5-Key Developments that Every Supply Chain & Logistics Practitioner Should Consider in 2022
For the last two years, global supply chain & logistics has faced a myriad of challenges arising from the uncertainty during the COVID-19 pandemic. With many countries on a steady path to recovery, what are the latest key developments emerging this year?
Many challenges that arose from the early phases of the COVID-19 pandemic like shortages of raw materials, supply chain bottlenecks, and the lack of visibility are only a few of the many challenges they need to encounter.
As a result, many supply chain practitioners became highly aware of the need to revamp their supply chain strategies, processes and the technologies involved. A survey from McKinsey mentioned that in the earlier stage of the pandemic, 93% of senior supply-chain executives from across industries and geographies intended to make their supply chain far more flexible, agile, and resilient.
A survey from McKinsey mentioned that ... 93% of senior supply-chain executives from across industries and geographies intended to make their supply chain far more flexible, agile, and resilient
Today, in 2022, are these concerns still relevant, and is the need to build a more agile & resilient supply chain still there? Where should they concentrate their efforts, in the midst of the recovery? What approach should they take? And is it still possible to apply in 2022? Is it too late?
This article will explore 5 key developments in 2022 that many supply chain practitioners are looking at in order to ensure that their supply chain is resilient, relevant and agile.
#1 Circular Supply Chain
“Sustainability” has been, and still is, a key topic for many companies in the past years. With COVID-19 no longer being at the forefront of our minds, companies are turning their focus towards sustainability with greater vigor. With more customers concerned about climate change and environmental issues, there is a growing need to optimise operations and output while reducing carbon emission footprints in the supply chain. Long-term sustainability has become one of the key areas of focus for supply chain practitioners for this year.
When discussing sustainability, the circular supply chain has emerged as one of the hot topics for discussion. Two terms that help to better grasp and understand the circular supply chain are “reuse” and “recycle”. At its core, most supply chains are linear in nature and refers to the transition from raw materials to finished products via a manufacturing centre, which is then distributed through a distribution centre to a consumer, where at the end of its life, the product is eventually disposed of, or discarded.
On the other hand, in a circular supply chain, the goods flow are able to flow back in the reverse direction, thus allowing them to be reused, recycled, or resold. Circular supply chains are focused on reusing its ostensible discarded materials and raw materials in other ways in order to reduce waste.
As consumers become more aware of sustainability and want to actively participate and play their part to make the environment more sustainable, this is definitely an issue that needs to be addressed. Supply chains need to be ready to be able to cater to return trips and also review some of their processes in order to make this change a reality. Some customers are even willing to pay more for products that use sustainable ingredients and are environmentally friendly.
#2 Elastic Supply Chain
The last two years have taught businesses that their supply chain needs to be more responsive and flexible to deal with market fluctuations and uncertainties. It is no longer enough to merely “survive” during these situations, supply chains are obliged to operate in a more flexible & agile manner in order to “thrive” and take full advantage of opportunities that present themselves in these situations.
This is where an elastic supply chain comes into play. The concept of elastic supply chain is where businesses are able to easily scale up or scale down their operations based on the demands on the market. Elastic supply chains are typically well equipped with technology that can help companies to adapt their end-to-end processes, from procurement and manufacturing, order capturing and sales, inventory and warehouse management, and finally completed via transportation and distribution. Companies with an elastic supply chain also would be prepared with multiple contingencies and plans, ready to be implemented at a moment’s notice to rapidly adapt to changing situations.
A successfully implemented elastic supply chain can allow companies, at some point, to cut costs, improve services, and gain a distinct competitive advantage.
#3 Local Expansion
The COVID-19 pandemic has revealed a very real and serious weakness in supply chain distribution. Over a long period of time, most industries rely on single sources for their raw material, which puts them at high risk during the pandemic. This resulted in global supply chain bottlenecks for some industries as supplies were disrupted or simply insufficient. Many businesses experienced raw material shortages, leading to other supply manufacturing challenges.
As a result, many companies are attempting to diversify their supply sources. The need to localise the supply chain, especially for vital goods has become more prevalent as businesses realise they need viable contingencies for such cases. Also, this would help to minimise the risk of shortages during the “crisis” period. This ultimately helps to improve supply chain resilience during times of uncertainty.
#4 Supply Chain Integration
Oftentimes, many different parties are involved in the delivery of a single item to ensure it reaches the consumer. With the involvement of many parties, especially third-party services, companies usually do not have clear visibility into their supply chain.
