After the year we had in 2020, everyone had hoped that 2021 would be the year for supply chains to bounce back and return to normality. This hasn’t quite been the case, as supply chains across the world are still experiencing knock-on effects from the pandemic. Here are my predictions for supply chain trends in 2022:
Disruptions to supply chains over the past year have varied in volume and impact, so it is important that supply chains can show resilience. However, one study shows that 60% of supply chain leaders say that their supply chains have been designed without taking resiliency into consideration, causing problems when disruptions hit. A study conducted by the World Economic Forum found that only 12% of global companies are protected against future supply chain problems from happening, with the majority needing to build resiliency.
Since the upcoming year is already filled with uncertainty, building this resilience is so important. Many businesses have recognized this, as a survey conducted by Gartner revealed that 87% of businesses were planning to invest in supply chain resiliency, including in 2022. It is clear that resilient supply chains are better equipped to deal with the uncertainties that the new year may bring.
In today’s supply chains, sustainability plays a big part in how companies operate, and like in 2021, this trend is set to continue, as firms set out their future environmental goals. As consumers emphasize the importance for sustainability, companies are encouraged to become more environmentally friendly.
In a global study conducted by independent research firm Verdantix, data revealed that 92% of companies are adapting their business strategy to become more sustainable and these companies also plan to increase investments into sustainability initiatives to improve environmental, social and governance (ESG) performance in 2022. This report found that on the whole, sustainability is becoming more democratized across businesses, as well as technology and innovation being commonly used as tools to achieve sustainability goals. An example of how companies are becoming more sustainable is the use of electric vehicles (EVs) in the automobile industry, as top vehicle producers are announcing ambitious plans for electrification.
The world is evolving into a circular economy, and the topic is being mentioned more frequently in the world of business. Sustainable fashion is a top way of reducing consumption, as the industry is moving towards creating sustainable clothing, made from upcycled materials or encouraging buying secondhand items to move away from the dreaded term of ‘fast fashion.’
It is clear to say that instead of being something that firms optionally incorporate into their operations, sustainability is becoming critical, and sustainable supply chains are on the rise to reflect this. Making sustainable options more affordable and accessible to consumers is key to making a difference, and businesses seem to be keen on changing their ways for the better.
Technology in the supply chain: AI, Machine Learning, IoT and Blockchain
As companies are still struggling with the pandemic, the use of AI and machine learning can be vital as a tool for improving supply chains. The use of artificial intelligence (AI) is set to rise in the new year, with companies predicted to have 35 artificial intelligence initiatives in their businesses by 2022. The AI and machine learning industry are expected to expand at a CAGR of 44% to US$9 billion by 2022. Several advancements in AI and machine learning technology have occurred in recent years.
AI is set to have a heightened role in hyper automation (the process of automating operations utilizing sophisticated technology). For example, companies can reduce employee manual labor and enhance productivity by automating time-consuming processes. This is also a useful thing to have whilst in a pandemic as the dependency on humans is reduced, which is key when catching Covid-19 is still a risk. As well as this, AI in cybersecurity is set to be extended. By 2026, the market for AI and machine learning in cybersecurity is expected to reach US$38.2 billion. Additionally, AI and machine learning are often used to make IoT devices and services smarter. According to Gartner, by 2022, over 80% of IoT initiatives in companies will use AI and machine learning.
Visibility in supply chains is a concern among companies. Through blockchain, all parts of a supply chain can be integrated into one platform, which helps reduce disruptions. The trend of using blockchain technology to improve transparency is set to continue as global spending on blockchain solutions is expected to reach $11.7 billion in 2022.
In 2022, it is highly likely that companies will continue with the trend of reshoring and nearshoring, whether this takes place in terms of production or sourcing, it is a popular way to reduce transportation costs. Due to the fact that widespread travel restrictions and the inconveniences involved with travel during a pandemic are still occurring, businesses will continue to bring their operations closer to home. An example of this is the recent semiconductor shortage. Companies in Europe have decided to build chip plants in their own continent in order to reduce their dependency on Asia, who were badly hit with restrictions, which limited production, and due to backlogs in transportation, companies were unable to access the chips.
Catering to a change of consumer needs after the pandemic: E-commerce and Last mile as a service
When the pandemic hit back in 2020, the realization hit that most things can be bought online, whether it may be the weekly groceries or a new pair of shoes. This trend of online shopping is still going strong, as consumers are becoming more accustomed to the world of e-commerce. Due to the heightened demand coming from online shopping, there is a lot of pressure on the last mile delivery of goods as customers want faster and more efficient deliveries at cheaper costs. To remain competitive, companies are likely to invest in their supply chains to account for this demand.
This year has brought a fair share of disruptions: from shortages of goods and workers to backlogs and price hikes. It is clear to say that it hasn’t been an easy year for supply chains. Some of the trends have continued on from previous years, and others have stolen the limelight heading into 2022. Due to the turbulent time supply chains have faced, many will be better equipped to deal with any further obstacles that the new year may bring.