Supply chains, much like living organisms, need to evolve to survive. New technology, like robotic process automation (RPA), cloud computing and artificial intelligence (AI), replaces weak links and alters the supply chain software market at large. We looked to the experts for their thoughts on the future of supply chain trends.

Compare Top Supply Chain Management Software Leaders

Robots, automation, the ever-growing cloud, a post-pandemic environment, security and more. We’ll discuss the trends influencing supply chains and their SCM software counterparts.

Key Takeaways

• Supply chains will focus more on resilience and risk management to deal with post-pandemic disruptions.
• Blockchain will see more use throughout supply chains globally.
• Digital supply chain twins will give decision-makers digital environments to view real-time input from their physical supply chains.
• Supply chain as a service (SCaaS) providers will see a boom in adoption.
• Circular supply chains will help turn operations into zero-waste environments.
• Cloud SCM solutions will continue to grow in popularity.
• AI, IoT and embedded analytics will grow in popularity and see massive integrations.
• Automation and robotics drive innovation to the forefront.
• 5G networks will give businesses the power to support huge amounts of devices and connections.
• The capacity crunch will continue as shipping demand continues to surge.

Challenges

The pandemic led to shortages of workers and truckers worldwide. According to the American Trucking Association, truck driver shortages will likely surpass 160,000 in 2030, up from 80,000 in 2021. This event slowed the movement of goods while pushing shipping rates higher than usual.

An Accenture report also mentions that pandemic-based supply chain disruptions could cause European economies to lose up to €920 billion in GDP by 2024.

Persistent labor shortage, rising freight costs, lack of materials supplies, port congestions and logistics breakdown are root causes of these disruptions. Although supply chains are constantly improving, recovery will take longer than anticipated.

As business leaders undergo changing dynamics in supply chains, they rely heavily on technology and strategy restructuring. Let’s discuss the important current and future trends in supply chain management.

Compare Top Supply Chain Management Software Leaders

Top Trends

These are the top supply chain management trends as we move through the next few years:

1. Post-pandemic Resilience

Economic disruptions, school closures and variable lockdowns threw countless industries into upheaval. Supply chains worldwide are picking up the pieces and charting new territory. A Statista report shows a very volatile supply chain pressure index since the pandemic’s onset.

According to McKinsey, companies need to uncover and address hidden risks while rethinking their short-term and outdated strategies to stay resilient.

Supply chain disruption damage goes beyond the value chains themselves. Value chains include everything from gathering raw materials to customers receiving their products.

While it is true that higher-tier suppliers were affected by the pandemic, some of the real damage happened to the nearly invisible lower tiers. Any choke point or disruption in a value chain has devastating effects on multiple processes down the line.

These emergent dangers caused supply chains to rethink how they handle risk assessment to stay flexible and resilient in an unstable global environment. The recent upheaval forced supply chain managers to take a step back and consider their vulnerabilities:

• Where are the weak links in your supplier partnerships?
• Are any critical areas of your value chain entirely out of your control?
• Do you rely on single-source items that could disrupt your supply chain if they encounter problems?
• Do you have enough visibility into your end-to-end processes to stay agile during unexpected disruptions?

When we talked to Joanna Martinez, Supply Chain Advisors Founder, she said:

“Resilience and flexibility are not new supply chain goals. They have been there for years, under the umbrella of Agility. But many times, instead of being balanced with cost objectives, the goal of reducing cost won out, like a balance scale with more weight on one side than on the other.”

While cutting costs across the supply chain can be helpful, she pointed out the need to be cautious with such an approach:

“The supply chain of the future should no longer tilt to the lowest cost options; it can be fashioned with the objective of being able to ‘turn on a dime.’ Memories are short, but supply chain leaders have a wonderful chance to implement real change as business returns to a normal state. As long as they move quickly.”

2. Blockchain

It makes sense to follow the demand for an increase in supply chain visibility with the growing popularity of blockchain. Blockchain’s database structure can set supply chains up for success with end-to-end transparency. Before diving into this further, what exactly is blockchain?

