Back in 2021, we wrote, A Practical Approach to Supply Chain Risk Management. In the post, we covered the risks to manufacturers’ supply chains at the time, how to create a management plan, and what to include in it. This time, we’re covering four of those risks currently trending for 2022, and how manufacturers are dealing with them, especially with technology.

Supply Chain Visibility 

In its simplest form, a “supply chain” is a network between a manufacturer and its suppliers to produce and distribute a specific product to the customer. Prior to 2020, most companies considered it a costly part of doing business. The COVID-19 pandemic and the resulting lockdowns brutally revealed the supply chain’s importance. Businesses could not get their products to stores, or get materials to build their products like computer chips for cars or a rugged mini PC.

Supply chain visibility now puts a company’s supply networks front and center in its plans. These include (but not limited to):

  • Tracking and monitoring the entire manufacturing process from assembly and shipping to customer delivery. 
  • Use of analytics tools and software packages to increase visibility of how, where, and when a company spends in distributing its products to consumers.
  • Becoming far more responsive to major disruption and variability to supply chains, especially on a global scale.  
  • Providing some transparency to a company’s efforts in reducing their carbon footprint (see Sustainability below).
  • Providing mandatory corporate disclosures on the impact of supply chains in jobs creation, sourcing practices, as well as types of labor and modes of transportation used (example: local workers, use of electric vehicles for deliveries, etc).
  • Improving company branding through techniques like notifying customers when their order will arrive (the so-called “Amazon” effect). 

Importance of Customer Service (aka “Customer is King”)

Marketing in 2022 is all about building the individual connection to customers. They have become more demanding, with 67 percent saying their standards for good customer service are higher than ever. On the other hand, 95 percent say they are more likely to be loyal to a company they trust.  

Supply chains are expected to change and evolve to meet these expectations. Companies are doing so by:

  • Adding 360-degree images or videos to online product listings.
  • Offering multiple delivery options like Buy Online and Pick up In Store (BOPIS)
  • Utilizing cross docking, which transfers the ordered product directly from a supply vehicle like a train car to the delivery truck. In the past, the product would have been unloaded and stored in a warehouse first. Cross docking saves on warehouse space and speeds up delivery.

Companies are tapping product information management systems and customer management tools to perform the above and more. The goal from the supply chain viewpoint is a seamless buying process, transparent order statuses, and reliable delivery across multiple channels.

Sustainability Saves the Planet, Company Profits 

Ethical consumerism is defined as “the practice of purchasing products and services produced in a way that minimizes social and/or environmental damage, while avoiding products and services deemed to have a negative impact on society or the environment.” This is influencing the supply chains to become less harmful to their surroundings, sometimes literally.  Companies implementing these “green logistics” are:

  • Creating eco-friendly warehouses thanks to advanced energy management systems like timers and gauges which are used to monitor the electricity, heat, water, and gas usages all over the facilities. 
  • Purchasing devices with energy-saving features like a PoE mini PC. 
  • Driving electric and solar-powered vehicles to help reduce the overall carbon footprint.
  • Shifting to electronic data interchange (EDI) to share business documents electronically and thus save hundreds of thousands of pieces of paper per year.
  • Using inventory management solutions to make sure the company has enough stock to sell or manufacture its products. 
  • Consolidating shipments to save on transportation both in fuel costs and emissions.
  • Shopping locally to reduce fuel consumption of vehicles and thus lessen carbon footprint.
  • Looking to replace traditional linear supply chains with circular supply chains, where manufacturers refurbish discarded products for resale. The result is less waste, which helps companies reduce their overall impact on the environment. There is also the bonus effect of less spending for raw materials which reduces reliance on suppliers. 

And there’s plenty of reasons to do so. Governments are increasingly cracking down on negative carbon footprints and other harmful practices. At the same time, companies are learning that more than 60 percent of customers don’t mind paying a premium for sustainable products. Adding up, sustainability can be a profitable investment for companies thanks to lower energy usage, more efficient production, and less packaging. Yes, it costs money to implement many of these strategies upfront, but they can prove to be beneficial in the long term.

Automation Brings Real-World Results

Much of the supply chain was built on legacy technologies such as warehouse management systems and transportation management systems, all of which are still very important in today’s operations. Unfortunately, they have a major limitation in the modern world: lack of access to real-time information. 

“Currently, many supply chains are built on dated, legacy technologies,” says Kris Timmermans, senior managing director at Accenture’s Supply Chain & Operations division. “They can’t support end-to-end visibility or real-time decision-making, meaning they struggle to deliver strategic business value. They’re essentially analog machines trying to solve problems in a digital world. That results in slow response times, waste, conflicting priorities between functions, delays and rigidity, and companies struggle to meet increasingly granular customer needs. New digital supply chains need to be based on a flexible, asset-light model that places customers firmly at the center so they can anticipate and withstand disruption, as well as support environmental, social, governance and other sustainability practices.”

Automation within supply chains is trending for 2022. Companies are looking into: 

  • Diversifying their supplier base while speeding order processing thanks to Supplier Enablement Platforms.
  • Integrating web-based orders from listings like Amazon into enterprise resource planning (ERP) software for more accurate inventory levels and back-order status updates. 
  • Greater investment in EDI software to make documentation processing faster and compatible with ERP.
  • Rapid adoption of robotics in warehouses to keep up with the high demand of e-commerce as well as current and future global supply chain shifts. 
  • Tracking productivity of staff with latest warehouse technology like wearables.

Closing Thoughts 

Thought by most companies as a complicated expense, supply chain management grabbed the spotlight in 2020 as the COVID-19 pandemic brought worldwide economies to their collective knees. Two years later, companies are looking for ways to protect their supply chains against such future disruptions. 

Sustainability is one such method. Do you think it’ll protect a company’s supply chain from another pandemic? What about the other methods? Or are there even, other, better ways to manage one’s system of suppliers, distributors, and retailers? Let us know in the Comments below. 

Contact an expert at Cybernet if you’re interested in going into more depth about the current trends in supply chain management for 2022. 

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