The last decade has seen immense changes in the supply chain industry. From surviving the economic recession, through committing to sustainability and incorporating somewhat futuristic technology, businesses have had their hand full in the past 10 years. This article navigates through the main highlights of a Decade in Supply Chain.
“With the forces of globalization, rapidly changing consumer demand and volatility at work, supply chains play a critical role in everything from competitive advantage to emerging market success. With so much at stake, companies need to evolve their supply chain capabilities and position them as an essential part of the CEO agenda.” - McKinsey
Beginning of the decade – Recession Recovery
The last decade started with most companies trying to re-emerge from the economic downturn. The Great Recession affected both the supply and demand sides of the chain. Paradoxically, the demand downturn actually created supply shortages in some industries. Order cancellation rates caused suppliers to delay production, and as consumers shifted demand to lower-cost options, suppliers of those generic products sometimes came up short. Spending on supplier risk assessment and the frequency of reassessment increased dramatically during the crisis. Transportation costs were also reassessed and throttled back, slowing shipments. (from Supply Chain Quarterly)
By mid-2009 the recession was over, and it was time to rebuild supply chains. While executives were still preoccupied with risk mitigation, companies worked quickly to improve communications with suppliers and began pursuing growth over cost containment.
However, there was a prevalent and detrimental gap between data availability and decision making. Companies collected and used much less detailed information than necessary to making informed and effective supply chain decisions.
Middle of the decade – Agility and Sustainability
Halfway through the decade, the economy in most western countries had experienced a slow but steady growth, with a decrease in unemployment rates which, in turn, translated into a small rise in consumer expenditure.
However, customer demand was still volatile. Responding to this somewhat unpredictable reality demanded greater flexibility from supply chains.
The term “agility” was coined by business experts to describe a new focus on speed, cost efficiency, responsiveness, flexibility, and productivity in manufacturing and delivering goods. Agile supply chains rely on real-time data for daily operational decision making and forecasting. Agility helps with creating robust processes that support long-term goals to eliminate waste, better manage inventory, and increase efficiency.
At the end of 2015, 195 countries signed the Paris Agreement, aimed at reducing global greenhouse-gas emissions. This resulted in an increased focus in sustainability during the second half of the decade. Companies seeking greener practices started realizing that some of their greatest challenges and opportunities were outside their stores, distribution centres and manufacturing plants. Businesses started re-evaluating their entire supply chain hoping to achieve a more significant environmental impact.
“The typical consumer company’s supply chain creates far greater social and environmental costs than its own operations, accounting for more than 80 percent of greenhouse-gas emissions and more than 90 percent of the impact on air, land, water, biodiversity, and geological resources. Consumer companies can thus reduce those costs significantly by focusing on their supply chains.” - McKinsey
End of the decade – Labour Shortage and Automation
During last half of the 2010’s, the combination of all-time low unemployment rates and an aging workforce resulted in a tight labour market for warehousing and logistics. Many companies have embraced automation for repetitive tasks as a means free up and reallocate existing workers to more skilled functions and value-adding activities.
The incorporation of IoT (Internet of Things), AI (Artificial Intelligence) or AMR (autonomous mobile robots) in systems such as MHE (material handling equipment), WMS (warehouse management systems), WCS (warehouse control systems) and WES (warehouse execution systems) offered increased efficiency, speed, reliability and accuracy. This allowed businesses to operate with the agility required to meet customers’ demands.
“Increasing technology innovations are making big waves across industries, and logistics and the supply chain may be one of the most impacted sectors. Notorious for its heavy use of manual processes and large amounts of data stored in different ways and in different places, the logistics industry has perhaps the most to gain from implementing new technologies and following the most innovative Supply Chain and Logistics technology trends.” – TransMetrics Blog
Moreover, the fulfilment demands of e-commerce and the desire to gain real-time visibility are further driving supply chain digitization. Concurrently, the rise of integrated technology has shifted how managers approached end-to-end supply chain operations.
“Large amounts of data are more prevalent than ever in today's supply chains, thanks to computing enhancements and technologies on the digital edge. As a general technology, machine learning is applicable to a wide range of logistics technologies. It is being applied to enhance warehouse management systems, robotic vision systems, supply chain planning, supply chain visibility, and more. Furthermore, fulfilment operations are placing a greater premium on adaptability to meet shorter fulfilment horizons and the constantly changing needs of the market.” - Forbes
The Future
The final year of the decade was marked by major disruptive events that brought uncertainty and turmoil to supply chains around the globe. The US versus China trade wars, ongoing Brexit concerns and a myriad of natural disasters all significantly impacted the cost of doing business worldwide.
On the other hand, technologies like autonomous vehicles and blockchain helped with elevating supply chains to new levels of efficiency and productivity.
So, which major trends that will define the next generation of supply chains?
“Consumer spending should rise even more than the number of consumers as household incomes swell and people use bigger shares of their budgets to buy consumer goods. China, for example, is on track to gain 100 million working-age consumers by 2030, and it is expected that their spending on personal products will be double the current rate.” - McKinsey
In these uncertain times, it’s hard to predict which direction economies will go, and how these macroeconomic factors will affect supply chains. However, we’ve chanced a few predictions for the year ahead in this article.
Share your thoughts and predictions with us!