Blockchain leverages chunks or “blocks” of data, whereas normal databases store their information in tables. These storage blocks eventually hit their capacities, and as data flows in, new blocks are created and chained to their predecessor.

These blocks form immutable records that give users valuable transparency into all of their transactions with accurate time stamps. That’s all well and good, but how does this tie into the world of supply chain management?

Blockchain comes with multiple benefits that include:

• Improved materials tracking from a source, through the supply chain, to the customer.
• Reductions in paperwork and administrative processes.
• Increased transactional security and visibility with suppliers and subcontractors.
• Better fraud detection and prevention for high-value items.

These advantages make it easy to see why a report from Research and Markets shows the global supply chain market for blockchain growing to $3,272 million by 2026.

Compare Top Supply Chain Management Software Leaders

3. Digital Supply Chain Twins

As social distancing becomes a new norm, making decisions based on real-time supply chain data through manual methods is less appealing. Combatting this requires more than things like prescriptive analytics; real-time data from all physical fronts of your supply chain is necessary to avoid costly disruptions.

Digital supply chain twins continue to be among key supply chain trends. Digital supply chain twins faithfully recreate an entire supply chain and its processes in an easily accessible, digital environment.

Real-time information gathered from IoT (Internet of Things) devices can give decision-makers a crystal clear picture of everything from customer orders to individual items moving through the chain.

It can point out production delays and their possible repercussions while notifying you of equipment that needs repairs. However, the systems, equipment and costs associated with creating a digital supply chain twin are big investments.

Digital twins provide huge advantages for numerous industries outside of supply chain management, paving the way for their usage worldwide.

4. Supply Chain as a Service (SCaaS)

With value chains becoming more complex, handling all of your supply chain processes in-house is nearly impossible. Switching from manual processes to a digital environment, leveraging large amounts of IoT-enabled devices, analyzing data and maintenance will become necessary things that require skilled manipulation and maintenance.

Many companies won’t have the right talent to carry out these tasks and will outsource many of these critical processes.

The benefits of SCaaS include better customer service, increased productivity and lower costs. SCaaS provides similar offerings with specific supply chain benefits like boosted asset management. Flexibility is a standout advantage, with resilience and agility at the forefront of the pandemic landscape.

We asked Kelly Barner, Managing Director at Buyers Meeting Point, about her thoughts on the SCaaS model.

“SCaaS provides a strategic opportunity to work with an organization whose sole focus is to make each component of the supply chain more efficient. When individual segments are able to focus their energy and attention on asset management, inventory rotation, etc., new types of innovation and competitive advantage become achievable.

Relinquishing control over key pieces of your supply chain makes adopting SCaaS daunting; change is and always will be scary. However, as you offload responsibilities, you’ll find valuable time to innovate, improve and optimize.

5. Circular Supply Chains

Sustainability is rapidly becoming a front-runner in the world of supply chains. In the past, linear supply chains generated waste by disposing of leftover items after creating a product.

Instead of producing an item and returning to the beginning of the chain with brand new materials, circular supply chains recycle unused fragments back into their value chains. Long story short, circular supply chains promote a zero-waste environment.

Customers care about the ethics of their products. Often requesting specific details about how, with what and where manufacturing happens. Consumers aren’t the only variables here either; governments often set boundaries that limit waste and push for reclamation.

Ethical practices and sustainable sourcing are vital components of a successful operation, and opting for a circular chain can help push you in the right direction.

While this strategy can be difficult to implement, the circular method can cut costs considerably.

A Research and Markets report expects the reverse logistics market to exhibit a CAGR of 5.80% during the forecast period of 2022 to 2027.

Compare Top Supply Chain Management Software Leaders

6. Cloud-based Products

Cloud systems offer similar levels of functionality and security as their on-premise counterparts while reducing sunk costs and customization woes that plague traditional software.

