Supply chains are the lifeblood of most, if not all, businesses today. Keeping all supply chain components running as smoothly as possible ensures that your business can provide on-time delivery of products and services. Aside from reading up on the latest supply chain statistics, it’s always helpful to stay updated on the latest supply chain trends.
In this article, we’ve gathered the top predictions for supply chains and supply chain management (SCM) for 2020 and beyond. By staying on top of supply chain management trends and issues, you can make sure that your company can readily adapt to these changes.
SCM encompasses a broad range of activities and requires excellent attention to detail. This is why most enterprise resource planning software are designed with modules and features dedicated to SCM. Through the software, managers can optimize supply chains, keep them running as smoothly as possible, and prevent disruptions that affect customer service.
Given the importance of supply chains, it’s no surprise that many trends in supply chain management center around the improvement of the supply chain itself, with new business models gaining traction. Supply chain technology trends also heavily feature robotics, IoT, and blockchain, which are all projected to make the supply chain faster and less prone to disruptions.
Climate change advocacy groups and consumers’ growing efforts to be more environmentally responsible push the supply chain to become less harmful to the environment. Electricity and transportation hugely contribute to greenhouse gas emissions in the US, so green logistics are quickly gaining traction among many companies today.
Green logistics is just one of the many supply chain trends affecting warehousing. Eco-friendly warehouses, for instance, feature advanced energy management systems that use timers and gauges to monitor the usage of electricity, heat, water, and gas all over facilities. These systems help prevent excessive waste of resources. Electric and solar-powered vehicles are also seeing more use in supply chains; these vehicles help reduce the overall carbon footprint of supply chains.
Similarly, climate-smart supply chain planning is expected to play a more significant role in SCM in the next year and beyond. Environmental changes brought by climate change affect the availability of materials and resources, posing potential disruptions to supply chains. Companies will have to consider these factors and look for other resources if necessary.
Aside from doing their share to preserve the environment, businesses that adopt sustainable efforts also stand to gain more in terms of profit and customer loyalty. After all, more than 60% of customers don’t mind paying a premium for sustainable products. With green consumerism on the rise, more companies are expected to implement eco-friendly supply chain processes in the coming years.
Linear supply chains will soon be replaced by circular supply chains, where manufacturers refurbish discarded products for resale. To deal with the rising costs of raw materials and their volatile availability, many companies are opting to break down their products and turn them back into their raw material form.
Looping the supply chain can help cut down costs, past the initial costs of putting new processes in place. With a circular supply chain, companies can spend less on raw materials and, in turn, enjoy a reduced risk of price volatility. Moreover, a circular supply chain creates less waste, helping companies reduce their overall impact on the environment.
Stricter government regulations on recycling and waste disposal also push companies to consider adopting the circular supply chain. Businesses with sustainable practices may also stand to gain incentives for their efforts, not only from the government but also from consumers, a majority of whom prefer environmentally friendly products.
The coming years will see even more components being added into the supply chain, as companies look to make partnerships and build integrations with third parties. Partnering up with third-party services can help companies reduce costs while improving customer service.
For instance, more businesses will integrate and start to offer inland services, reducing overall freight costs, and streamlining the supply chain. Integrations are particularly useful for shippers who often use a combination of sea and land transportation for their products. With integrated services, delivery times become shorter, and customer service improves.
The Amazon Effect also pushes companies to optimize their supply chains as much as possible. As a result, more supply chain managers will be partnering up with third-party logistics providers (3PLs) and 3PL-based technologies. 3PL providers offer inbound and outbound freight management and handle order fulfillment on any channel, and companies can take advantage of these to organize their supply chains.
Similarly, 3PL-based technologies allow supply chain managers to integrate multiple management systems via API and connect them to the cloud. These integrations will enable supply chain managers to overcome the limitations of in-house technology solutions.
Companies will also seek partnerships with other businesses that incorporate digital solutions, which deliver more accurate delivery ETA estimates and cut down administrative work.
