7 Supply Chain Trends to Watch in 2021

The supply chain forms a backbone for organisations worldwide. As a broad definition, supply chain management encompasses the seamless movement of raw material and finished goods and their storage, inventory management and ensuring the finished products/services reach their prospective customers within the scheduled timeline.

Robust supply chain management maximises the value addition to customers and helps enterprises gain a competitive edge in the market. It also improves the efficiency of manufacturing processes and cash flow for businesses and is key to enhancing the customer experience.

The outbreak of COVID-19 in 2020 has prompted the rethinking of existing supply chain models to sustain the momentum with more of a focus on hedging against risks and uncertainties. It has inevitably led to the redefining of certain trends in this space.

Here are what we see as the key supply chain trends to watch as we go into the final quarter of 2021.


Automation of supply chain processes to maximise efficiency

COVID-19 has accelerated digitisation across functions, and the supply chain is no exception. Automation helps connect various applications and tools to streamline the entire process and improve overall efficiency. It also frees the workforce from certain manual tasks, thereby allowing them to concentrate on their core tasks. Emerging technologies such as Artificial Intelligence (AI), Internet-of-Things (IoT) and Blockchain have great potential to revolutionise supply chain management.
For instance, AI enables businesses to infer prominent data patterns and draw valuable insights to facilitate more informed decision-making. A 2019 Inbound Logistics report highlights that over half of the G2000 manufacturing companies will rely more on AI before 2024. The leveraging of blockchain can improve transparency due to its ability to store data in a secure and immutable manner. Similarly, IoT helps in real-time tracking of the consignment to ensure that it reaches the right customer at the right time. The use of drones and driverless vehicles can also help reduce labour dependency.


Layering technologies for a holistic experience

Integrating various next-gen technologies such as AI, IoT, etc., provides a holistic experience. The layering of technologies implies that the adoption of technology cannot be viewed in silos. A successful commercial outcome hinges on the extent to which companies have been able to amalgamate various technologies. This phenomenon will eliminate data silos in the supply chain and create dynamic data across platforms for drawing actionable insights. A prominent aspect of the layering of technologies is smart contracts. These refer to transaction protocols that will be executed automatically once terms and conditions specified in the contract are met. For instance, in the shipping industry, it implies the automatic generation of an invoice once the ship reaches its destination.

It is noteworthy here that technology is only a means to an end rather than an end in itself. In other words, technology has redefined the supply chain function to generate tangible results for businesses.


Omnichannel model as the new normal

Penetration of digital economies and complex technical automation in no way implies that bricks and mortar is dead; as a matter of fact, both online and offline models co-exist today. A shift to an omnichannel model necessitates an appropriate mix of distribution centres, new node types and partners to cater to customer expectations in each channel. It also requires a seamless flow of information across channels and functions. Moreover, a complete transformation of operational models, including revamping processes, structures and performance management, is vital to reap the benefits of the omnichannel model. Omnichannel operations have gained currency as they combine the strength of both models to maximise customer experience. While eCommerce facilitates convenient and hassle-free shopping, brick-and-mortar stores are indispensable as they allow you to ‘get what you see.’


Agile supply chains

The COVID-19 pandemic has underscored the significance of agile supply chains to absorb any shocks from unforeseen contingencies and natural disasters. Technology is a great enabler to ensure agility. For instance, AI and Machine Learning can be used for forecasting events, thereby aiding companies to prepare a comprehensive plan to hedge against them. Another aspect of supply chain agility is evident in the personalisation of shipments. Previously, the shipments were created in bulk for pre-orders leaving no scope for customisation. But with organisations increasingly adopting customer-centricity as their core objective, easy customisation lends them an edge over their peers. It has also necessitated scaling up investment, especially in infrastructure, to offer tailored solutions to each customer without incurring additional costs.


3PL partnerships gaining currency

3PL or third-party logistics partnerships refer to the trend of outsourcing or using third-party businesses to ensure end-to-end supply chain management, from packaging, warehousing, transportation to order fulfilment. Since these 3PL providers specialise in logistics, they have greater influence over negotiations and can offer higher volume discounts to entities involved in the process. Outsourcing logistics functions reduces overhead costs, enabling businesses to focus on core competencies and at the same time ensure access to expertise to improve customer satisfaction and expand to newer geographies. This has led to the rise of the Supply chain as a Service model enabling processes to become faster, smarter, customer-centric and sustainable in the long run. With shrinking department size and a pruned workforce, companies prefer single-vendor automated supply chain solutions with comprehensive support and services to reduce their burden on in-house teams.


Advancement of green logistics in the supply chain

The advancement of green logistics is a prominent trend for 2021 and beyond. COVID-19 has reaffirmed the significance of sustainability and inevitably prompted companies to step up their social responsibility efforts. Green logistics is a formidable step towards achieving Sustainable Development Goals. Additionally, it has many proven advantages in terms of cost-effectiveness, customer goodwill and brand loyalty to ultimately impact businesses’ bottom-line. According to a McKinsey report, 66% of millennials agree that they are more likely to promote a company embodying sustainability. The use of eco-friendly manufacturing techniques, smartly located inventory, route optimisation tools and efficient energy management systems play an instrumental role in achieving sustainability.


Customer experience is the supply chain’s driving force

The supply chain today is a lifeline for businesses; it can make or break customer experience and impact sales and growth. Seamless supply chain management characterised by ease of ordering, hassle-free payment and transactions, and speedy order fulfilment enhance customer experience and encourage retention. Moreover, over half of online shoppers prefer eCommerce retailers that offer personalised products and exceptional customer service. An Epsilon survey had also found that 80% of consumers are more likely to conduct business with companies providing personalised services. Next-gen supply chains leverage customer insights effectively to improve their products and services continuously and maximise their experience.

The supply chain industry stands at the cusp of disruption due to the interplay of next-gen technologies, policy push and initiatives by ambitious companies in many sectors. Developments such as the proliferation of e-commerce and the emergence of data centres will aid businesses to achieve greater efficiency. Nevertheless, innovation will be the key for companies to stand out from the noise and gain credibility among stakeholders.



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