The cloud SCM market is expected to grow in 2022 and beyond. In fact, a recent Markets and Markets report shows the cloud-based supply chain management market will grow to nearly $45.2 billion in value by 2027.

When we spoke to Jim Tompkins, Chairman and CEO of Tompkins International, he gave us a few reasons for this growth. The biggest reason he gave above all else was that “people are over the fear of someone else controlling them.”

In the past, many opponents of cloud-based software were worried about an outside party accessing their software, especially with complete control over their uptime and security. But as cloud-based systems gain popularity, vendors work to be reliable and trustworthy business partners.

Since people aren’t so afraid of the cloud anymore, they can focus on the actual benefits of this deployment.

“Now, [people are starting to think about] speed of implementation, cost of upgrades, the overall lifecycle of the software and working in the cloud environment in a way that follows the best practices of the developer of the product.”

Tompkins noted that companies looking to invest in an SCM solution should be ready to adapt to their new system. Many new buyers believe a customized system must match their business’s exact processes and requirements.

In reality, businesses should consider configuring SCM products to support their ultimate goals, either through cloud-based flexibility or ultra-customizable on-premise solutions.

An on-premise solution allows you to customize your software to support your business processes exactly as they stand. Configurability means your software will support your business overall, but you may find yourself changing some processes to work better with the technology.

Get our Supply Chain Management Software Requirements Template

7. AI and IoT

Kushal Nahata, CEO of FarEye, is focused on how software can give businesses a competitive edge.

Stakeholders will [need to] know the status of every resource and when and where their shipments are … In today’s time where eCommerce is disrupting the online shopping landscape, supply chain management can be a brand differentiator.

In order to keep the customers hooked and loyal towards one brand, a lot of effort [should be put] into upgrading the technology,”

According to Nahata, the first supply chain management trend to grow is the Internet of Things (IoT).

“The main drivers behind the growth of IoT are the availability of cheap and reliable sensors, internet penetration, the massive increment in data storage, processing capabilities and the emergence of AI.

The future of IoT will increase productivity in delivery and supply chain industries. Many logistics experts use these new resources to enhance their supply networks, reduce costs and generate revenues.”

He also predicts an increase in artificial intelligence to solve the many inefficiencies in today’s supply chains.

“The supply chain has historically been like a black box for enterprises, with customers not knowing about their goods’ condition.

Due to unpredicted freight movement, manufacturers are losing a lot of time, money and inventory. India alone spends about $160 billion on road logistics, twice [what is spent by] countries with efficient transportation infrastructure.”

Nahata stated that many companies are already turning to AI to optimize their supply chains, as it easily reduces time and money spent while speeding up processes.

“Artificial intelligence can reinvent business models by revamping how you look at future supply chain management trends. AI analyzes today’s operations patterns to predict the possible outcomes of tomorrow’s scenarios.

It automates lower-level decision-making and balances the supply with the forecasted demand. Managers can thus indulge their skills in high-level decision making and strategizing.”

Compare Top Supply Chain Management Software Leaders

8. Robots and Automation

For years, we’ve all heard about how autonomous mobile robots (AMRs) transform supply chain trends. The adoption of modern robotics in the supply chain comes with a few obvious benefits.

These advantages make it easy to see how the global robotics market will rise to a value of $91.8 billion by 2026 from $55.8 billion in 2021.

Instead of requiring human presence to set up new machinery at a physical location, robotics providers can activate and integrate their product with your processes from a safe and remote location.

Automation carries an, albeit understandable, stigma for snatching up jobs. It takes over low-value tasks while allowing you to re-focus more on high-priority tasks and challenges.

Instead of shedding employees, managers can upskill their current workforce. This strategy means WMS (warehouse management system) companies may see a greater effort to ensure their systems can work with AMR systems.

We may also see a greater emphasis on automation in general for the small market segment that has to choose between the two products.