UPS Supply Chain Solutions
Kuehne + Nagel (Americas)
DHL Supply Chain North America
Ryder Supply Chain Solutions
Source: Logistics Management, 2018Designed by
Companies can expect major changes in the labor component of the supply chains. For instance, one such change is the globalization of the workforce. Research says that 80% of manufacturers will have multi-country operations by 2020.
Factors such as the need for more knowledge workers influence the demand for workforce globalization. Knowledge workers—those capable of handling complex processes like analytics, procurement processing, and provision of services—drive the labor component of supply chains, and the emerging labor workforce in the US doesn’t have the training and expertise to handle these processes.
As a result, employment opportunities in logistics, warehousing, and transportation have been rising each year. More companies are trying to fill the gap by outsourcing these jobs and expanding operations to countries outside the US. Advanced IT systems, collaboration software tools, and sophisticated logistics setups make globalization easier for companies.
Aside from the skills gap, the shortage of supply chain workers also stems from a lack of interest in these jobs. Experts expect warehouse and supply chain managers to offer unique benefits such as mentoring programs and tuition reimbursement to make supply chain jobs more attractive to younger generations.
Many companies today handle their supply chain activities in-house. Still, we may see more businesses adopting ‘Supply Chain as a Service’ or SCaaS business models and outsourcing activities like manufacturing, logistics, and inventory management. Companies’ supply chain management teams will soon evolve to become a smaller group of skilled individuals focused on making strategic decisions to improve the supply chain.
As in-house supply chain teams grow smaller, control towers will become more prevalent. These advanced digital control towers give supply chain managers an end-to-end view of the supply chain. Cloud technology allows supply chain managers to access the data they need wherever they are.
Likewise, technology has innovated support for SCM. Supply chain technologies will soon be available “on tap.” Originally seen in SaaS software, this method allows companies to reduce overhead spending by avoiding fixed costs in infrastructure, upgrades, and maintenance.
Distribution and Logistics
Source: SupplyChainDigestDesigned by
As product lifecycles and clockspeeds become shorter, supply chains must evolve to become faster and more efficient. Many companies today use a single supply chain for all products, despite the differences in these products’ life cycles. In the future, companies will have to develop different supply chains to accommodate these varying lifecycles and remain profitable.
The shorter product life cycle requires companies to rethink their supply chains and streamline processes to ensure that they can keep up with the regular demand for new products. Advanced tools such as inventory management software can help SCM teams keep better track of stocks and automate order management. To this end, more companies will also be streamlining their reverse logistics processes to improve the handling of obsolete products.
It’s not enough for supply chains to have lean processes; supply chains need to be flexible and responsive to market fluctuations as well. As a result, more businesses are adopting a flexible approach to logistics. Elastic logistics allow the supply chain to easily expand or shrink according to current market demands. Technologies such as artificial intelligence allow supply chains to adjust as needed with minimal disruptions.
Elastic logistics provides flexibility to many variables in the supply chain, including sailing schedules, carrier space, container usage, and route optimization. The adjustability helps companies better handle potential issues such as overstocking and unoptimized space in vessels. As a result, businesses can enjoy greater stability and remain competitive despite market fluctuations.
Source: Inbound LogisticsDesigned by
With the complexity of SCM, it’s not surprising why many universities offer undergraduate and graduate degrees in SCM. Professional associations also provide certification programs for aspiring supply chain managers.
However, none of these programs offer a single set of knowledge for SCM. Instead, they focus on specific activities, such as financial analysis or manufacturing. This will change in the next few years, as technologies such as IoT allow for the development and integration of a cohesive system that defines SCM. Supply chain professions will soon have a standardized certification program like those of CPAs and engineers.
A standard certification process for SCM will ease the deployment of new systems and services. It will also help fill the current skills gap in the supply chain profession.
Rising consumer concerns over the impact of modern business on society create a need for companies to be more transparent about supply chain externalities. Companies have begun providing some transparency when it comes to the sustainability of their supply chains and their efforts to reduce their carbon footprint. Still, more visibility is needed on the impact of the supply chain on other aspects of society. The shifting nature of global trade and its corporate requirements may also result in mandatory corporate disclosures for a variety of supply chain practices.
