The past several years have been a wild ride for those in supply chain roles. Adaptability has been key as companies looked to their supply chain teams to overcome a steady stream of disruptive events. Looking ahead, it’s clear that the end is not yet in sight.
Jarrod Kinchington, the Vice President and Managing Director of Infor ANZ, discusses the major trends that will impact supply chain professionals in the coming years. Jarrod notes that supply chain planning will be critical for businesses, but the uncertainty and volatility of local and global factors affecting supply chain performance will make it difficult to predict the future accurately. He highlights five major trends, including the ongoing impact of geopolitical and macroeconomic pressures, the impact of the Russian war on Ukraine on energy and food supplies, the increasing importance of labour in the supply chain, the decoupling efforts from China, and the redefinition of supply chain visibility.
Jarrod provides five trends to have a huge effect on companies and their supply chain professionals in the coming years.
1. Virtually everyone’s supply chain plans will be wrong.
Uncertainty and volatility will continue to conspire with local and global factors affecting supply chain performance. Neither demand nor supply will reach stable and sustainable levels well into 2023, as geopolitical, environmental and macroeconomic pressures play out. Supply chain planning is still critical to business, but don’t worry about trying to predict the future correctly. Instead, emphasise planning for a wider range of what-if scenarios to ensure your business is prepared to adapt and pivot quickly, whatever the future brings.
2. This winter will be tough.
The Russian war on Ukraine is affecting energy and food supplies worldwide, but things will be
particularly challenging in Europe, the Middle East and Africa. Though global supply chains have evolved to help balance regional gluts and shortages, the extent of worldwide knock-on effects from increasingly frequent and unforeseen disruptions in demand, supply and freight flow will continue to drive inflation, scarcity and pockets of distress.
3. Labour becomes a major vector of supply chain dysfunction.
The concept of essential workers emerged during the COVID-19 pandemic to classify elements of labour whose work cannot be performed remotely, and whose absence brings basic commerce to a halt or threatens individual health and security. This category included hundreds of thousands of transport and warehouse workers worldwide. While wages in many logistics sectors increased in the past two years of extreme worker scarcity, those gains have been offset by steep climbs in the cost of living. Economic disparity will drive fundamental political shifts around the world, as well as the flexing of labour muscle to reset employment dynamics in key supply chain entities.
4. China decoupling efforts will uncover more supply chain inadequacies.
For several years, procurement operations in many industries have been systematically diversifying supplier networks to countries other than China to minimise the impacts of tariff hikes, trade wars and zero-COVID strategies. However, ports, inland transport routes and waterways in other Asian countries benefiting from supply chain shifts do not yet have the transport and logistics infrastructure or service providers to match Chinese strength.
5. Supply chain visibility will be redefined.
This year saw announcements of job cuts at leading real-time transportation visibility providers, and dramatic softening of venture capitalist (VC) activity in the supply chain technology sector. Industry analysts increasingly mention the dissatisfaction they are hearing from enterprise buyers of transportation visibility, disappointed by the lack of long-term return on investment (ROI) from their investments and the essential business context that is still missing from transport data alone.
As the real-time visibility market shifts out of hype cycle mode into the sobering realities of a global economic downturn and growing supply chain maturity levels, we’ll see a renewed emphasis on supply chain business networks and their application platforms to serve up a broader, more holistic and more converged approach to operational supply chain visibility.
Buying decisions for visibility will involve more stakeholders and potential beneficiaries than the transportation department, with procurement, finance, sales and operations planning (S&OP), inventory management and even environmental, social and governance (ES&G) leaders weighing in on technology projects to ensure scalability, flexibility and the broad supply chain ecosystem coverage that will help address fast-evolving business needs.