What Will Affect the Supply Chain in the Future?
If you’re getting ready to enter the market – are you prepared for the pressures of expedited deliveries and expectations of agile logistics? If not, you risk being crushed under the wheel of progress that is accelerating supply chain management every day.
In keeping up with the breakneck pace of the technological innovations of today, the modern supply chain is ever-evolving. With these advancements comes a higher demand for nimble supply chain management and logistics, and supply chain officers are feeling the pressure to stay on top of these increasing expectations and trends by implementing more sustainability, automation, and transparency into their current models.
As you get your footing, it’s important to stay ahead of the future trends in supply chain management to remain as efficient as possible.
What Problems in Supply Chain Management are Companies Facing?
Though technology has advanced supply chains extensively, it would be naive to assume it has eliminated their challenges entirely. Modern technology, coupled with a more globalized market, new pandemic regulations, and increased consumer expectations, has given way to unique challenges throughout the supply chain network.
- Efficient vs. Responsive – Every company can have either an efficient supply chain or a responsive one, with efficient supply chains delivering large amounts of low-margin products with steady demand and responsive supply chains delivering smaller amounts of higher-margin products with more varied demand. Customers are expecting faster delivery times for even high-margin products now, so even efficient supply chains face the challenge of becoming more responsive to these needs.
- Poor Visibility – Not knowing where the products are in the supply chain and a lack of communication with supply chain partners makes it difficult for businesses to share delivery updates with consumers and drive company timelines.
- Delivery Costs – In one survey, 24.7% of supply chain professionals in B2C e-commerce industries reported that delivery costs are the biggest challenge. Last-mile delivery is the most inefficient component of the entire supply chain and presents the most difficult challenge to ensure timely delivery while keeping costs low.
- Managing Customer Expectations – No matter what you’re shipping, customers want their products fast. A competitor like Amazon means that businesses everywhere are competing with one- and two-day delivery windows, so they have high expectations when it comes to delivery updates and arrival, and these short timelines leave little room for error.
- Managing Supplier Relations – Each additional supplier added to a supply chain brings with them another layer of complexity and risk, and successful supplier management requires keen decision making and prioritization to find partners that are reliable, consistent, and affordable.
- Maintaining Sustainability – Consumers today are more concerned about how the product gets to them and how sustainable that supply chain is, especially when products are made and shipped internationally. Businesses need to ensure livable wages, manufacturing partners who meet regulatory standards, and quality (and thus, longevity) of the product.
- Access to Data – Access to supply chain data allows businesses to identify weak points and make improvements, and without visibility of this data, recurring challenges are difficult to overcome.
- Global Market Demand – There is an overwhelming global market demand for consumer goods, but the demand comes with the unique strings attached in the form of delivery and quality expectations. Further, inventory must be maintained to meet this increased demand.
Future Trends in Supply Chain Management
From Ford’s first assembly line to the AI and robotics we rely on today, the supply chain as we know it is constantly changing and evolving into something better. In the future, the trends we’ll see in supply chain management hone in on tech-driven solutions and smart machines to increase efficiency while improving the bottom line.
Supply Chain Automation and AI
In a world where accuracy and speed are paramount for success, utilizing AI and automation is becoming an obvious choice to meet faster deliveries and stay competitive.
Labor shortages have become more common, and, especially among blue-collar workers, this trend is expected to continue. Ecommerce has unleashed a wave of overwhelming demand, and warehouses are struggling to stay staffed to keep up with increased production expectations. As warehouses innovate to avoid labor shortages, more and more will turn to supply chain automation and AI to reduce some of the pressure this lack of staff is causing.
In addition to warehouse robotics, AI will also make an impact with self-driving trucks. Driverless trucks have not yet become common as companies are still working out the logistics of this market, but we’ll start to see more testing of these technologies with humans riding along so we can collect more data, better inform the machines, and boost vehicle safety and control in the meantime. Eventually, we hope to see driverless fleets, but, for now, the data gathered from automated trucking testing will help forecast more efficient trucking practices.
Sustainable Supply Chains
The environment is a growing concern among consumers, and sustainability has become something they look for when purchasing products. As a result, businesses within the supply chain are finding various ways to optimize the sustainability of their processes and translate these benefits back to the consumer.
Some businesses will pledge to become zero-waste within a certain time frame, others will opt for more sustainable logistics partners, and others will even rethink the entire flow of their supply chain.
The circular supply chain model is one innovation that stems from this search for sustainability. Rather than view a supply chain as a linear flow that ends with the consumer, the circular supply chain model proposes a reintroduction of raw materials and discarded products into the manufacturing process. Businesses that want to secure their position as stewards of the environment while reaping economic benefit will see value in this strategy and start to incorporate more of the materials already in use to cut down on transportation, storage, and admin costs.
Gartner predicts that by 2029, it will be socially (and perhaps, legally) unacceptable for a supply chain to generate waste. Business leaders will need to focus on avoidable waste production to embrace a more circular economy and create longer lifetimes for the products and materials already created. We’ll start to see more companies joining the likes of Unilever’s Sustainable Living Plan or Coca-Cola’s World Without Waste initiative.
Supply Chain Meets Blockchain
Blockchain has shaken up the way we think about money, and it may soon change the way we view and understand supply chains. Using blockchain and supply chain technologies together has great potential to improve traceability and transparency while reducing administrative costs. Blockchain ledgers carry detailed information such as date, price, quality, location, and certification, which can make managing a supply chain from anywhere simpler thanks to this easily accessible data. Since blockchain makes it easy to trace back a product, it can lower counterfeit losses, improve compliance in contract manufacturing, and make it easier to predict when products will arrive.
Virtual Reality and the Supply Chain
While virtual reality has taken off in the video game space, VR has a great potential for use in warehouses and logistics. Pick-and-pack accuracy is critical to drive delivery timelines and keep supply chains on track, and augmented reality technologies can make locating and procuring certain items simple, with little room for error. Instead of an employee at the warehouse searching through a computer for information regarding the location of an item to pack then manually searching the warehouse floor, workers could potentially slip on a pair of VR glasses, pinpointing exactly where the item is located. These kinds of wearable VR tools overlaying digital information on physical objects will become much more common in the coming years.
Other trends we’ll see with virtual reality or augmented reality within the supply chain include:
- Inventory visibility – Deeper insights into what’s on the shelves, what’s being purchased, and what’s not to improve responsiveness to demand.
- Remote collaboration – AR offers new possibilities for digital collaboration in what has previously been an otherwise hands-on field. Remote experts can now be in the warehouse, helping troubleshoot challenges, without actually having to be there. This also saves on costs by eliminating the need for physical transport.
- Enhanced training – Interactive simulations with real-life scenarios can help trainees get more realistic training while still staying socially distant.
Final Thoughts on the Future of Supply Chain Management
A good supply chain is not a fixed ecosystem; it must be agile and ever-evolving. It pivots often and responds quickly to changes. It mitigates problems before they arise, and innovates constantly. Supply chain management technologies have made it even easier to adjust and improve as needed.
Many of these new technologies, from AI and blockchain to VR, are becoming more commonplace in the supply chains we rely on every day. Each with its unique benefits, these emerging and maturing tech solutions will become a prime source of competitive advantage.
The moral of the story here: keep up or get lost in the shuffle. Companies who want to provide a superior delivery experience to consumers while improving the back-end processes that make up their supply chain should prioritize these changes to maintain or claim a position of power.
And for tech startups developing solutions with supply chain applications – this is your moment to shine. Reach out to MacDonald Ventures.