For instance, companies will soon have to look into providing reports on the impact of their supply chains on jobs created, sourcing practices, as well as types of labor and modes of transportation used. Disclosing information about these aspects of their supply chain can help companies enhance brand image among consumers and prepare for compliance with regulatory requirements if necessary.
Supply chain visibility remains a top concern 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 help make the entire supply chain more transparent to minimize disruptions and improve customer service. Through blockchain, all components of the supply chain can be integrated into a single platform.
Carriers, shipping lines, forwarders, and logistics providers can use the same platform to update companies and customers of the product journey. Invoicing and payments can be made from the same system, too. This integration streamlines the entire supply chain and helps supply chain managers to identify issues before they occur.
Blockchain also provides unparalleled protection for information, as the technology’s decentralization methodology protects data from being edited. All users must agree to updates or edits to the data before they’re implemented.
Aside from blockchain, more companies are implementing IoT devices to enhance the visibility of their supply chains. For instance, airplanes, trucks, and other modes of transportation can be fitted with sensors, which provide live tracking updates on shipping and delivery. IoT technology in warehouses and retail outlets can also improve visibility in production, inventory management, and predictive maintenance.
Companies can use all these real-time information to proactively service customer demands, minimize downtime, and increase the supply chain’s overall efficiency. By increasing visibility across components of the supply chain, IoT devices can also help businesses optimize their assets and ROI.
Many businesses will also leverage the power of IoT by integrating the technology with core business applications such as business intelligence software platforms. These integrations will enable analytics for the information gathered by IoT devices, allowing companies to make data-driven decisions on supply chain strategies.
Robotics currently play a huge role in transforming supply chains and SCM. During the first half of 2019 alone, North American companies spent $869 million on more than 16, 400 robots.
More companies today are using drones and driverless vehicles to streamline logistics operations. Companies and consumers can expect drones to become fully capable of making deliveries of small goods. Self-driving cars are also likely to be more advanced by 2020, with capabilities to make automated traffic decisions.
In warehouses, autonomous mobile robots will see more use in speeding up menial, labor-intensive tasks. Combined with efficient warehouse management software, robots can drastically improve the supply chain’s productivity.
The growing use of robots and robotic processes automation software, however, does not end in the replacement of humans. The technology is intended to augment human efforts by speeding up simple, repetitive tasks. By relegating these tasks to machines, human workers can focus on higher-value tasks that have a more direct effect on business growth and customer experience.
Artificial intelligence (AI) will also play an essential role in making supply chains more efficient. The technology can be used to automate procedures using algorithms based on data from previous processes. Automation makes supply chains more efficient by eliminating human errors.
AI also can identify patterns in the supply chain, and companies can leverage this technology to predict purchasing demands and manage inventory. This takes the guesswork out of planning and procurement, eliminating the need for planners to do the same calculations over and over.
Augmented reality (AR) and virtual reality (VR) also pose various possibilities in improving the efficiency of supply chains. For instance, AR devices allow workers to multitask more effectively. Companies can also use these devices to enhance product development efforts by predicting potential product uses in a realistic setting.
Aside from climate events, new tariffs and global trade issues require companies to be more agile in terms of supply chain planning. To ensure stability and maintain high service levels, companies must make sure that their supply chains are agile enough to cope with natural disasters and the shifting availability and costs of raw materials.
Supply chain managers can take advantage of supply chain modeling solutions to predict scenarios and identify potential problems. This way, they can plan the best responses to disruptions.
The supply chain is changing, and SCM isn’t as simple as it used to be. However, advancements in technology give business owners plenty of ways to optimize their supply chains to ensure everything runs as smoothly as possible.
Staying ahead of these supply chain trends can also ensure that supply chain disruptions have minimal effect on your business. It’s never too early to get started on supply chain planning to ensure that your business’ supply chain is flexible enough to handle the effects of factors such as global trade issues and workforce shortages.
If you’d like to streamline your business’ procurement processes, our guide on the best procurement software can help.
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