The number one factor to impact, well anything, in 2020 was of course COVID-19. Supply chains were not spared. International trade ground to a halt with the volume of Global trade in May of last year down by 17.7% compared to the same month in 2019, economies crumbled and global GDP for 2020 contracted by an estimated 4.3% and Supply Chain Managers were throwing their demand forecasts out the window.
The global pandemic has both battered the supply chain industry and at the same time brought to the fore how vital it is. Discussions that revolved around lean management and the almighty JIT system have been replaced with finding ways to make supply chains more resilient to change and more agile so as to be able to adapt to unforeseen change more quickly.
Here is what the experts are predicting will trend in the supply chain management industry in 2021.
The rise of the machine
Robots don’t get sick (although they too are susceptible to viruses) they also have a number of other advantages over humans: they work faster, don’t need breaks, and make less mistakes. Amazon currently has over 200 000 autonomous mobile robots (AMRs) moving stock around their warehouses. Drones are beginning to be used to make light deliveries and driverless trucks are about to come rumbling over the horizon. Development of these technologies will continue to grow.
But automation isn’t only about robots. It can come in the form of software too. Enterprise Resource Planning (ERP) software or Warehouse Management Systems (WMS) are helping more and more SMEs go paperless and improve their supply chains.
AI will continue to develop, and process more big data allowing Supply Chain Managers to develop more efficient systems, and make more accurate projections as well as respond to changes faster – saving time and money.
There will be more ways to track, manage and report on the exact status of inventory with technologies such as GPS and Radio Frequency Identification (RFID) tags. These developments in the Internet of Things (IoT) arena will feed data to AI systems so that they can develop process models which in turn will enable the robots to make more autonomous decisions.
Other digital developments that are being repackaged for use in Supply Chain management are Smart Contracts, which are transaction protocols that are meant to be executed when certain conditions are met automatically. Wider adoption of blockchain, with research suggesting it can save the food and beverage industry $31 billion by 2024 alone.
Cloud-based technology will enable users to work from anywhere and will be especially beneficial to smaller organisations that cannot afford to invest in costly and extensive infrastructure.
What about the humans?
The humans will be at home, not because they have been replaced by robots but rather because the COVID-19 pandemic resulted in many countries including South Africa enforcing strict lockdown periods. Many companies were forced to find ways to allow their employees to work from home and it is anticipated that this trend will continue. There are many advantages to working from home such as better work-life balance, increased productivity/better focus, less stress and avoiding the commute, to name a few. The lockdowns meant companies had to invest in infrastructures that could support remote working. There are of course also advantages for the organisations as they no longer have to facilitate a large staff contingency, and research has shown that contrary to initial fears, productivity as a whole increases when people work from home.
SCM Dojo also predicts there will be more focus on employee development across the following 3 dimensions:
- Technical Supply Chain Competencies (also includes Materials Management & Logistics)
- Digital Supply Chain Knowledge, and
- Soft Skills
The Age of Ecommerce is Upon Us
The combination of people being locked down and working from home resulted in an astounding jump in online retail purchases. Even helping to make Jeff Bezos the world’s first man with a net value of over $200 Billion. To put it another way ecommerce experienced 10 years of growth in just 3 months.
And this is not expected to slow down. In fact, a global growth rate of 8.1% is expected between 2020 and 2024 with Turkey in the lead with a 20.2% forecast.
B2B online transactions will also grow and are expected to reach $1.8 trillion by 2023.
Consumers will also increasingly turn to their social media platforms for retail therapy with recent developments such as Facebook’s and Instagram’s Shops.
Disaster-proof supply chains.
Remember at the beginning of last year when suddenly toilet paper became a rare commodity, or when SAB had to dump millions of litres of beer because of lockdown?
These are two classic examples of the unexpected impact that COVID-19 had on supply chains. Supply chains are now being re-engineered to be more agile and able to respond to unforeseen circumstances more quickly.
Organisations are using AI and machine learning to develop models that can be used to predict future events and prepare for it.
Organisations are looking to supplier diversification to bolster their supply chain. What this means is they are hedging their bets between international and local suppliers to get the best balance of price, production capacity, shipping costs, lead times and quality so that if one channel closes down they can increase demand on the other.
2021 will mostly be about recovering from the whirlwind that was 2020. It’s time to take stock and build better, more robust, agile and diverse supply chains. We will do it using robots, powered by AI and informed by IoT while we work from home on cloud-based systems and keep the wheels of commerce turning with our online purchases. Necessity has forced us to find new and innovative ways to overcome the roadblocks the pandemic has put in front of us and now we are set to leverage these solutions as the trends in SCM in 2021. The future remains a mystery but two things we know for sure: The world will never be the same and whatever the future holds, Supply Chain Management will, as always, be at the centre of it all.
Are you interested in a career in Supply Chain Management? The IMM has a number of Supply Chain Management academic programmes and short courses to suite your requirements and your pocket. Visit our website for more details or call us on 0861 466 476 to speak to one of our consultants.