For most of 2020 and now 2021 we have seen one of the most dynamic periods ever for supply chain management and operations. The fallout of the Covid-19 pandemic has disrupted existing supply chains and normal ways of working. So what are the trends we are seeing, and what will these mean for future practice?
Resiliency as a key focus of risk mitigation
Supply chains are complex, global and increasingly interconnected. When one part of the network is exposed to risk, all are vulnerable to disruption. Focusing on supply chain resilience in conjunction with legal and operational risk mitigation will enable businesses to respond to adverse events faster than the competition, limit the impact and focus on increasing market share.
Accelerated use of artificial intelligence (AI), analytics and automation across the supply chain
As we have commented in previous blogs, trends indicate the implementation of AI and machine learning for predictive and prescriptive analytics will continue to accelerate, with broad-reaching effects across the end-to-end supply chain. Businesses that harness the power of big data and automation will have a competitive advantage in visibility, operational efficiency and quality. For example, the use of AI and advanced algorithms with a focus on risk mitigation should assist in predicting whether any problems will occur — and if so, support in providing solutions.
The explosion of data and data-driven organisations through AI, blockchain and the Internet of Things (IoT) is creating much more interwoven areas of vulnerability in systems and tools. Supply chains must work to protect their networks, devices, people and programs through practical and legal risk mitigation.
But it also presents opportunities to revolutionise supply chains by increasing visibility and real-time tracking for both raw materials and final products. This is making networks more responsive and competitive. Cheap and reliable sensors that provide large amounts of data are essential for large-scale implementation of IOT systems.
E-commerce and sales channels
We have seen many businesses in trouble because they used only one (disrupted) channel to reach the customer. We anticipate an increased focus on multi-channel sales, leading to greater resilience and business continuity. This means many businesses might consolidate demand, including e-commerce, direct-to-consumer, distributors, and physical retail. Data is likely to play a strong role here to facilitate last-mile delivery, warehouse mechanisation, facilities management, digital sorting, and autonomous driving.
Supply network collaboration
While supply chain can be fragile, they are also often old-fashioned – supply networks might be the new trend. They revolve around collaboration that serves the end customer. Businesses might move towards introducing platforms that support tight collaborative workflows between suppliers, distributors, and customers.
These platforms should have a solid information flow when it comes to plans, forecasts, shipments, ETAs, and inventories, and everyone needs to have access to such data. It will make the supply chain more reactive and dynamic – and, therefore, resilient – if managed properly.
Re-shoring: going back to local
While production initially moved to other countries due to globalisation, companies have increasingly embraced the notion of re-shoring in the past few years, transferring their overseas business operations back to their original locations. Significant advantages include delivery performance, product quality, and the flexibility to respond to customer demands. This pandemic has revealed a major downside to globalisation: when borders closed, entire industries were shut down due to a lack of raw materials. Businesses are now re-determining which parts of their production will be global and which will be local.
These trends indicate a re-assessment of approach to risk and opportunities in supply chain management. An essential aspect to this is clarity in contractual relationships, together with appropriate practical risk mitigations.
If you require advice on any of the issues discussed in this blog, please do not hesitate to contact our team.