The business landscape today no longer sees a reliable supply chain that handles the movement of material and goods at an efficient pace. Shortages and long lead times are apparent in almost every retail industry, forcing the world’s view of the supply chain into something different. Prior to the crisis and Coronavirus (COVID-19) pandemic panic buying, most consumers did not think of the supply chain when buying goods. But now, the supply chain is in the mainstream news cycle and a part of everyday conversation.
For managers and companies alike, this wave of change means new strategies and methods of operations. Some say that supply chain management has fundamentally changed.
“The supply chain is no longer just an efficient maker and mover of goods; it’s now a principal driver of business growth,” says Kris Timmermans, global supply chain and operations lead at Accenture. “We’re seeing a shift from traditional thinking that supply chains follow a linear progression. Today’s supply chains are more complex than linear models—they’re sophisticated supply networks that are more flexible and efficient. Transforming this thinking will help meet customer expectations for a wide selection of customized, sustainable products and fast deliveries that meet individuals’ specific needs.
“As we look to the future, building resilience, staying relevant to customers and embedding sustainability throughout will be critical, as future supply chains must be equipped to anticipate and lead through disruption,” adds Timmermans.
The following are top trends in supply chain management today:
Supply chain management is top of mind instead of an afterthought
Previously, supply chain management was not universally thought of as a strategic task but instead was thought of more as a cost management job. Today, that focus shifts to a c-suite-level approach and is now considered essential for resilience. Companies that did not shift to putting supply chain management first throughout the past two years might find themselves falling behind in several ways, not just in missing out on material, but also lacking the ability to ship products from A to B or even deeper problems.
The change in how supply chain management is approached also transforms what the job itself focuses on. Today, there is a great spotlight on visibility, with companies valuing data in location tracking, stock levels, transportation time, capacity and more. These trends arose during a tumultuous time in business and the supply chain but are unlikely to fade following the crisis. These new values in business strategy and supply chain management are likely to be a mainstay in the industry and reshape how companies invest.
“In past decades main goals in logistics had been cost cutting and efficient increases, logistics had been seen as a cost center which had to be optimized,” says Jonas Krumland, CEO of Logward. “During the recent crisis and challenges this narrative has changed, though. All of a sudden, supply chain management is seen as what it is: an essential and integral part of any company’s backbone and an important influencing factor in each company’s customer journey.”
Relationships become another priority
Since the supply chain grows in complexity, deeper partnerships become more important. According to Krumland, organizations that invested in long-lasting partner relationships managed the crisis better than those who continuously went shopping on spot markets. An important part in strengthening supply chain relationships is extending visibility to partners. Additionally, collaboration in innovation can be another helpful tool in a flourishing supply chain partnership.
Businesses now incorporate sustainability
Sustainability in the supply chain is no longer an added bonus or a ploy to try and entice eco-conscious consumers. It is now an integral part of business management, especially for the supply chain. While regulations crack down on negative carbon footprints and other harmful practices, organizations adopt sustainability endeavors into their main strategies to stay compliant. But compliance and consumer interest are not the only factors driving sustainability further into the core supply chain management.
Today, the term sustainability incorporates what the industry says is “planet, people, profit.” Essentially this means that businesses now realize being environmentally and ethically responsible has a positive impact on the bottom line. Additionally, newer machinery and technology often require less fossil fuel and produce less greenhouse gases while also offering greater efficiency, optimization and lower operational costs.
While there was a slight dip in commitment to sustainability last year due to constant struggles from the pandemic and other crisis, more than half of companies in a recent study from Blue Yonder invested in sustainability. Originally, a 2021 study from Blue Yonder showed that one in 10 companies decreased focus on sustainability but the new research said 58% of respondents invested as of late. There are still massive shortages and constraints happening in logistics, but companies still look to adopt sustainable strategies.
Newer technology replaces legacy systems
Go-to technologies in the supply chain changed quite a bit in the last two years, with managers investing more strategically and becoming less shy to new technology. Machinery, hardware and software are all looked at in a different light today. The supply chain was built on legacy technologies that previously lacked the ability to interact with other, newer technologies. But now, visibility is key.
Robotics, autonomous vehicles, wearables and other technology previously thought to live in Sci-Fi novels are now considered an everyday part of the warehouse and logistics industries. Many were helpful during times when social distancing was required and also during the current labor shortage.
But according to experts, some new technology is more flashy than useful. As in many industries, it is important managers avoid what is called the “shiny object syndrome” and steer clear from getting roped into new technologies that consist of buzzwords with big promises but less function. The most important technologies today lie within visibility and data management. Some supply chain managers may flock to artificial intelligence and machine learning without a solid foundation of quality data.
These legacy systems such as warehouse management systems (WMS) and transportation management systems (TMS) are still very important in operations today. However, they need the ability to provide access to real-time information.
“Currently, many supply chains are built on dated, legacy technologies,” says Timmermans. “They can’t support end-to-end visibility or real-time decision-making, meaning they struggle to deliver strategic business value. They’re essentially analog machines trying to solve problems in a digital world. That results in slow response times, waste, conflicting priorities between functions, delays and rigidity, and companies struggle to meet increasingly granular customer needs.
“New digital supply chains need to be based on a flexible, asset-light model that places customers firmly at the center so they can anticipate and withstand disruption, as well as support environmental, social, governance and other sustainability practices,” adds Timmermans.
Newer innovations now allow WMS and TMS to move from locally operated programs to software-as-a-service and integrate with cloud technology. The combination of cloud access and quality data will be the most beneficial to supply chain management.
For those interested in tapping machine learning and artificial intelligence to help solve problems, Krumland suggests that basic homework in master data management, data quality, data standardization and process compliance be done first.
Operation reform should be end to end
There is a massive focus on reforming the supply chain from all facets, including the government, consumers and business managers. But while many focus on solving smaller issues one at a time or transforming certain aspects of the industry, experts urge a focus on optimizing the entirety of a supply chain operation from end to end.
The increase of data, especially quality data, in the supply chain can be vital to amending the gaps we see today. But this data needs to be shared throughout the entire operation. Supply chain managers musts focus on breaking down silos and sharing data. A visible supply chain with data starting at the front and back office functions will create a more positive customer experience.
Risk management is vital
A recent expert column from Kevin Shuler, CEO of Quandary Consulting Group, stressed the importance of understanding how to manage risks properly, which right now is more important than ever. He explains that “over optimizing your supply chain can be just as costly as allowing disruptions to happen.” Stockpiling inventory in case of a potential disruption that never comes can unnecessarily drive cost and put pressure on operations. However, not preparing for a spike in demand, like what was seen in the beginning days of the pandemic with panic buying, can be damaging. Supply chain managers must find the right balance in risk mitigation.
One way to do this is to tap insights and experience to make informed decisions and frequently audit the supply chain. Here, you can identify potential weaknesses and conduct stress tests on suppliers to see how relationships, pricing, logistics and production would be impacted.
“You also want to build out a supply chain emergency plan and base it on your organization’s needs and experiences,” Shuler adds. “And, keep it up to date. This will give you something to fall back on when the next major disruption happens.
“You should also increase your supply chain agility. Don’t put all your eggs in one basket. Instead, diversify suppliers. And, have backup suppliers vetted and ready in case you need to rely on them to move materials,” Shuler says.
The future of the supply chain could look very different than the one we see today and hopefully soon, there will be less shortages and disruption. However, we can thank these disruptions for opening our eyes on the transformation that can and needs to occur for a more resilient and stronger future.