9. 5G Networks

Now that we have 5G networks beginning to enter the world stage, how will this technology alter the future of supply chain management? With IoT-enabled devices flooding the market, networks that can handle huge amounts of devices are necessary.

The difference between 4G and 5G network density is staggering. 4G networks can handle 10,000 devices per square mile, while 5G supports 100 times that amount. With digital transformations becoming mainstream, a heavy-duty network needs to be in place to ensure that communication between processes, machinery and users is quick and seamless.

5G boosts quality and optimizes vital portions of the supply chain from logistics to distribution and warehouse management.

10. Capacity Crunch

For the past few years, the specter of a capacity crunch pushed the trucking industry to the limit. There were signs that things could correct themselves in 2020, but with the advent of the pandemic, things look grim for the near future.

As consumers turn to an online environment, delivering goods to them on time is a challenge. There were hopes that things would slow down enough for crunched distributors to catch up, but this isn’t the case today.

The constant need for product transportation means an increase in revenue, but with major logistics challenges. Among the obvious issues with near-constant demand, smaller issues like truck maintenance become vital to head off.

A truck breaking down or going out of service can cause a devastating ripple of slow-down, especially in times of record demand. It’s going to be more important than ever for companies to keep track of their business processes in an agile way that can keep up with changes in the market.

Truck manufacturers will need to invest in manufacturing software to help them automate processes and cut costs. Shippers and trucking companies may need stronger supply chain collaboration systems to navigate a changing landscape that has otherwise been relatively stable in the past.

Compare Top Supply Chain Management Software Leaders

In Conclusion

The coming years will bring both new challenges and technologies to businesses working in the supply chain. Businesses will begin to focus on supply chain resilience to combat unexpected disruptions. Leveraging technology like digital supply chain twins, robotics, AI and automation will help keep chains agile, flexible and scalable.

Blockchain will step into the spotlight and provide visibility into transactions and processes. The market for cloud-based systems will continue to grow, alongside supply chain support in the form of SCaaS.

What other future trends in supply chain management do you think we’ve missed? Let us know in the comments.

Contributing Thought Leaders

Dr. James A. Tompkins is an international authority on supply chain strategy, focusing on implementation of end-to-end supply chains that are demand driven. Jim is the founder and CEO of Tompkins International. His 35-plus years as CEO of a consulting / integration firm and his focus on helping companies achieve profitable growth give him an insider’s view into what makes great companies even better.

Kushal is responsible for driving the vision, strategy, and growth as CEO and Co-Founder of FarEye. A dynamic leader, Kushal drives the culture of ‘customer-first’ at FarEye which enables the team to deliver value to FarEye’s 100+ clients globally. He is an effervescent thinker who is passionate about enabling the digital transformation of logistics enterprises. Under his leadership, FarEye has achieved a 300% growth rate with an impressive geographical expansion.

Joanna Martinez helps businesses being battered by disruptive forces, creating innovative ways to reduce costs or grow bottom-lines. She is also an advisor and a frequent speaker on disruption and digitization. Joanna was named a Distinguished Alumna by Rutgers College of Engineering. Thinkers360 designated her a Top Global Thought Leader and Influencer in multiple categories.

Her book, A Guide to Positive Disruption, focuses on her experiences implementing change and provides a framework to follow to become a force for positive change yourself. Joanna’s current project is an online learning program for people interested in improving their understanding of digital concepts.

Kelly Barner has held numerous roles in procurement since 2003. She is the Owner and Managing Director of Buyers Meeting Point and MyPurchasingCenter. Starting in 2009, she has covered procurement news, events, publications, solutions, trends, and relevant economics. Kelly is also the General Manager at Art of Procurement and Business Survey Chair for the ISM-New York Report on Business. Kelly has her MBA from Babson College as well as an MS in Library and Information Science from Simmons College and she has co-authored three books: ‘Supply Market Intelligence for Procurement Professionals’, ‘Procurement at a Crossroads’, and ‘Finance Unleashed’.