5 Predictions for Supply Chain Management in 2022

Now in 2022, the reality remains that a lot of the transport issues manufacturers faced in 2021 will remain.

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It’s no secret - 2021 was a crazy year for supply chain professionals. The supply chain received an enormous amount of media coverage for reasons such as a ship blocking the Suez Canal to a chip shortage for auto makers. As supply chain operations are rarely touched upon in the mainstream media, today, many people and organizations – regardless of their industry - are closely following the sector. Now in 2022, the reality remains that a lot of the transport issues manufacturers faced in 2021 will remain. Be ready for plenty of supply chain news this year, including these important trends.

1.      Supply shortages will continue to keep ocean container rates high

As long as several global economies continue to thrive, the demand for goods and services will continue to hold transportation rates, particularly ocean, at record levels. However, with inflation rearing its head in various parts of the globe, higher prices on products may lead to a consumer slowdown, allowing manufacturers and their suppliers some breathing room to restock their supplies. That said, the backlog of existing demand will keep ocean transport rates higher until bottlenecks drain out. As we see supply and demand begin to balance out in the second half of 2022, transportation rates should creep lower heading into 2023.

2.       Sustainability initiatives will not be equal across the board

Even with heads of state coming to an agreement on sustainability requirements, it will largely fall on individual companies to enforce these standards upon themselves. While many organizations have already expressed, and even implemented, plans to reduce or eliminate carbon emissions, many have yet to adopt any strategy to make both immediate and long-term impacts. Without a unified, standardized pact that holds both countries and companies accountable, minimal change will be made. Until such a standardization exists, consumers and investors are the ones most likely to force companies to make the necessary shifts, as the younger and more environmentally conscious generations continue to grow into the largest global consumer base.

3.       Organizations will bring their supply chains closer to destination

With supply shortages stretching from groceries to semiconductors, many organizations have been forced to examine ways to bring crucial components closer to final production process to ensure history doesn’t repeat itself. With many global organizations looking to localize larger portions of their supplier base, supply chains will find themselves better equipped to handle large demand spikes as they occur.

4.       Safety stock levels will rise to avoid backlogs and shutdowns

With the global vaccination effort proceeding at a slower than anticipated pace, new variants of the Coronavirus disease (COVID-19) virus will continue to drive caution and hesitation regarding traveling and fully reopening businesses. As a result, organizations will move away from just-in-time (JIT) inventory strategies and will bulk up inventory levels, so they can avoid production disruptions. This also allows organizations to use supply chain finance tools to extend payment terms to suppliers using innovative finance options with lenders. Organizations can build inventory strategies that are less susceptible to disruption while allowing their supply partners to maintain healthy capital levels.

5.       Companies will continue to invest in new technologies to streamline processes

Organizations are going to have to do more with less as talent shortages impacting global supply chains continue to compound. Companies will need to adopt existing and emerging technologies that allow for cleaner data, stronger collaboration and the automation of mundane processes so team members can focus on supply chain process improvement. This will mean expediting digital transformation already in process and moving entire systems to the cloud for better, yet secure access to critical data needed to implement decisions quickly and effectively.

The pandemic has thrust many companies much further into their digital transformation much sooner than originally scheduled, and the timeline will continue to shorten as companies now realize how critical cloud technology has become for staying afloat.