Trends 2021: Supply Chain

Stephen DeAngelis

December 23, 2020

Occasionally, a year comes along to which we gladly bid adieu — 2020 is one such year for many individuals and companies. Irish-American author Stewart Stafford summed up the feelings of many when he wrote, “You don’t need 20/20 vision to see that 2020 is a giant caca burrito getting forced down our throats.” The truth is, difficult times often require us to reassess how things are going — and that can be a good thing. Following the outbreak of the pandemic, many companies were forced to confront the fact that their supply chains were not as resilient as they had hoped they were. Madhav Durbha, a Group Vice President at LLamasoft, writes, “The old adage: ‘you don’t know what you’ve got till it’s gone’ rang true in 2020. National lockdowns and social distancing measures exposed serious weak points in the supply chain, causing huge delays and disruptions, which affected people’s daily lives.”[1] Although looking back can be helpful, looking forward is essential. Tim Denman (@TimDenman), editor in chief of Consumer Goods Technology, writes, “The supply chain is the lifeblood of the consumer goods industry. It is constantly evolving to meet changing market conditions — an evolution that was accelerated to light speed in the face of the worldwide COVID-19 health crisis.”[2] How are things changing? Below are some of the supply chain trends subject matter expert believe will have significant impacts in the coming years.

Greater Visibility

One of the first lessons many companies learned during the pandemic was that they didn’t have as much visibility into their supply chains as they required. Vishal Patel, Vice President of Product Marketing at Ivalua, suggests, “Work on finding out who your suppliers are, who they subcontract to and who your suppliers’ suppliers are and on developing ways to monitor the risks they face so you can assess the potential for serious disruptions to your supply chain. Ensure there is a structured manner in which to maintain this information and act on it.”[3] Mariia Deresh, a content provider at PLS Logistics Services, adds, “After the pandemic hit, everyone is talking about building resilience … but behind resilience, there is supply chain visibility. … Resilience means clearly understanding what is going on through every step of your network in order to have the ability to make flexible decisions and realistically estimate your capabilities in case of trouble. … Investing in robust visibility and automation software will be ranked top of business needs in the upcoming year.”[4]

Improved Agility

Analysts from One Network Enterprises, agree “visibility is more important than ever”; they also note, “It’s not enough. What good is seeing a problem if you can’t resolve it, and do so in an optimal way?”[5] One of the most important lessons learned during the pandemic was how essential it is to have an agile supply chain — a supply chain that can pivot when conditions change. Digital marketing expert Frank Hamilton explains, “For supply chains to function at [their] best, there needs to be more flexibility and agility. … With agility, companies can prove they can cope with natural disasters or pandemics. An agile supply chain can also help you navigate scarcity and disruption.”[6] Dan Weinberger (@DanMorpheusCEO), CEO of Morpheus.Network, adds, “If there is one thing the supply-chain industry needs to learn from the ongoing pandemic, it is agility. The supply chain has to be flexible enough to absorb any shocks, major or minor, that comes along its way. This includes natural disasters and unpredictable demand.”[7]

More Resiliency

Improved visibility and agility make a supply chain more resilient. Richard Howells, a supply chain expert at SAP, notes, “As an IDC article points out, ‘we have long talked about the importance of visibility, agility, and resiliency’, but not until now have they become the top priorities in an increasingly disruptive world.”[8] As Deresh noted, resiliency became a hot topic during the pandemic. Durbha predicts resiliency will remain a hot topic in 2021. He writes, “There will always be disruptions in this never normal world we inhabit. As a result, the level of risk in 2021 will remain elevated and will be part of the new normal. What I anticipate will change is businesses’ resiliency to these risks and disruptions. … To manage this risk and improve efficiency within the supply chain, uptake of technology will undoubtedly accelerate and as such many organizations, large and small are accelerating their digital journey. Where technology, such as AI, machine learning and digital twin, was once seen as a ‘nice-to-have’, it is now essential to set the winners apart. … To become truly resilient in the supply chain, optionality is key. Using a supply chain digital twin, which acts as a virtual representation of a business’ supply chain, businesses can model a wide range of possibilities to ensure they can assess and prepare for any disruption they can imagine.”

Increased Sustainability

Hamilton writes, “Another notable trend in supply chain management is the advancement of green logistics. Besides its benefit to us and our environment, it is cost-effective, promotes brand goodwill, and increases customer loyalty.” Durbha adds, “In 2020, we have seen a number of companies pledge to be carbon neutral by 2030. This will only be possible if businesses create shorter, more circular supply chains. Currently, one of the greatest contributors to air pollution and CO2 emissions is transportation, which makes up almost a quarter of global CO2 emissions. Yet, only 30% of companies are currently incorporating sustainability into their supply chain decisions.”

Implementation of Cutting-edge Technologies

Advanced technologies have been mentioned in the above discussion and they play an essential role in the modern supply chain. Shubho Chatterjee, a digital transformation, strategy, technology and operations executive, notes, “The digital transformation of supply chains has been underway since 2010, but COVID-19 kicked it into top gear.”[9] The following technologies are expected to have to significant impact on supply chains in the coming year.

