10 Trends Driving Supply Chain Transformation
Supply chain transformation has been actively discussed since the beginning of 2020 when the global pandemic started to unfold. Many businesses, global leaders among them, had to discover the gaps in their SCM operations the hard way. It all revealed a huge potential and an equally huge need for in-depth analysis and improvement.
Probably, supply chain transformation would have started regardless of the pandemic, but these unforeseen (if you’re not Bill Gates) circumstances gave a strong boost for rethinking and reshaping a great number of business operations.
Analyzing the current and potential transformation of the supply chain is one of the most interesting subjects – mostly because it is an extensive niche incorporating a number of complicated processes. Explaining what’s been happening by briefly discussing ten trends won’t be exhaustive, but it will give at least a general idea of where the industry is heading.
Ten Supply Chain Management Trends
To avoid misunderstandings, these are not some surprising facts meant to reveal the unspoken truth about the supply chain. It is rather a summary of what would be useful to know about the technological side of today’s supply chain and its transformation in the mid-term perspective.
#1. CSM calls for customized solutions
A supply chain entails several departments or several independent companies. To get them to cooperate digitally, a firm needs to find software that will connect all flows of the supply chain or make multiple systems communicate. What works for a business might be highly individual, and it makes finding the right solution complicated.
It doesn’t mean that every company needs to develop custom supply chain collaboration software from scratch. To begin with, it is essential for decision-makers to know what types of supply chain management software are available and whether they integrate well with other products. Also, frameworks such as Odoo often become a backbone for supply chain management systems, and developers can build up the custom functionality upon these platforms.
#2. Visibility will remain a top priority
The research by a number of companies (Gartner, Accenture, McKinsey, etc.) states that supply chain visibility is one of the main capability areas for the majority of companies, and it can significantly improve the SCM.
Visibility directly influences decision-making. It can provide information about gaps in the supply chain operations and ideas about what to change. Needless to say that all operations become transparent – easy to follow and analyze.
In terms of software, development and QA teams will need to deal with location hardware, synchronization, and a variety of integrations. In addition to APIs connecting supply chain visibility, mapping, monitoring, tracking, and other software, teams will need to pay much attention to software security since we are speaking about a large volume of confidential information.
#3. Changes in SCM structure require complex analytics
We’ve mentioned that the SMC structure is shifting from linear to more flexible. The primer suggests organizing the process as a sequence of steps, where stages come one after the other, while the latter suggests progressive releases after short iteration cycles.
Maybe, it is not always necessary to follow the sequence strictly. Instead, businesses may try looking for ways to run some processes in parallel or reduce the gap between stages ensuring as a quick transition as possible. To figure out how to do it, professionals can rely on AI and big data analytics.
#4. It is essential to ensure supply chain resilience
Some see the ability to quickly adapt to the circumstances as a superpower, but it is time to reconsider such an attitude: adaptability is crucial for businesses. Companies that aren’t ready to change quickly and find ways to work in unfavorable conditions eventually are going to face more and more difficulties. The easiest way to cope with it is to be ready for any scenario.
A supply chain simulation showing the behavior of a logistics network over time is a way to discover gaps and risk areas. Teams should consider various use cases (just like in software testing) and “what if” scenarios, including the crazy ones. A few could believe that a deadly global pandemic would take place in 2020 or that Russia would start the full-scale invasion of Ukraine in 2022. Now, we know that estimating events from what is rational and seems likely makes companies unprepared for serious disruptions.
#5. At least the most critical parts should have digital twins
When you hear the phrase “digital twin” for the first time, it sounds like something from a cyberpunk movie. Maybe we’ll get to that someday, but for now, a digital twin is a digital replica of the company’s operational backbone. In other words, it is a virtual model that reflects all of the physical processes that make a company’s supply chain.
This model doesn’t just copy and double the existing processes giving the team more work. Its main task is to reduce the amount of work by studying the processes and testing their improvements in the virtual environment. It sounds like digital twin is another name for simulation software, but it is more advanced: digital twins work with real-time data and can run any number of simulations.
