Global supply chain challenges are especially worrying for the manufacturing sector. Now more than ever, companies are looking for ways to cut costs, optimize operations, diminish risk, and meet customer expectations.
Looking at the rest of this year, we expect to see more companies investing in digital technologies that help supply chains become more resilient and agile. Today, we’re discussing this trend along with some other important trends in supply chain management.
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7 Trends in Supply Chain Management
1. Accelerated Automation
Business leaders have long talked about their plans to automate portions, if not all, of their supply chains. Yet, before the pandemic, adoption rates remained low.
In fact, one report published in March 2020 found that only 12% of supply chain professionals were actively using automation technologies, like artificial intelligence (AI).
However, that all changed a few months later. Over the past two years, supply chain pros have embraced these tools at an increasing rate. Now, 73% believe that automation will be mission-critical to their operations moving forward.
This isn’t surprising considering that these technologies can provide deeper visibility into every facet of the supply chain. This enables executives to make quicker and better-informed business decisions in real time.
This year, expect to see an uptick in the use of supply chain management systems, especially SCM systems that provide instant access to the predictive and prescriptive analytics companies need to pivot at a moment’s notice.
2. New Approaches to Supply Chain Management
Responding to supply chain disruption requires more than sophisticated software. It also requires a well-trained and well-managed team that’s up to the challenge.
As labor shortages continue to rise, it’s becoming more imperative than ever for manufacturing leaders to refine their approach to talent management and retention. In addition to investing in new-hire training, this may also mean investing in better pay and benefits for current employees.
It also means looking for strategic skills during the hiring process, such as experience in data analytics and machine learning.
Many companies are using human capital management (HCM) systems to manage all these initiatives. An HCM system can simplify and streamline key areas of employee retention, development, training, and more. It also includes core functions that improve the overall employee experience to reduce turnover.
3. Greater Emphasis on Visibility
Manufacturers have been investing in technologies to enhance supply chain visibility and transparency for years. In large part, this has been in response to customers’ desire to learn more about where products come from; they want to ensure they are ethically and responsibly sourced.
In 2022, the focus on visibility will deepen. Not only will product tracing become more imperative but so will the ability to ensure that suppliers are top-tier and reliable.
Manufacturers are increasingly using modern ERP and SCM software to answer questions around providers’ stability, quality, and lead times. With this increased visibility comes better supply chain operations and the prevention of costly disruptions and delays.
4. Rise in eCommerce and Omnichannel Strategies
When you think of the term eCommerce, retail shopping likely comes to mind. However, a recent report by the U.S. Census found that manufacturing actually takes the top spot in this space.
In fact, of the $6 trillion total value of annual manufacturing shipments, nearly $4 trillion comes from manufacturing eCommerce shipments. That’s more than 67% of the sector.
In large part, manufacturers are embracing eCommerce because it makes it easier to purchase and sell products to other businesses.
As warehouses around the world pile up with product, we can expect the use of eCommerce platforms to rise in 2022 and beyond. Increasingly, companies will focus on diversifying their fulfillment strategies to improve their competitive advantage.
5. A More Diverse Supplier Base
Before the pandemic, it wasn’t uncommon for a business to rely on one specific supplier for one specific component. While that worked fairly well at the time, it’s become evident that this approach can negatively affect product distribution. This is especially the case when a supplier is headquartered in a country with different lockdown protocols.
As a result, businesses are learning that it’s smart to widen their network of suppliers. Not only does this help diversify fulfillment and offset risk, but it also helps companies meet customer needs more consistently.
6. A Culture of Continuous Improvement
Remaining agile and resilient will be the focus of global manufacturers in 2022. These teams must be able to react quickly to operational fluctuations, respond to shifts in customer demand, and manage unexpected delays, all while driving continued growth.
When faced with such pressures, building a culture of continuous improvement within the workplace becomes essential. This is why we’re seeing so many companies build cultures that foster new ideas and encourage teamwork, while allowing every employee the opportunity to contribute to organizational change.
7. Product Simplification
To avoid bottlenecks and ensure timely production, manufacturers must be confident they’ll have quick access to the parts they need.
Many manufacturers make products that require hundreds or thousands of intricate parts. In these cases, a supply chain shortage is especially devastating.
Fortunately, these companies are finding ways to reduce the number of raw materials they need. This approach, coupled with supplier diversification, is helping them effectively maneuver short-term setbacks.
Follow These Trends in Supply Chain Management
This year is poised to be a groundbreaking one for manufacturers around the globe. Business leaders are becoming smarter and more inventive with the tools and strategies they employ.
Considering these trends in supply chain management, we can expect companies across the globe to start realizing significant benefits, especially in the areas of visibility, traceability, and transparency.
If you’re wanting to follow suit, check out our post on the top ERP systems for manufacturing, or contact our enterprise software consultants below to learn about SCM systems, business process reengineering, and more.