In order to build a transparent end-to-end supply chain, many supply chain practitioners are already aware of the need to integrate their supply chains, especially from a technology standpoint. More companies are integrating their own systems with that of their third party service providers or are choosing to work exclusively with third party providers who are willing to adopt the company’s own technologies. It is undeniable that there is a growing need for supply chain integration which brings comprehensive end-to-end transparency in supply chain operation, especially amid these uncertain times.
More companies are integrating their own systems with that of their third party service providers or are choosing to work exclusively with third party providers who are willing to adopt the company’s own technologies.
Furthermore, with an integrated supply chain, this will also enable companies to collect more data about their own operations, which can be used to improve operational efficiency in the long term. An integrated supply chain will be particularly useful for those who have complex lines of the supply chain, transporting different goods.
#5 Digitalising Last-Mile
With the growth spike of e-commerce and the rise of consumer expectations, more companies are working towards offering instant or same-day delivery options to consumers. Businesses who previously only relied on a retail strategy are also re-looking at their distribution channels and are trying to incorporate a direct-to-consumer (D2C) approach.
A key factor to success for a D2C strategy is a well-functioning and smooth last-mile execution. Digitalising the last-mile is just the first step of many steps to ensure that the consumer has the best delivery experience.
For businesses who are already well established in the D2C space, they are looking into more advanced solutions like robotics automation in the warehouse or drone deliveries. However, not all businesses are at the stage where they can easily adopt such solutions from the get-go. Therefore, to set the foundation right to embark on such solutions, digitalising the last-mile is a crucial first step to take in the year of 2022.
With the right last-mile technology, delivery operations can be optimised and powered with automated routing, real-time visibility at all times & digital documentation throughout the process. Such technology can also help provide insights to the gaps in operations and key parts for improvement.
Where to Begin?
As both countries & companies emerge from the pandemic and are jump-starting their recovery, there is a lot of room for future improvement in all aspects of the supply chain. These are 5 key considerations that supply chain and logistics practitioners should look into critically for the year ahead. The year of 2022 is a year that can be used to make supply chains more agile, resilient, sustainable and future-ready.
Image Sources (if any):
- Image 1: Kuebix (2019). How the Circular Supply Chain Model Will Replace the Linear Supply Chain. Supply Chain 247.
https://www.supplychain247.com/article/how_the_circular_supply_chain_model_will_replace_the_linear_supply_chain
References:
- Alicke, N. et. al. (2021). How COVID-19 is Reshaping Supply Chain. McKinsey & Company. https://www.mckinsey.com/business-functions/operations/our-insights/how-covid-19-is-reshaping-supply-chains
- Bernard. B. (2021). Elasticity is the key for organizations seeking improved supply chain performance. EY. https://www.ey.com/en_id/alliances/how-elasticity-leads-to-excellence-in-supply-chain-execution
- Bland, A. (2021). 10 Trends in Supply Chain Management & Logistics for 2022. Unleashed. https://www.unleashedsoftware.com/blog/10-trends-in-supply-chain-management-logistics-for-2022
- Dag, Z. (2021). Elastic Logistics: The Future of the Supply Chain. More Than Shipping. https://www.morethanshipping.com/elastic-logistics-the-future-of-the-supply-chain/
- Gerald, B. (2021). Five Supply Chain Trends to Expect in 2022. Supply Chain Brain. https://www.supplychainbrain.com/blogs/1-think-tank/post/34164-supply-chain-trends-what-to-expect-in-2022
- Jackson, B. & Morrow, D. (2020). Coronavirus and the Localization of Supply Chain. Sustain Analytics. https://www.sustainalytics.com/esg-research/resource/investors-esg-blog/coronavirus-and-the-localization-of-supply-chains
- Lolum, D. 8 Logistics and Supply Chain Trends to Expect in 2022. Bringg. https://www.bringg.com/blog/logistics/supply-chain-trends/#:~:text=Top%208%20Supply%20Chain%20Trends%20for%202022%3A&text=Forecasting%20for%20inventory%20and%20delivery&text=Move%20to%20last%20mile%20delivery,the%20carbon%20footprint%20for%20sustainability
- 2016. Circular Supply Chain vs. Linear Supply Chain. An Evolution. Global Tranz Resources. https://www.globaltranz.com/circular-supply-chain/
- 2018. Supply Chain Integration. Creative Safety Supply. https://www.creativesafetysupply.com/articles/supply-chain-integration/