#6. Cloud computing is another means of achieving resilience
Cloud computing enables easier access to data, contributes to sustainability, and makes enterprise resource planning in supply chain management simpler to track. Thanks to cloud technologies we can access the same system from anywhere using any device, and this certainly makes SCM more flexible and effective.
Probably, there’s no need to explain the opportunities and benefits of cloud computing – they are pretty much the same across industries. But skipping this part considering it too evident to mention would be wrong.
#7. New human-machine operating models are to come
While some are discussing the brave new world with AI taking care of all the mundane / complicated / you-name-it tasks, others are anxious that automation will result in layoffs. In practice, it is more likely that none of these edge ideas are completely correct, and the truth lies somewhere in the middle.
Undoubtedly, the adoption of AI technology and robotic process automation will take on some tasks and facilitate the SCM on different levels. However, instead of making farewells to people, companies will need to change their current human-machine operating models, adjusting the existing roles to the new processes.
It is always a mix of human effort and technology that works best. Those who were engaged in manual work may become operators controlling the machines. That’s a simple and most obvious example, but active use of technology always comes hand in hand with new job roles or rather reshaping the old, traditional roles.
#8. Supply chain security spans physical and digital levels
We’ve mentioned security briefly while addressing the visibility, but this point is worth a dedicated paragraph. API’s endpoints are one of many things that require increased attention. The supply chain management incorporates multiple systems, all dealing with sensitive information – personal, customer, and commercial data, intellectual property, and so on. A breach in any of these systems can result in massive data leakage.
Just like that, a single breach can disable the functioning of the entire system. That’s what ransomware such as WannaCry, Petya, and EternalBlue did to dozens of firms worldwide: shut down computers, making it impossible to access or restore data, stopping all business operations for days.
Let’s not forget about the physical level of security. Process automation and better tracking imply more active usage of digital devices. And all devices run by software can be hacked if not properly protected. Finally, there is process security, which should be audited and strengthened by increasing the literacy of company staff (in other words, proper staff education and training).
#9. The demand for change is often socially driven
There’s hardly a discussion about supply chain management that doesn’t come across sustainability. The strive for sustainability can be driven by a company’s ideology or by customer demand. More often people choose to buy goods and services from businesses that communicate familiar values. For those dealing with transportation, delivery, and tons of paperwork, it is an especially sensitive issue.
The first thing associated with sustainability is decarbonization. The social demand for approaching this issue responsibly will push a certain customer sector towards choosing providers that can communicate their attitude to global warming and ecology in general, as well as show an understanding of how to reduce their carbon footprint. Sustainability can truly become a competitive factor for businesses, and not only as a reputation bonus: if done right, it saves resources and lowers expenses.
But there are other things that can be dictated by user feedback and expectations. For example, a return policy or procedure may seem too complicated and become a reason to choose another brand over you. The same goes for a dozen little things that shape the customer experience. These details may seem bothersome, but analyzing them can give some ideas on how to improve your supply chain, and drive more users and profits along with them.
#10. Technological advancement will go on
Technology is ever-changing and capable of transforming businesses and entire industries. Companies have no other choice but to keep up with the trends. The adoption of new tech solutions becomes faster and easier. For better or for worse, we’ll always have some trends to follow. Supply chain software development isn’t an exception.
Who knows, maybe this list of trends will be partially or completely irrelevant in a year, or it may remain completely valid and usable. Today, some start discussing immersive applications for SCM and supply chains in the metaverse. On the one hand, it still sounds too cyberpunk. On the other hand, digital transformation accelerates every year, and the metaverse, in some form or another, may find its way into business transformation just like cloud technology has done earlier.
To Sum Up
When studying the materials on supply chain and technology, we stumbled upon an interesting cliche – “the death of supply chain management is inevitable.” Ironically, that was already said too many times about any analog solution, starting with paper books and vinyl records.
All the hyperautomation and artificial intelligence resources in the world cannot compensate for human effort – either intellectual or physical.The supply chain management will always be there, maybe just in a more digital form.
Whatever opinion you choose to stick to, now is the right time to start analyzing supply chains, looking for bottlenecks, and leveraging the potential of technology to offer digital solutions for businesses.