Six Supply Chain Priorities That Should be on Top of Your 2021 Agenda
All major industry players in supply chain and logistics are looking to invest in the most promising developments – from digitalization and automation all the way to sustainability and new ways of working. The Covid-19 pandemic has served as a pivotal event in this, accelerating our need for digital readiness, resilience, and agility.
Moreover, the upsurge in e-commerce resulting from the pandemic has created an additional opportunity for our industry. Where will we move from here? I believe the future supply chains can be broken down into six key supply chain priorities.
Six Supply Chain Priorities for 2021
So what will the future of supply chains look like? The answer lies in these six supply chain priorities:
1. Digital Acceleration & Automation
Digitalization and automation are profoundly shaping future supply chains and logistics – a development that will accelerate in 2021 and beyond. To date, a significant part of logistics operations is still performed manually. This year high investment in automation will set the tone, which is driven by increased volumes and resulting capacity and labor shortages.
Automation simply makes sense, as it goes hand in hand with labor cost savings, greater productivity, more flexibility, improved safety, and less errors. As a result, manual tasks will become increasingly automated, ultimately leading to a landscape where humans and robots will work together harmoniously. The adoption of low investment and easy-to-implement automation, such as robots, wearable technology (e.g. ring scanners and smart glasses) and software based on RPA (Robotic Process Automation) are only the first steps in this transition with more digital applications to follow. Future parcel centers will accommodate shipment dimensioning, automated sorting using mobile robots, and automated loose load extraction from swap bodies, amongst many more innovations.
2. Supply Chain Resilience & Localization
For the past decades, supply chain design prioritized cost optimization over resilience. Because of this, global supply chains were vulnerable for disruptions during the Covid-19 crisis. Therefore, balancing costs and resilience is the new maxim moving forward. This will enable greater responsiveness to disruption, demand changes and uncertainty. More resilience requires moving away from a single sourcing strategy to diversification (China +1, for example) and more distributed safety stocks enabled by central visibility.
In addition, the boom in e-commerce triggered by the pandemic only pushes supply chain redesign further to the top of our agenda. End consumer’s high expectations on speed and availability force suppliers to move their goods closer to demand and redesign their logistics networks accordingly.
3. Analytics & Real-Time Supply Chain Optimization
We have huge amounts of data at our disposal and with the expansion of real-time visibility even more data will become available. Therefore, the deployment of analytics along the entire value chain will be a top investment priority in the next years. Analytics will empower us to further boost real-time end-to-end visibility, take real-time decisions to optimize operations, and enhance forecasting to eliminate inventory shortages. In addition to this, the application of digital twin technology will separate physical data flows from real-time data. This will bring real-time optimization and dynamic re-positioning to the next level.
Sustainability is no longer an easy-to-dismiss buzzword. It is becoming the key priority in our industry. How we operate and innovate in the future will inherently incorporate ecological and social considerations. Consequently, the implementation of measures to reduce our ecological footprint will become widespread. Air transport is our main contributor to CO2 emissions. To reduce these emissions nearshoring, mode shift, and the implementation of technological innovations are key.
Investment in technologies that help minimize our ecological impact will be critical to enable the operationalization of a sustainability agenda. Examples of such tech applications are smart meters, intelligent charging, solar photovoltaic systems, rainwater harvesting, underfloor heating, and thermally active building . In addition, governing our social impact with the help of e.g. human rights policies or codes of conduct, will gain in importance in 2021 and the years to come.
5. Hybrid Mode of Working
We are moving towards new modes of working, and digitalization is helping us do so. For those who were not there yet, last year’s pandemic definitely served as an additional impulse for flexible work. Where will this development take us? I believe that we will not return to our offices as usual, but will rather end up with a hybrid working model which combines both analogue and virtual work modes. Virtual and augmented reality will come to play a greater role in this: moving us from a simple call, to a video call, to a 3D meeting with avatars. The flexibility we gain from this is critical to attract and retain the right talent in today’s competitive hiring game. This brings me to the final priority I identified.
6. Investment in Talent
Moving forward, building and retaining the best and most diverse teams will be the competitive differentiator and prerequisite for success. An important part of this is upskilling our employees to meet new demands and hiring data scientists to stay ahead of the curve. Moreover, diversity and inclusion will become the cornerstone of our organizations. This requires an overhaul of conventional recruiting processes, continuous bias trainings, and the establishment of a truly inclusive organizational culture. In sum, quite some changes need to be made in order to become an attractive industry for a truly data-driven and diverse workforce.
The Future of Supply Chains: 2021 Has Lots in Store for Us
The supply chain and logistics industry is rapidly transforming. In a constant quest to innovate, it is key to know which investment is worthwhile and where the biggest levers for your competitive edge lie. The six supply chain priorities discussed in this article will definitely be on every supply chain leader’s 2021 agenda. Driving change, taking risks, and allowing for mistakes are the success factors for today’s and tomorrow’s leaders. If we push ourselves out of our comfort zones, we will be able to make a difference in 2021.
What’s on top of your 2021 agenda? Join the conversation here or on my LinkedIn channel. I am looking forward to hearing your thoughts.
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Welcome to Sabinext. I’m Sabine Mueller, CEO of DHL Consulting. DHL Consulting is an independent strategic supply chain and management consultancy of Deutsche Post DHL Group. I have been dedicated to the logistics sector for close to two decades. This personal blog is a discussion platform for supply chain trends, diversity and future of work.