In response to the many disruptions across supply chains over the past year, new trends are emerging and others are gaining more traction to help bolster resilience in this space. Organizations are pivoting operations, leveraging different resources, and taking advantage of new technologies to streamline their supply chain orchestration moving forward.
In a 2020 survey Gartner performed (see Gartner’s article “Creating a Nontraditional Supply Chain”), participating supply chain executives were asked to select their top 5 choices of what the opportunities are after a crisis.
The resulting top 5 were:
- 68% - Increase supply chain agility
- 67% - Accelerate supply chain digitization (visibility)
- 59% - Strengthen supplier risk management
- 53% - Explore new business models
- 41% - Shorten supply chain
In alignment with the preceding survey results, here are 4 of the top supply chain trends you should be aware of for 2021:
1. Digital supply chain transformations will accelerate.
Companies that did not have this on their near-term radar prior to the pandemic will now evaluate where investments need to be made to build agility in their supply chains.
- Enterprise visibility across demand, inventory, supplier orders, and intransit inventory will continue to be an initiative to manage supply chain activities and mitigate disruptions.
- Control Towers and end-user digital workbenches that connect real-time data across the enterprise will also be a focus in order to manage planning exceptions. Machine Learning and AI will be a key component of this -- providing alerts of disruptions, and resolving exceptions to free up time for more strategic work.
2. Companies will deepen relationships/partnerships with suppliers.
Establishing more unified and streamlined communication channels allows for real-time collaboration and decision-making. This removes the latency that comes with dashboards and reports built on data warehouses or data lakes.
- Dual-/multi-sourcing to improve supply chain resilience.
- According to Gartner’s research as published in their “Future of Supply Chain” article, companies will invest in localized sourcing for resilience, agility and sustained growth in local markets.
- Having sources both internationally and locally will add resilience to the supply chain.
- It is unlikely that manufacturers will look to source critical supply only from localized sources as this approach will not completely resolve the risk of having a single source. Yossi Sheffi, in his book the New (Ab)Normal, asserts that relying entirely on domestic production to serve domestic consumption fails if production is closed due to a pandemic or other disruption.
- Real-time collaboration and decision-making.
- Removing the latency that comes with dashboards and reports built on data warehouses or data lakes.
- Capacity management will extend beyond internal capabilities with improved collaboration with suppliers to alignment throughout the supply network.
- Capabilities will improve both production and aftermarket planning
- Effective capacity management with critical suppliers, as well as collaborating on what-if analysis, will lead to an improved master production schedule.
3. Companies will evaluate their business models to support growth.
- Companies will evaluate their network design to enable a more profitable operating model that supports the shift in volume towards e-commerce.
- Outputs from network design, as well as from changes in products and services, will be critical inputs into the evaluation of trade-offs between cost and speed.
- As highlighted in Gartner’s “Future of Supply Chain” article, supply chains will need to develop operational capabilities that enable more flexible processes and options for fulfilling customer orders.
- Companies will also need to re-examine across the supply chain and determine which activities are best executed locally, regionally, or centrally to enable an end-to-end process to improve operational efficiency as well as the customer experience.
4. Companies will invest in elevating planning capabilities.
Orchestrating the demand and supply planning processes leveraging AI, ML and downstream customer demand visibility will be critical to improving forecast accuracy.
- Integrated Business Planning (IBP) will be a focus, taking the next step from S&OP to align Planning, Operations and Financial Targets.
- Scenario planning will also be highly utilized to understand the impact of different parameters on the supply chain, such as lead-time, demand shifts, network changes, and alternate transportation routing.
- Measuring outcomes against scenarios will lead to improved forecast accuracy and overall supply chain efficiency.
While I consider these trends the most topical this year, there are so many areas to delve into when discussing the current and future state of supply chain orchestration. To hear more about supply chain challenges and innovations, listen in on my upcoming Appian World virtual session, From Disruption to Digital Transformation: Priority Supply Chain Initiatives for 2021, with Brendan Bonthuis, Director of Insights & Analytics, Gordon Food Services and Jenna Harvey, Global Industry Lead for Commercial, Appian.