It is fair to say that the impact of the pandemic on the supply chain has affected everyone in the past two years. The world has felt COVID-19’s presence, and as this volatility event became more broad and deep as the months went on, it was omnipresent in the areas of supply and demand. It unearthed vulnerabilities in organizations across the globe, straining resources and making it clear that resilience is more complicated than it looks to achieve.
Supply chain organizations face increasingly insufficient recovery times between disruptive events, and there is a growing need to shift business models fundamentally and operational strategies to stay competitive and satisfy new customer demands. At the same time, stakeholder and customer pressure to progress sustainability initiatives mean concrete actions must be demonstrated in the supply chain space.
That is why in this article, supply chain management expert Kelly Thomas, CEO of supply chain management consultancy firm Worldlocity, and Shippeo’s Chief Product Officer, Anand Medepalli, have an in-depth exploration of the latest trends and predictions for supply chains for organizations who struggle to make headway in all of these areas without the critical capabilities unlocked by improved visibility and collaboration.
Technological and trend acceleration
The pandemic has accelerated the trend of specific technologies being adopted, which is likely to continue, including the further use of technology we are familiar with.
Concerning supply chain trends, it is not that these trends were not present before the pandemic; rather that the pandemic has made them more pronounced and has accelerated their adoption, particularly by market leaders, who have used this as an opportunity to differentiate themselves from their competitors.
Supply chain disruptions have strongly impacted companies’ top and bottom lines. Unsurprisingly, many industry analysts’ surveys show that supply chain management has risen to the top of CEOs’ agendas. But dig deeper within these surveys, organizations will invariably find that the top three focus areas are supply chain visibility, planning tools to enable agility, and risk management.
Evolving supply chain management objectives
Historically, supply chain management has been about managing the trade-off between customer service and cost. The cost comes in many forms, including materials, labor, and machine. Even in operations, companies silo the supply chain, and in the past 20 years, organizations have tried to tackle more diverse customer needs while also focusing on various operational variables, including inventory, people, and machinery.
Supply chain management is no longer simply about operations
Today, objectives have progressed beyond the level of operations to include critical financial measures to shareholders, including how to drive growth. Leaders have been focusing their attention downstream on customers and how their supply chains can assist in driving revenue growth. However, it is also other things, such as operating profit, cash flow, and return on investment measures.
Long term goals and focus
Merging operational and financial objectives into one process and one system should be a long-term goal for organizations. In the past, this has been a messy situation – it was a back-and-forth integration with latencies, manual manipulation, reliability issues, spreadsheets. But now, we are finally seeing the convergence between finance and supply chain with integrated business planning.
The focus needs to be on merging supply chain and finance with environmental, social, and governance (ESG) criteria. It makes it possible to have a single, synchronized view of operational performance, financial functions, performing environmentally. From a supply chain systems and software perspective, building ESG criteria into our systems should not simply aim to become another silo we have to integrate with.
So widening the focus allows organizations to balance many more variables in decision-making. This is a longer-term trend in supply chain management in general. Stakeholders, even outside the supply chain, have been evolving from what’s known as shareholder capitalism towards what’s called stakeholder capitalism, where the focus is not just on how much profit is generated, but significantly on how that profit is created, including what impact it has on the planet and the environment. So that is the backdrop – objectives are evolving and becoming much broader.