In 2021 we were met with the seemingly never-ending global supply chain crisis. The pandemic caused supply chains and shipments to slow, leading to worldwide shortages and backlogs. As a result, businesses have been forced to re-assess their operations and adapt their supply chains to survive. But how many of those changes are likely to stick? Here are some of the supply chain trends that we can expect to see in the coming year.
The use of AI
During the pandemic, many companies invested in technology to automate key points in the supply chain, such as AI to ensure safe operations at warehouses. This year, companies are set to invest more in technology which can offer greater visibility into secure supply chains, such as advanced tracking and blockchain technologies, alongside AI-driven predictive analytics.
Machine learning should optimise fulfilment models, as warehouse allocation software will account for stock location, quantity, and the cost and speed of shipping. Predictive AI may even be able to foresee future disruptions. However, before any insights can be utilised, organisations will first need to collate their data in line with their business operations.
Sustainability is becoming a priority across the board, as is green supply chain management - the integration of environmental thinking into supply chain strategy. Consumers are showing preference towards environmentally conscious brands. The Global Sustainability Study 2021 conducted by Simon-Kucher & Partners found that globally, sustainability is rated as an important purchase criterion for 60% of consumers. Consumers now see themselves as the agents of change, increasing the pressure on brands to implement sustainable changes. E-commerce companies will need to have a deep understanding of the environmental impact at each stage of the supply chain in order to affect real change.
The shift towards local fulfilment is another factor which should positively impact sustainability commitments. Around 80% of global trade is transported across oceans on cargo vessels, which are currently powered by fossil fuels. What’s more, is The International Maritime Organization (IMO) have estimated that shipping accounts for about 3% of global greenhouse gas emissions, which localisation should reduce.
Localising the supply chain
Local fulfilment is another trend set for 2022, due to the rise in on demand delivery services. On demand delivery is a differentiator for brands, however most supply chains struggle to provide same day delivery. Supply chain leaders are now fulfilling orders from local stores to make this possible; this not only offers the benefit of shorter delivery times and increased efficiency, but decreases the environmental impact associated with shipping overseas.
The pandemic has highlighted the importance of elastic supply chains, and the ability to adapt alongside market fluctuations. Rather than reducing inventory, organisations will need to respond with ‘elastic’ strategies, the ability to expand and contract capabilities to meet current demand. Elastic supply chains not only minimise risk, but when successful, can reduce costs too.
As the number of online orders has increased, so has the number of returns. When ordering online, customers seek a simple and reliable returns process, and companies must ensure their supply chain can cater for this, from inventory management to restocking.
This year, retailers will be evaluating their returns strategy to find areas for improvement, which will likely incorporate new technology aiding automation. Though the best strategy is to minimise returns, for both logistical and environmental purposes.
The main aim for supply chains this year is to increase resilience and elasticity, which will be made easier by the use of AI. We hope to see some progress made in green supply chain management, driven by both the industry and consumers alike.