation.
Here are Top 10 supply chain predictions for 2021 that illustrate why and how.
1. Dual supply chains will run on both the global and regional level
Supply chain planners understand the risks associated with single sourcing, and yet as the Coronavirus disease (COVID-19) hit in late 2019, the true impact of those risks became (and continues to be) unimaginable. Because of this, many organizations are regretting their reliance on a single supplier, and understandably so, as there are limited options (and most are in Asia) for many of the products they purchase. Most planner and purchasing agents focus on reducing costs, however, supply chain managers are quickly realizing that the costs are not simply directed to the “cost” of the product, but the cost to serve.
As the industry continues to face the challenges of meeting and fulfilling customer demand, the potential for entertaining the addition of a regional supply chain makes sense. While at first glance the product may cost more, when one takes into consideration the logistic costs and cost to serve, let alone customer satisfaction, this may have strategic and game-changing benefits. In addition, since product life cycles are decreasing, that alone will lead to the demand of shorter fulfillment times.
2. Micro-fulfillment channel opportunities will be utilized to build out the last-mile
As e-commerce supply and demand chain disruptions continue to increase, organizations are scrambling to find ways to get items to customers as quickly and inexpensive as possible. One solution is micro-fulfillment, which is a hybrid model that uses or outsources smaller facilities that are much closer to consumers. Micro-fulfillment focuses on the last mile, which can be achieved in multiple ways. For example, retailers can consider the creation of “dark stores” to convert current brick-and-mortar real estate into localized distribution centers for delivery and curbside pickup.
Others can outsource the last mile by adopting a franchise model, where individual organizations provide not only the last logistic mile, but also assemble or finish the product locally. This localized approach blends traditional technology and automation with in-store selection based on availability and has the goal of getting items closer to consumers for speedy delivery or pickup. More industries and business have embraced the fulfillment method but setting up micro-fulfillment, which can be expensive, and without the right technology, difficult to manage.
Embracing an analytic platform to gain transparency, as well as manage and automate the process, will be pivotal to success.
3. Automating processes will become a requirement for digital transformation
According to a report by The Visual Capitalist, planners go through the same manual calculation steps every month for their S&OP, and procurement folks repeat approximately 40% of the same tasks month after month, year over year. The same holds true for those involved in building logistics and execution systems. The problem here is that most supply chain processes do not include analytics that learn and retain the knowledge and experiences of the past.
To gain this type of insight, more advanced artificial intelligence (AI) and machine learning (ML) capabilities need to be embedded in a human-centered way, particularly since most supply chain professionals are not statisticians or data scientists. In today’s disruptive environment, accelerating process automation is crucial just to keep pace. To achieve digital transformation at scale, supply chain data and processes need to be automated, along with the upskilling of people.
This provides an organization with the ability to self-correct processes, as well as gain insights into trends and patterns to meet global demand.
4. Blockchain technology integrations to improve transparency
Supply chain transparency and the lack of granularity of information remain top concerns for most companies today, so it’s not surprising that more businesses will be looking to integrate blockchain technology into their supply chains. Blockchain technology can pack a lot of information into a small format and receive it at a high frequency. Carriers, shipping lines, forwarders and logistics providers can use the technology to update companies and customers on the product journey at a granular level. Blockchain also provides unparalleled protection for information, as the technology’s decentralization methodology protects data from being edited.
There are infinite possibilities with this technology, but supply chain managers need to crawl before they run and using blockchain to solve “information tagging” in the future is the most feasible solution.
5. Integration of IoT and robotics will lead to enhanced visibility
More and more companies are implementing IoT devices to enhance the visibility of their supply chains. Transportation vehicles can be fitted with sensors, providing real-time tracking updates on shipping and delivery. IoT technology is also used in warehouses and retail outlets where employees have direct visibility into production, inventory management, as well as predictive maintenance. Organizations can use real-time data to proactively service customer demands, minimize production downtime and increase overall efficiencies. Many businesses will also leverage the power of IoT by integrating the technology with core business applications.
