Top Five Supply Chain Trends for 2021

THE RESILIENT ENTERPRISE | THE RISKMETHODS BLOG

In Nick Hornby’s iconic novel, High Fidelity, the brooding protagonist, Rob Gordon, organizes his life into a series of “Top Five” lists. These include his most memorable breakups, his favorite books, and other, more arcane compilations. It’s a treasured novel (and movie, and Hulu series) that, like lists, can restore clarity and order to dark and chaotic times. And speaking of dark and chaotic times…

For procurement and supply chain organizations, 2020 has been a uniquely challenging year. It has presented leaders, practitioners, and suppliers with high-impact events and conditions occurring across the risk spectrum. Now, we won’t get into the whole ordeal—no one’s ready for a “what does it all mean” article. Maybe next year. Maybe never. But suffice it to say that the COVID-19 era business world contains economic, political, and social disruption. It is perhaps the fullest expression of a volatile, uncertain, complex, and ambiguous business environment.

For procurement, sourcing, and supply chain leaders standing on the precipice of a new year, there is no going back to pre-COVID-19 times. But to help you navigate these unchartered waters, we recommend getting on board with these Top Five Supply Chain Trends for 2021 for greater resilience.

1. Embrace artificial intelligence so you can make better decisions faster

Perhaps it is ironic that enterprises and individuals have so much data and information, yet still find it difficult to make data-driven, informed, and timely decisions. In fact, there is often too much data for business leaders and users to quickly ingest, digest, and parse.

Fortunately, there are artificial intelligence (AI) applications that can wrangle big data and reduce time-to-decision. Advanced analytics, machine learning, and natural language processing can automate the collection, identification, assessment, and reporting of supply chain risk intelligence in real time. This helps to build more complete risk profiles for better mitigation.

Using AI-enabled supply chain risk management (SCRM) solutions, business leaders can maintain situational awareness and the authority to quickly respond to risk events.

2. Get a complete picture of your global operations to become more risk aware

Just as Rob delved deep into his past relationships to find closure, it is helpful for procurement and supply chain teams to look at historical data to find trends that might be predictive of future events. Leverage machine learning and other AI applications to intelligently analyze the data and make quick work of analyzing decades of business intelligence (BI).

Then blend historical BI and supply chain risk intelligence with real-time intelligence (for example, social media, news, other key risk indicators) to holistically and predictively analyze supply chain risk. Look back and around at longer-term and current trends; and look ahead for emerging risk events before they occur.

Being risk aware means having a total view of risk — past, present, and future. Do not ignore past events. Learn from them, and you can avert or mitigate disaster.

3. Create resilient and risk-prepared supply networks across all tiers

man-sitting-at-window-in-front-pc

Remember that no man is an island. In the COVID-19 world, we all depend on each other, and that especially includes buyers and suppliers. Think of the frantic early days of the pandemic, when organizations were panic-buying personal protective equipment and ventilators.

Such shortages demonstrate the need for close collaboration with suppliers and for having a resilient supply network. In a pandemic, disruptions including supplier insolvency, competition, design flaws, customs delays, or product diversions can literally mean life or death.

Collaborate on risk mitigation through a supply chain risk management hub. This empowers companies of any size to gain sub-tier visibility and work as business partners of choice. Together, be focused and target what matters most.

4. Begin supplier relationships with full disclosure upfront

It’s not entirely clear that Rob’s doomed relationships would have fared better had he been upfront about his inevitable fatalism. But it would have made things easier on everyone. Tough decisions could have been made sooner before any attachments were established.

Similarly, some business partners have acceptable risks given the relative advantages they bring to the relationship. Maybe they are located in an unstable region; or maybe they have high markups. But each trading partner must be fully aware of the risks and advantages. They then can adjust their calculations and make informed decisions.

Supplier resistance to disclose their supply chains should begin to wane as the recognition dawns that the network will thrive (or whither) together. Organizations can introduce methods to incent information-sharing.

5. Invest in SCRM programs and solutions. They will pay off.

One of the lessons of COVID-19 is that knowing where critical suppliers and chokepoints are before a crisis will speed reaction time. Enterprises will go beyond classic supplier segmentation to understand dependence in more detail. They will develop contingency plans to mitigate sudden or emerging risks in their supply chains.

This all sounds well and good. But many enterprise procurement and supply chain teams cannot muster the resources to make these kinds of business decisions. They need to collect, parse, and ingest, prioritize, and operationalize a large quantity and diversity of data.

Investing in digitized, cloud-based SCRM solutions brings results. This can provide the visibility, foresight, control, and contingency planning needed. It enables teams to be agile and resilient in the (hopefully) waning days of the COVID-19 pandemic. And if not the novel coronavirus, some other global, regional, or national disaster will make such an investment a prescient one.

Final Thoughts

At the end of the novel, Rob reunites with his most recent ex, Laura, and they start anew. They are mindful of their checkered past and their (Rob’s) missteps. But they are recommitted to each other and to happier days ahead.

Likewise, as we glimpse the end of a nightmarish year, we can see better days ahead—with vaccines, therapeutics, a trove of lessons learned. With competent leadership, the global community can properly contain this pandemic, and restore clarity and order.

Procurement and supply chain practitioners are, once again, the unsung heroes of the pandemic. They deserve smarter, more efficient tools and processes to fight supply shortages and supply chain disruption.

Fortunately, these tools are available off the shelf, and so accessible that they should be at the top of anyone’s list.

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