Supply chains are more than logistical frameworks, forming complex, dynamic ecosystems with a sizable degree of openness. Initially depicted as a series of steps to transform raw materials into final products, supply chains have gained strategic importance, with competition being described as a battle between supply chains, not just firms. As 2023 is coming to a close, staying informed about the latest trends and best practices is vital. So, what’s shaping supply chain management in 2024?
Table of Contents
- 1 1. Digitizing The Supply Chain to Adopt to The Global Economy
- 2 2. Sustainability Is High on The Priority List
- 3 3. Bringing Manufacturing and Part/All of The Supply Chain Back Home
- 4 4. Strategic Investments in The Supply Chain
- 5 5. Restructuring Supply Chains to Achieve Distinct Geopolitical Goals
- 6 Concluding Remarks
1. Digitizing The Supply Chain to Adopt to The Global Economy
Supply chains continue to witness disruptions due to unanticipated tariffs, economic conflicts resulting from extreme protectionism, and post-pandemic economic recovery. Risk, visibility, and resilience are hot topics in business conversations, not to mention they’re present on the front pages of mainstream media outlets. The outcome is that supply chains are becoming more digitized to withstand increasing pressure to be accountable for their actions, acknowledging the importance of the technology infrastructure, as analytics alone can’t address the challenges. Digital supply chains are more customer-centric, focusing on more critical value propositions, such as tailored fulfilments, agile operations, and trustworthy relations.
2. Sustainability Is High on The Priority List
Some supply chain issues that have attracted attention in 2023 will become increasingly important in 2024. Sustainability, and the circular supply chain, foresee minimizing the use of raw materials and reducing waste by repurposing by-products. The investment must match the rhetoric, meaning it should be higher than it is for other technologies. In the United States, there’s considerably more focus on sustainability, the top priority being the development of products, services, and ways of operating. For example, customers purchasing wholesale from a nuts supplier can track every tier of the supply chain, therefore making real change happen for farmers, communities, and, of course, the planet.
Sustainable procurement counts on integrating environmentally and socially responsible practices into the process. Many companies have made sustainability a core part of their business processes, of which an example can be made of Ofi, which makes available nuts for various snacking and backing applications, such as walnut, cashew, macadamia, and pistachio, to name a few. The Almond, Cashew, and Hazelnut Trail sustainability strategies include ambitious goals, including a commitment to reach and even exceed the industry’s standard as regards water efficiency. For more information on how ofi’s making a difference, please visit ofi.com.
3. Bringing Manufacturing and Part/All of The Supply Chain Back Home
The reshoring and the nearshoring of suppliers have grabbed the limelight in the past couple of years, and this trend is set to overturn global supply chains as enterprises are looking to source products closer to home. Reshoring is the practice of returning the production and manufacturing of goods back to the organization’s original country, so the model of producing goods overseas and shipping them to where they’re sold is obsolete. American and European companies moved their facilities and service centers to Asia because the overall costs were less than somewhere closer, but as wage inequality decreased, many were forced to bring jobs back home.
Nearshoring isn’t a new concept, as many enterprises have proven for the past decade. It involves outsourcing jobs to a neighboring country rather than one across the globe, combining the best of onshore and offshore outsourcing. For example, a company located in North America can choose to nearshore a part of its manufacturing operations to a company based in Latin America. When deciding on a location, organizations must take into account labor availability, costs, infrastructure, regulatory environment, and proximity to the home country. There have been initiatives such as the Chips Act, a framework to incentivize public and private investments in manufacturing facilities.
4. Strategic Investments in The Supply Chain
Many enterprises readily admit their supply chains don’t stand up to the challenges and demands of modern times, and as a consequence, they refuse to take a reactive approach to quality, managing issues that have surfaced. On the contrary, they’re being proactive, taking action before a small difficulty transforms into a problem and funneling money into more flexible, resilient, and dynamic supply chains. Forward-thinking organizations understand the need for ongoing investments to keep abreast of technological advancements, to say nothing of the evolving needs of supply chain management. Holding off and waiting for business to go back to normal isn’t a helpful strategy, to say the least.
5. Restructuring Supply Chains to Achieve Distinct Geopolitical Goals
Global supply chains are undergoing tremendous transformation as geopolitical events weigh on the minds of decision-makers across the industry. Russia’s full-scale invasion of Ukraine, for instance, has engendered the dramatic rethinking of the value of lean, globally distributed supply chains, forcing companies to adopt holistic, long-term perspectives. Simply put, it’s necessary to create an action plan and be stepwise as far as implementation levers are concerned. The competition of supply chain restructuring is, above all, the fight against being controlled by a few nations, which might be hit by a crisis.
Supply chains could adapt to deglobalization, even at the cost of reducing efficiency, to avoid redundancy and resilience. Technology supply chains, for instance, are slowly but surely becoming regionalized, not only to gain a cost advantage, but also to enhance resilience. Many enterprises that used to source their inputs from all over the world at present face tougher times and have no choice but to adapt. This is a paradigm shift and a new trend towards deglobalization. If it happens, such a move could have non-negligible implications for inflation and the world’s economy.
The supply chain industry is in a continuous state of transformation, with new trends emerging every day, so if you want to remain competitive and boost efficiency, effectiveness, and resilience in supply chain operations, follow the trends. It’s vital for people, processes, and businesses to evolve so they can survive and thrive. Supply chains are paramount for the world economy (and modern life), so grasping their evolution provides new perspectives for supply chain design and management.