Top 4 Trends of 2022’s Most Successful Supply Chains
In 2022, the supply chain is best known for its shortcomings. The COVID-19 pandemic, for example, laid bare many of its weaknesses worldwide. Meanwhile, global commerce continues to shift to a consumer-first mentality, making it all the more important to deliver on service levels in order to remain competitive.
Certainly, the odds are stacked against the supply chain due to a number of major obstacles, including raw material and parts shortages, ports so congested they became the subject of executive action, an ever-shrinking talent pool and unprecedented inflation—just to name a few examples. And in case those challenges weren’t enough, according to Procurement Tactics, there will be four times as many cyberattacks on supply chain software in 2022 than in 2021.
Moving forward, resilience against these disruptions is a must for any high-performing, global supply chain. But it’s not the only success factor. Where are supply chains thriving—and what can be gleaned from their successes? Let’s review some of the top trends in this year’s most celebrated supply chains, as well as emerging practices and technologies that promise even more long-term benefit.
#1: They’re getting greener
Since 2020, supply chain leaders have enjoyed a much more prominent spot in the boardroom—and the court of public opinion. And with that intense scrutiny comes renewed interest from stakeholders in consumer-friendly ESG initiatives.
Many leading U.S. companies have increased their environmental commitments this year, whether that’s through climate pledges, energy-saving initiatives or circular economy investments. Circular supply chains aim to eliminate waste through increased repair, refurbishment and recycling efforts—often with a corresponding commitment to responsible material extraction. Cisco Systems, for example, has a takeback program called Cisco Refresh that as of today refurbishes 99.3% of all hardware returned to the company or securely decommissions and recycles it.
Meanwhile, new technologies like alternative fuels, sustainable aviation fuel, battery-powered trains, route optimization software and LNG-powered container ships promise to help set freight on a greener path in the future.
Finally, many companies are also looking to fulfill their ESG commitments beyond the environmental component through the supply chain. According to Supply Chain Dive, retailers like Kroger, Walmart, QVC and HSN have put out calls for new vendors in order to create more diversity and sustainability to their supplier base.
#2: They’re automating
The so-called “Great Resignation” and corresponding labor shortage have touched a number of industries, and supply chain is no exception. According to Future of Sourcing, the supply chain talent shortage is expected to leave 2.4M positions unfilled between 2018 and 2028, creating a potential economic impact of $2.5T.
While self-driving trucks may still be in their nascent stages, other technologies like intelligent automation (IA) and robotic process automation (RPA) are already making a difference in helping companies eliminate the need for human intervention in repetitive or dangerous work. Before you order a robot, however, keep in mind that these technologies require strategic implementation. You don’t want to automate a bad process, for example.
#3: They’re diversifying
As we discussed in Trend #1, organizations are seeking to increase supplier diversity to support their ESG commitments. But many are also targeting supplier diversification as a risk-mitigation strategy in the face of increased disruption.
Creating a broader network of new or alternative suppliers, previously passed over for more cost-saving approaches, has become an important tactic since companies suffered factory shutdowns in China during the beginning of the pandemic. As organizations look to near-shore their operations, they’re also sourcing multiple suppliers.
From a shipping perspective, the days of relying solely on FedEx and UPS are gone as a diversified carrier mix can create more stability. Companies who prioritize customer experience are hedging their bets with regional delivery carriers for more personalized attention and cost savings.
#4: They’re digitizing
In the 2022 MHI Annual Industry report, 64% of survey respondents indicated they are increasing their investments in digital transformation. Beyond automation, a whole range of digital tools promises to modernize supply chain operations and help companies make faster, stronger pivots, such as:
- Cloud-based management software
- Advanced analytics
- Demand sensing powered by machine learning
Colgate-Palmolive, for example, invested in its advanced analytics as part of its tech-first strategy and analytics transformation. As you look at your own digital transformation plans, however, keep in mind that these technologies are far from “set it and forget it.” Implementing new platforms requires a great deal of planning and strategy to ensure successful adoption. And don’t forget about the IT resources you need to maintain these technologies in the long run.
Act now—but stay strategic
Supply chain can be a competitive edge—or a sore subject. New tools and approaches can alleviate some of the heavy burden of disruptions and support company-wide goals related to ESG. But successful implementation takes careful planning and technology expertise.
We’ve helped Fortune 500 companies modernize their processes and transform their digital capabilities. Using a collaborative, tailored approach, we help our clients select, strategize and implement new technologies according to their business goals.
Looking to up your supply chain game? We can help you explore platforms like SAP S/4HANA and take a strategic approach to implementation
Read other blogs on SAP S/4HANA HERE and HERE to learn more.