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Supply Chain Challenges in 2022

Covid-19, Brexit, driver shortages, capacity issues, inflation, shipping delays, increased freight costs, low inventory levels and demand peaks – what haven’t supply chains had to deal with in the past couple of years?

These challenges have been well documented, and governments, organisations and supply chain professionals across the globe are acutely aware that further disruption is inevitable in 2022.

But crisis creates opportunity. So the organisations set to emerge out of the pandemic as “winners” are the ones building supply chains that react quickly to changes, delays and unexpected events. Those who are able to exceed customer expectations will certainly be the ones that outpace the competition, driving growth and securing competitive advantage.

So, what supply chain considerations can be prioritised to tackle this years’ biggest challenges?

Globalisation, diversification, and supply chain visibility

Globalisation is under pressure. According to a recent report by Gartner 46% of supply chain leaders anticipate declines in globalisation and 61% expect offshore manufacturing to drop off, over the next five years.

A key priority should be striking a balance between globalised, regionalised, and localised supply chains that have strong collaboration and are interconnected; as well as creating flexibility by diversifying supplier bases removing dependency on a single major trading partner.

While the above contributes to a highly resilient supply chain, it also means managing elongated and complex processes with multiple nodes and participants involved. Consequently having full visibility end-to-end is of paramount importance to a supply chain manager.

Visibility is, in fact, central to managing supply chain challenges including:

  • Supply chain disruption
  • High operating costs in a period of economic slow down
  • Escalating customer expectations

Mitigating disruption with AI and automation

Leading organisations are using advanced technologies and automation to significantly improve visibility in order to become far more responsive to major disruption and variability, locally, regionally and globally.

In 2022, organisations that can harness the power of predictive and prescriptive analytics, big data, algorithms and robotics will win all round.

It’s important to note that the explosion of data and data-driven organisations is creating many more areas of vulnerability in the areas of data security and governance. More interconnectedness inevitably means greater risk of inadvertent privacy breaches, identity theft and worse. A watching brief and expert support is likely to be required if this is your route.

Safeguarding networks, devices, people and programs, and investing in firewalls, antihacking technologies, and reskilling employees are all important considerations. A watching brief and expert support is likely to be required if this is your route.

Reducing operating costs

The unparalleled disruption caused by Covid-19 has had severe operational and financial consequences for many and continues to be one of today’s largest cost-increasers for companies.

Minimising supply chain costs is both challenging and complex. Spare production and distribution capacity embedded in supply-chains allows businesses to be more agile when responding to disruption, but can be expensive. With full visibility across your entire end-to-end network, accurate costs assessment in different areas becomes a reality (investment, transportation, procurement, production, inventory etc.), empowering all stakeholders to make informed decisions based on data.

Meet escalating customer expectations (and changes in consumer behaviour)

Has the general public softened up as a result of the pandemic? When it comes to availability and on-time delivery, the answer is a definitive no.

Today’s consumers are more demanding than ever. This means supply chains have to be 100% customer centric by default.

The shift to online spending, accelerated by lockdown, is set to stick and is perhaps the most obvious change in consumer behaviour. Gartner suggests:

  • “69% of supply chain organizations expect a decrease in consumer willingness to visit stores over the next five years.”
  • “79% of supply chain leaders think that an internet/platform-based approach is the most critical new business model to support post pandemic recovery.”

Expect to see organisations prioritising Ecommerce and omnichannel fulfilment, as a clear route to competitive advantage. But the ability to track and trace goods from source to delivery and now onward through returns is increasingly expected as standard by consumers.

A further expectation of consumers (and stakeholders) is sustainable business practice and this year we expect to see an even greater willingness of consumers to pay more for ethical and responsible business processes. Again, this makes visibility a key goal for organisations who are under pressure to be transparent on sourcing and supply chain matters as a way of satisfying customers and capturing new markets.

If visibility is the No 1 requirement, then investment in technology must surely follow for organisations wishing to reduce operating costs and diversify the way customer needs are met. Supply chain leaders who find ways to balance cost control with improved customer experience will be the ones to prevail this year and beyond.

If you’d like to see how our Ligentix technology provides AI supported visibility at PO level throughout the supply chain get in touch at hello@ligentia.global

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