Top 10 Supply Chain Trends in 2022

September 23, 2022 | Article

By Awal Hosen

The Covid-19 has made Boardrooms to understand that supply chain is not a cost center anymore. The past two years have pushed the subject to the top of the agenda. Now we all know that supply chain matter. Personally, I have seen at my work how top management has changed their discussions from profit seeking to balancing the act of supply chain. Supply chain leaders now find themselves in an unfamiliar position: they have the attention of top management and a mandate to make real change. Last couple of years, I have seen most of the trends were all around the Machine Learning, AI, and IoT. The scene has changed due to the pandemic to the transformation of supply chain.

The first of these new priorities, resilience, addresses the challenges that have made supply chain a widespread topic of conversation. The second, agility, will equip companies with the ability to meet rapidly evolving, and increasingly volatile, customer and consumer needs. The third, sustainability, recognizes the key role that supply chains will play in the transition to a clean and socially just economy.

Here are my top 10 Supply Chain trends for 2022:

1. Resilience:

The turbulence of the past two years has forced many organizations to address vulnerabilities in their complex, highly globalized supply networks. Bigger buffers and safety stocks are still seen as an important tool for supply chain resilience. Supply chain resilience will continue to require data expertise, novel solutions and strong collaboration among global networks that are highly complex and interconnected. Key strategies include diversification of suppliers, production capabilities and transportation processes, as well as finding alternative materials and nontraditional partnerships. Resilient supply chain design will also be critical to mitigating adverse events faster than the competition, providing excellent customer service, and generating value and market share.

The below framework from Mckinsey is one of the good examples of how those risks arises from the unforeseen events.

2. Agility:

Customer loyalty is no longer a given. In the postpandemic economy, established brands will face new challenges. As consumer-generated content replaces traditional brand marketing campaigns, companies have less control over the peaks or troughs of demand. Where a business might have once spent months preparing its supply chains for a carefully targeted promotional campaign, now a single viral video can bring attention from millions of consumers overnight.

This fast-moving, fragmented, consumer-centric world will require a different sort of supply chain. Traditional supply chains sought to achieve stability and minimize costs. Future supply chains will need to be much more dynamic—and be able to predict, prepare, and respond to rapidly evolving demand and a continually changing product and channel mix. In short, supply chains will need to become agile.

A reference from Mckinsey:

3. Sustainability:

Post-COVID-19 consumers have become even more likely to prefer brands that offer robust sustainability credentials and a strong purpose. Companies looking to avoid the increasing reputational, regulatory, and financial risks of poor ESG performance are being pressed to act. The supply chain has a central role to play in the enterprise sustainability transformation.

4. Digitization:

Most companies ramped up their digital supply chain investments significantly over the past two years. Digital tools have been critical to companies’ efforts to improve the resilience of supply chain planning and execution. Almost all industry has doubled their investment in digital infrastructure.  Of the companies looking to invest in advanced planning systems.

5. Visibility:

Visibility will be a key objective for organizations under pressure to achieve true transformation, satisfy customers and capture new markets. People are willing to pay more for ethical and responsible business processes, and this will be a catalyst for investment in supporting technologies. For instance, as the ability to track and trace goods to the source is increasingly expected by consumers, the internet of things will continue revolutionizing real-time visibility. Look for new business models and heightened trust and collaboration within and beyond organizational boundaries.

6.  Digital Supply Chain Talent:

Digital talent remains a significant challenge for companies. Supply chain talent is critical to supporting ongoing industry advances, solutions and frameworks — and as such, people at all levels of supply chain should expect to experience new ways of working. Anticipate a convergence of training, plus better pay and benefits for existing employees; as well as hiring talent with foundational skills in data analytics. Organizations must be creative when attracting, reskilling and retaining talent, as traditional approaches may not be as relevant to future supply chain needs.

7. Cybersecurity:

Cybersecurity is critical to protecting networks from cyberattacks, which continue to be a dominant threat to supply chains around the world. The explosion of data and data-driven organizations through previously mentioned digital tools is creating many more areas of vulnerability. This interconnectedness means supply chain partners can inadvertently expose each other and their customers to privacy breaches, identity theft and worse. Expect greater collaboration when safeguarding networks, devices, people and programs. In addition, more organizations will choose to invest in redundancy, firewalls, and advanced antihacking technologies and employee training.

8. AI and Machine Learning:

Artificial intelligence and machine learning, key components of numerous trends on this list, are foundational to integrating people, processes and systems in a wide array of operational environments. The technology-driven evolution to industry 5.0 — which involves a more collaborative approach, as well as partnerships between humans and robots — will have significant impact on supply chain functions such as planning, demand management and fulfillment. As machines learn, improved insights will be discovered, leading to significant transformation, advancement and competitive advantage.

9. Customer-Centricity:

Customer-centricity is on the minds of supply chain professionals everywhere, as consumer expectations continue to expand and — as noted earlier — people demand ethical, sustainable business practices. Managing a successful supply chain will require upskilling talent with greater cross-functional and analytical skills so people have the training to support these new levels of customer-centricity. Those supply chains that find ways to meet today’s escalating and intense customer expectations at the lowest cost will prevail.

10. Advanced Analytics and Automation:

The benefits of advanced analytics in supply-chain management are now being recognized across industries. Advanced analytics and automation will continue to accelerate, helping organizations mitigate disruption via digital, agile supply chain management. The implementation of predictive and prescriptive analytics — as well as advances in big data, algorithms and robotics — will have broad-reaching effects. Specifically, the organizations that harness the power of these solutions will benefit from greater visibility, data-driven decision-making, execution efficiency, predictability and profitability. Of course, all of this hinges on effective data security and governance, as well as a dedication to reskilling employees.

These new priorities can’t be tacked on to existing supply chain setups. Realistically, they will need to be built in from the foundation and considered in every element of supply chain design, organization, and operation. For many companies, that will likely require a change in mindset from the top, with risk, agility, and sustainability KPIs considered alongside traditional ones focused on cost, capital usage, service, and quality. To excel in these six supply chain dimensions, workforce management and digital capabilities will be essential.