Posted On September 27, 2021

Supply chains saw massive shifts in 2020 and 2021, as the COVID-19 pandemic and its effects impacted countries and businesses around the world. Along the way, supply chain teams and technology have had to evolve to keep up.

Many of the supply chain trends that companies saw in the past two years will stick around for at least the beginning of 2022. And as the pandemic, geopolitical events and other factors continue on, supply chain executives need to be prepared for more unprecedented conditions.

But first, what you won’t see much of on this list: supply chain technologies like automation, artificial intelligence (AI), machine learning, blockchain technology and the internet of things (IoT). While these technology advancements are becoming more prevalent in the global supply chain, they’re still a long way off from becoming the standard. Most companies need to focus on surviving the COVID-19 pandemic and its effects before looking into things like artificial intelligence.

Keep reading to see what supply chain management teams need to know for 2022:

The biggest of all supply chain trends: resiliency.

When it comes to your supply chain, agility and resiliency is the name of the game. Raw materials backlogs, labor shortages and capacity limits continue to force companies to pivot. In a recent report by Capgemini Research Institute, 62% of respondents said supply chain resilience would be a key priority in the wake of the pandemic.

There are numerous ways a company can increase the resiliency of its supply chain. The study defines a resilient supply chain as one with agility, diversification, contingency planning and visibility. Agility reflects how quickly a company can pivot, including increasing or decreasing production, or setting up new channels of distribution. Diversification applies to the sourcing of products and transportation mode and partners used to move those goods. And contingency planning incorporates things like demand planning and the ability to prepare for seen and unforeseen disruptions. Which brings us to…

Visibility into supply chains.

Supply chain visibility has always been important—and will be just as vital in 2022 and beyond. More than 90% of supply chain executives said visibility into their supply chain is important to success, but less than a third have achieved true visibility, according to Forbes.

In addition to spotting supply chain trends early and preventing issues from popping up, visibility is key to strong customer service. Modern consumer preferences include round-the-clock visibility, and not offering updates on shipments to retail partners or end customers up-front can have major consequences on a company’s overall customer experience.

Even with uncontrollable factors like shortages and backlogs, visibility can help assuage frustrated consumers. Telling a customer, “Sorry, your shipment is delayed in Chicago—but should be arriving at your doorstep in 5-7 days,” is much better than “Sorry, we aren’t sure where your package is—or when it will get to you.”

Beyond customer demands, supply chain technology with visibility and update automation capabilities helps companies save time, freeing them to focus on other more important issues.

Capacity and cost over timeliness.

A couple of years ago, most supply chain teams prioritized timeliness—searching out and choosing the carriers who could deliver products the fastest. But today, carriers both around the world and domestically have more business than they do labor, thanks to the pandemic. Capacity issues across the supply chain world are leading supply chain managers to take whatever they can get. While companies used to evaluate and make decisions based on carriers’ on-time supply chain performance, the focus now is on keeping supply chains moving at all, and with a reasonable rate when possible.

Most supply chain management teams in 2022 will continue to look for alternate carriers and shipping modes to fulfill orders and deliveries. Using multiple carriers can help businesses avoid putting all their eggs in one basket (or all their shipments in one truckload), but being able to shop endless carriers with similar rate quotes to find the quickest transit time won’t return any time soon.

Increases in pricing.

You’ve gathered by now that the supply chain industry is in turmoil—and it’s affecting the bottom line. Labor deficits, raw material shortages and e-commerce businesses driving up demand are all leading to increased shipping and transportation prices.

In 2022, companies will continue to reshore and nearshore their materials sourcing and manufacturing to downsize transportation costs. Eventually, supply chain leaders and operations teams will need to find other budgets to slash or ways to pass on the added costs to customers.

Lean teams and increased wages.

Across industries, continents and supply chains, most companies have one thing in common right now: a “Help Wanted” sign hanging in the window.

Dock workers, delivery drivers and manufacturing workers are all in high demand, and companies are offering increased wages and sign-on bonuses to try to shore up their teams. In the meantime, carriers are setting embargoes on specific terminals, cities and zip codes, no longer accepting shipments to or from those areas until they have enough staff.

While increased wages are great for employees, how the increased-wages trend will play out long-term is yet to be seen.

Increased focus on larger quantities and storage.

In the last two years, countless companies have had to halt their manufacturing processes or wait helplessly while their goods got stuck in ports. Not having access to products and raw materials isn’t good for business, and now companies are looking into ways to prevent it from happening again.

The alternative? Over-buying materials or products and storing them on domestic soil in case of another surge in demand or backlog of shipments. The study we referenced earlier from Capgemini found that 39% of organizations expected to shift from just-in-time sourcing and manufacturing in the coming years, up from 29% of organizations pre-COVID-19.

Supply chain best practices of yesteryear used to stress inventory management and ensuring the right amount of products were purchased and stored. But many businesses, from B2B to e-commerce companies, are looking at supply chain planning with new eyes, instead choosing to purchase more than they’re expected to need and investing in warehousing to store items closer. In many industries, it’s a smart move. But there’s risk involved, too, if the potential demand never happens and businesses are stuck paying to store product they can’t move.

Sustainability continues to trend.

As consumer demands shift, more companies are focusing on decreasing their environmental footprint—including that of their supply chains. Luckily, focusing on sustainability can have secondary benefits. Newer technology, like using automation for invoicing and quality control, often decreases how much paper a business uses while also streamlining business operations. Incorporating reverse logistics processes into a company’s supply chain can also help lower its carbon footprint and give marketing teams something to share with audiences.

If you want to make sure your supply chain can endure the twists and turns of 2022, contact us! We can connect you with supply chain partners and technology needed to increase your company’s resiliency, no matter what the year has in store.