The past few years have seen unprecedented supply chain challenges largely stemming from COVID-19 disruptions. As 2022 takes hold, many of the same challenges are present. Consequently, companies are becoming more focused on anticipating, reacting to, and planning for the unexpected through their supply chain strategies.
In 2022, key supply chain management trends all lean towards building supply chain resilience. Leading organizations will look to invest more time and money than ever before in building resilience and agility into their supply chain. But where should they focus their resources and investment?
We’ve compiled a round-up of the top six supply chain management trends that we think you should take notice of in 2022. We consider predictions from some major supply chain consultancies, technology partners and customers.
Supply Chain Digitalization
The trend
More companies are digitalizing their supply chain.
Why?
Digital transformation of supply chains will provide the flexibility to adapt inventory management plans and respond to market changes or short-term supply chain disruptions. It will also give businesses a head start on their competition, helping to build a more sustainable and robust supply chain for long term profitability.
Digitalizing processes to incorporate artificial intelligence will deliver improved data accuracy and enhanced visibility to help quickly interpret and analyze information to make more informed decisions. With accurate data, businesses can adapt and drive improvements faster. In turn, this will free up supply chain teams to deal with external supply chain challenges, customers, and supply chain partner negotiations.
As companies digitalize their supply chain strategies, cloud-based technology will provide the adaptability to scale up quickly. With employees continuing to work remotely or in hybrid models, data will be available whether in the office, at home or in the warehouse.
The trend
Companies are increasingly focusing on improving their demand forecasting and demand planning.
Why?
Many businesses have realized that demand forecasting for inventory management isn’t easy, especially in current circumstances. Over the last few years, customer demand has been erratic; they bought in new ways and tried new products due to changing preferences or their usual choices being low in stock or unavailable.
Demand forecasting plays a crucial role in supply chain strategies and ensuring stock availability as companies need to know upcoming demand so they can order the right stock items.
In MHI and Deloitte’s Innovation Driven Resilience: How technology and innovation help supply chains thrive in unprecedented times report, 50% of companies said forecasting was extremely challenging or very challenging.
Right now, no one is certain what will happen in terms of demand patterns in 2022 — it will likely depend on the country and industry. However, some experts, such as Global Trade Review and Demand Planning, think demand will become more predictable and level out.
Whichever way it goes, demand this year is likely to be very different to the previous two years. Therefore, simply using historical data to predict future demand will be very tricky. The Innovation Driven Resilience report also shows that 44% of companies will use predictive analytics to combat this challenge over the next one to two years.
Introducing software and artificial intelligence helps make forecasts more sophisticated so that you can consider seasonality, trends for new items, or those nearing the end of their product life cycle.
The trend
Companies are expanding their supplier network.
Why?
The risks of putting all our eggs in one basket have come to light over the past couple of years. Companies with solid relationships with one major supplier struggled if that supplier couldn’t provide critical stock.
While it’s essential that companies still build and maintain those relationships with their main suppliers, they are building up additional lists of suppliers, logistics providers and other supply chain partners. In some cases, these relationships are closer to home to shorten the supply chain. Other businesses are looking to new parts of the world to mitigate any risks that are region-specific. In both cases, the aim is to strengthen their supply chain and have options to help address any future supply issues.
The trend
More companies are adding eCommerce as a sales channel.
Why?
Online shopping is now part of mainstream life, and if companies haven’t already set up eCommerce systems to meet demand during the pandemic, now’s the time.
Many businesses went online during the pandemic due to lockdowns, but the shift continues. Gartner predicts that 80% of B2B sales will be through digital channels by 2025.
Introducing an eCommerce channel is about much more than setting up a website. Businesses must ensure they have a resilient and efficient supply chain. If stockouts happen, they are even more noticeable online. So supply chain teams are investing in tools that boost their ability to increase stock availability and meet customers’ growing demands in terms of speed of delivery.
The Innovation Driven Resilience report shows that 45% of businesses already use inventory and network optimization tools to provide an accurate overview of their stock. Another 32% are looking to invest in the next 1–2 years.
Digitalized stock management is essential if businesses go down the eCommerce route. This will help balance stock levels, avoid stockouts, and maximize profits from eCommerce activities.
The trend
Companies are reviewing their supply chain strategies and practices to implement eco-friendly processes.
Why?
The supply chain is a significant contributor to climate change. More than ever, customers are questioning where their products come from and what they are made from. Many are beginning to switch to more sustainable or ‘greener’ alternatives. Meeting this scrutiny with meaningful plans and actions will help long-term financial performance.
Reviewing sustainability goals goes hand-in-hand with building a resilient supply chain. While trying to reduce costs, improve efficiencies and maintain optimum stock levels, companies should identify green stock items, ways of reducing carbon emissions and alternative materials.
Businesses are adopting a circular supply chain to show a commitment to sustainability and create brand differentiation. Reusing and selling discarded raw materials can mitigate the impact on the environment and satisfy consumer scrutiny.
The trend
An increase in using robotics and automation in warehouse processes.
Why?
Labor shortages have led to companies looking at automation to fulfill orders. Despite the initial outlay, technology can bring big cost savings and efficiencies to warehouse and stock management.
Innovation Driven Resilience highlights that 38% of companies are using robotics and automation with 23% adopting them in the next one to two years.
The most common use for robotics and automation is around the warehouse, in picking, packing or sorting orders (44%). This is followed by loading, unloading or stacking (34%) and material and product movement within the facility (30%). 15% of companies already have fully automated warehouse operations.
The range of robots and technologies now available makes it easier for businesses to choose the right combination. As Plexus underlines, there are two options — create a bespoke automation solution using a variety of robotics solutions or integrate off-the-shelf solutions. Off-the-shelf solutions can make this more feasible and affordable for smaller businesses.
We can’t say with certainty how supply chain issues will pan out this year. However, by ensuring your supply chain processes are set up efficiently, you should have the resilience to overcome any unforeseen challenges that come your way.
Perhaps the biggest supply change trend is that supply chain uncertainty will continue well into 2022, and those businesses investing in ways to mitigate its impact will be one step ahead to face new challenges head-on.
Originally published at https://www.eazystock.com on January 17, 2022.