These integrations will enable organizations to have maximum adaptability to make data-driven decisions on supply strategies.
6. Data services and CoEs will embrace the power of the cloud
“By 2024, for greater transparency and efficiency, 40% of customs agencies will join private blockchain and API-powered trade platform ecosystems to achieve a 50% increase in cross-border compliance.”
As many organizations look toward taking on a micro-fulfillment model, there will be a need to retain visibility into their ecosystem to ensure cross-border compliance and meet regulatory requirements. To share and automate data across disparate systems and software over large distances, IT departments will need to create a cloud-based Center of Excellence (CoE). By leveraging the power of the cloud, data can be accessed from anywhere at any time, allowing global organizations to be always-on.
The cloud also affords greater security, as many cloud infrastructure providers provide rigorous security offerings inclusive to the infrastructure. Many data lake and exchange providers do as well, and they provide a ready-made platform to which data can easily be stored and secured for analysts to readily access. Once this data infrastructure is built, IT organizations can easily govern the data exchange and offer analytics services internally to business units as well as outside third-party entities who need access to the information by standardizing on a unified analytics platform.
7. There will be a continued emphasis on the service chain vs. the product chain
In the “New Normal,” products are now considered table stakes. Increasingly, consumers are demanding more from pre- and post-sales service to enhance the customer experience. Traditionally, companies offered services such as additional warranties, in-store services, product setup services and insurance policies through third-party entities. This often resulted in a less than ideal customer experience, as many of these third parties would either deny a claim, unreadable fine print for warranty omissions or simply charge for services that may be “above” the line.
Having the most innovative product is no longer the only factor that matters — services have become the game-changer. But, managing these services in-house or through remote monitoring will require investing in analytic processes to help manage the transparency and sharing of data.
Organizations that look at services as a key differentiator will emerge as the winners in a crowded market.
8. As knowledge work goes global, upskilling will become a continual requirement
Knowledge work in supply chains today accounts for approximately 40% of the total labor hours spent. Since 80% of manufacturers will have multi-country operations by 2020, it’s not unfathomable that an analyst in the Philippines may be doing supply planning for several North American distribution centers.
Knowledge work can be described as work that deals with complex analytics, procurement processing and provisioning of services on a global scale. But, finding talent that can speak two languages, local and English, as well as understand the statistical models, use an analytics platform and has experience in supply chain management can be like finding a unicorn.
As the talent pool becomes smaller and more skill sets are required, one of the best options is to invest in tools that help employees quickly become productive as well as provides a certification path or self-serviced upskilling path.
9. Social data will serve as a closed-loop feedback process to accelerate design and testing
Social media data is everywhere today. Manufacturers and retailers are having to react at the speed of social media, where today is our tomorrow. As organizations address shortening product cycles, the most effective way is to collapse design and testing. Collapsing functions will be the best way to build agility and adaptability in the supply chain. Think of ZORA DESIGNERS creating on the spot — the concept allows for small batched, short cycle products to be designed and distributed to stores where customer gobble up the idea of having a one-of-a-kind piece. But, using social media to test out products and create buzz means having to keep on top of the pulse at quantum speed. Using technologies like real language processing (RLP) and robotic process automation (RPA) can help.
The winning companies will be able to receive, process and act on the data that is being provided to them by their constituents via social media.
10. A standard certification process for upskilling will be adopted
With the complexity of supply chain management, it’s not surprising why many universities offer undergraduate and graduate degrees in the field. Professional associations also provide certification programs for aspiring supply chain managers. Many of these programs are focused on single functions inside the supply chain, as advanced technologies such as IoT, analytics, neuro-linguistic programming and RPA programs will need to change to accommodate the single view of the digital supply chain, allowing for accreditation and specialization for technologies.
A standard certification process for supply chain management will ease the deployment of new systems and services, and will also help fill the current skills gap in the supply chain profession.