Supply Chain Resolutions: Can we stick with it this year?

I just got home from my Zumba class at the gym. The studio was crowded with newbies and their personal New Year’s resolutions. From experience, I know that this will only last about 6 weeks and then we will get back to normal crowds with those of us who are die-hard gym goers. The rest of the people lose their will to stick with it.

So what resolutions and new ideas are ahead for supply chain management? Will we start new projects and commit to making improvements? Can we stick with it through the year?

Very often, supply chain projects take multiple years or are more of a trend with no specific end date. Supply chain professionals are more likely to see the start of multi-year projects and the introduction of many new ideas. So here is what I see going forward now, and toward the future:

Reduction of complexity in global supply chains

There is a strong trend to simplify supply chains by making them shorter (sourcing closer to home) with fewer suppliers and logistics providers. Supply chain professionals are being trained in Lean techniques, but with a twist - mitigating risk. This means more inventory to avoid stock-outs and moving everything closer to home. This is not a strict deployment of Lean techniques, but a hybrid that includes identifying and mitigating supply chain risk.

Sourcing closer to home

Replacing global sourcing with developing new suppliers in the U.S. and Mexico. This is a trend that began during the pandemic and is now going strong. One startling number was recently published by Thomasnet. Thomasnet surveyed over 500 industrial buyers - 83% of these buyers said they intended to find and place 10% - 12% more orders with domestic suppliers this year. Based on Thomasnet’s collected buying data from past years, as compared with projections for this year, this simple change – buying 10% to 12% more U.S.-made products - could inject $443 billion into the U.S. economy. WOW!

New projects involving data analytics.

Supply chain professionals have always been more analytical than other functional areas of the company. We deal with forecasting, materials management, production planning, procurement, inventory management, logistics, and warehousing – all areas that require considerable analytical skills. Data analytics adds another layer of critical thinking and requires better analytical skills to support decision-making. I see this trend continuing to grow and requiring higher skill levels and more training and education in supply chain personnel.

Supply chains shifting out of China

It is becoming very clear that it is time to leave China. The risk of very long and complex supply chains became crystal clear during the pandemic. Points of weakness in consistent supply chains were exposed and vulnerabilities became evident. The geopolitics are concerning and the relations between the U.S. and China continue to deteriorate. Labor rates in China continue to rise to the point that China is no longer a low-cost country. It is time to actively seek new suppliers and manufacturing sites in other low-cost countries such as India, Vietnam, and Mexico or reshoring to the U.S.

Software solutions are improving

Software is becoming more flexible and addressing more business requirements. Supply chain operations and supply chain partners depend on software more and more every day. Software is the tool we can no longer live without. Expect to see more functionality added to current systems and new software being developed with new projects starting all the time.

Working from home is normalized

The pandemic shifted where we work. New tools such as Zoom and MS Teams and Google Meet have replaced in-person meetings and the need for in-person office time. We aren’t going back to the old way of five days per week in the office. Flexibility in where and how we work will continue to change.

So, these are my predictions for supply chain trends starting or continuing this year. Oh yeah, and let’s resolve to lose some weight, exercise more and get more sleep!

SC
MR