Cognitive Technologies. Weinberger writes, “Artificial intelligence has emerged as the primary propellant for automation in the supply-chain industry. By crunching data from past operations, AI algorithms can perform basic operations automatically. This saves a large amount of time and eliminates the possibility of human error, thus making the operations more efficient. It also redirects the human capital to perform more complex tasks. The potential of AI is, however, much more. AI can be used to identify patterns in data and bring useful insights. This could be used, for instance, to forecast demand in the near future. With the help of AI, operations within the supply chain can become more efficient and accurate.”

Connectivity. Deresh notes, “This year has shown that having a rigid supply chain with no diversity in terms of suppliers, partners, and marketing channels dooms your company for failure. Consequently, 2021 will be all about collaborations and expanding networks. Actually, it is a very clear switch from the chain model to the network model. No more linear approaches to supply chain management — it will all be circular and interconnected. It will be critical to have a wide network of suppliers and maximize the use of every single marketing channel, from retailers and distributors to direct sales and online.” A big part of the connectivity picture will be provided by the Internet of Things (IoT). Weinberger observes, “IoT works in the direction of boosting transparency across the supply chain. GPS sensors can be fitted in modes of transportation like trucks to offer live location tracking. Sensors in the warehouse help visibility in inventory management, while those in retail outlets help in gauging demand. The appealing factor of IoT is how easily it can be used within the entire supply chain, from beginning to end. The results from it allow companies to increase efficiency, minimize downtime, proactively respond to customer demands, and increase overall ROI.”

Big Data. The lifeblood of a digital supply chain is data. Chatterjee observes that companies armed with the right data and the right technology to analyze that data, “can apply digital transformation to map and manage their supply chains; acquire near-real-time visibility of alternative sourcing; create digital twins of key processes; foster collaboration with suppliers through electronic data interchange and value-added networks; and create control towers for achieving an end-to-end view of shipments, inventory and potential risks.”

Blockchain. Although blockchain (aka distributed ledger) technology remains in its early stages, many analysts believe it will find a permanent home in supply chain operations. Weinberger explains, “For many years, blockchain has been touted as the next big thing for the supply chain industry. While the implementation has not been as fast as was expected, blockchain has carved a niche for itself. … The technology will definitely expand its reach in the coming years.”[10] He adds, “The primary use of blockchain in the supply chain industry is for the transparency it offers.” Another benefit is that blockchain provides “a digital ledger that is immutable and incorruptible. Information, once stored on a blockchain, cannot be altered or manipulated.”

The Focus on Omnichannel Operations

One Network Enterprises’ analysts observe, “If 2020 taught us anything, it demonstrated that to succeed, maximize resilience, and ensure business continuity, companies need to maximize every available channel — ecommerce, direct-to-consumer, retail, distributors, and Amazon. That way, if one channel is disrupted, whether by natural or man-made causes, the show will go on. Companies need to consolidate demand across every channel, and have a view into every point of supply (even containers on ships!) to be able to maximize service levels, grow revenues, and minimize costs.” Hamilton adds, “Ultimate customer experience is what your customers expect. It entails providing them with a direct and convenient shopping experience. Whether they are shopping online or in-store, your business needs convenient omnichannel services. With simultaneous purchase and delivery, there’s a greater demand for logistics. But omnichannel supply chains enable your customers to have a smooth experience.” Chatterjee agrees omnichannel represents the future of supply chains. He explains, “A variety of e-commerce fulfillment models, including pickup at store and direct delivery to homes, is requiring quicker coordination between retailers, wholesalers, distributors and manufacturers. The entire supply chain is being driven by more demanding customer shopping preferences, leading to an increased focus on digital capabilities.”

Regardless of how 2021 unfolds, the supply chain will play an important role in it. As Durbha notes, “What this means is that supply chain has become a more important topic for the C-suite and the board rooms. In 2021, supply chain will take center stage on the business agenda.”

Footnotes
[1] Madhav Durbha, “2021 Supply Chain Predictions: What Could Possibly Go Wrong?” Supply Chain Digital, 22 November 2020.
[2] Tim Denman, “The Current State of the Evolving Global Supply Chain,” Consumer Goods Technology, 31 August 2020.
[3] Vishal Patel, “2021 Will Give Way to Big Changes in Supply Chain Practices,” Ivalua, 23 November 2020.
[4] Mariia Deresh, “What’s Next: Key Supply Chain Trends to Watch in 2021,” PLS Logistics Services Blog, 1 December 2020.
[5] One Network Enterprises, “Supply Chain Trends 2021,” The Network Effect, 19 November 2020.
[6] Frank Hamilton, “7 Supply Chain Trends to Watch in 2021,” Manufacturing.net, 5 November 2020.
[7] Dan Weinberger, “Seven Supply-Chain Trends to Watch in 2021,” SupplyChainBrain, 11 November 2020.
[8] Richard Howells, “20/20 Vision For Supply Chains In A Disruptive World,” Forbes, 21 October 2020.
[9] Shubho Chatterjee, “Digital Transformation of the Supply Chain: Now and Next,” SupplyChainBrain, 6 November 2020.
[10] Dan Weinberger, “The Future Trends In The Supply Chain Industry,” All Things Supply Chain, 23 September 2020.