How Is Supply Chain Management (SCM) Changing?

What is the future of supply chain management (SCM)?

As supply chain managers know, the global supply chain underwent a major stress test during 2020, which demonstrated the need for supply chains that are agile, resilient, and “intelligent.”

Today, many supply chain managers are upgrading their approach to SCM and preparing for a future that will bring more technological, societal, and economic change.

What Are the Biggest Factors Influencing the Evolution of SCM?

To understand what tomorrow will bring for SCM, let’s look at a few of the biggest factors driving the changes in this industry:

The digital transformation of the supply chain

SCM, like most other disciplines, is transforming as a result of the digital revolution.

Of all the trends covered in this post, this is easily the most significant.

Technology-driven innovation will drive major disruptions in the supply chain, including:

• The adoption of sensors and other IoT devices to improve insights and real-time decision-making capabilities
• The use of AI to drive improvements and productivity gains across the supply chain
• Increased security and transparency through technologies such as the blockchain

Ultimately, the digital supply chain – or, as some have called it, the “intelligent supply chain” – will become the norm in the years ahead. Every business will need to continually adopt the right technology in order to keep up in the digital age.

Shifts in the workforce

Remote working is another trend that transformed the world world in 2020. 

Like most other business disciplines, supply chain management will undoubtedly feel the effects of this change for years to come. 

For instance, the shift towards e-commerce was reflected in a shift towards online supply chain activities, such as e-procurement. 

B2B ecommerce, like B2C ecommerce, will continue to expand in the coming years, and this expansion will undoubtedly affect the way supply chains operate.

Globalization

Globalization, unsurprisingly, is another megatrend driving changes in the way supply chains operate.

While globalized supply chains expand sourcing potential, offer more market diversification, and allow supply chain managers to save money – among other things – there are also drawbacks to this increased internationalization.

Complexity, competition, and risk are just a few factors that can negatively impact the supply chain.

While digital transformation will compensate for many of these changes, supply chain managers must still prepare for and mitigate the risks that come with such challenges.

Changes to customer sentiment

Customer expectations have and will always continue to evolve. And as it does, SCM must strive to keep up.

For instance, as more customers demand faster product deliveries and real-time delivery tracking, supply chains must adopt technology that enables those capabilities.

Fortunately, technology, such as those capabilities discussed above, will give SCM professionals the ability to keep up. 

Advancing business and operational models

The “old ways” of doing business no longer apply in many business functions.

Agile thinking, for instance, has made its way into every area of the business, from software development to change management to supplier management. 

This mindset focuses on responsiveness and outcomes over static plans, among other things, making the agile approach more suitable for the modern era.

The circular supply chain

The circular supply chain refers to a supply chain built around reusing and recycling old materials. 

On the one hand, this approach is beneficial for the environment. 

On the other, it can be more cost-efficient because it allows supply chains to keep the same materials in use longer.

Actions to Take Today

How can SCM professionals prepare for the changes mentioned above?

There are several ways:

• Adopt modern technology. First and foremost, to stay modern and competitive, it is crucial to adopt and fully leverage the latest technology. From the blockchain to AI, these tools can deliver major performance benefits – and, just as crucially, without adopting them, it will be harder and harder to keep up in the post-COVID next normal.
• Retrain and upskill the workforce for the digital-first era. Employee training is an essential part of any business function, including SCM. Yet as supply chains become more digital, employee productivity will depend a great deal on their digital savviness and their training.
• Redesign supply chains for improved agility, resilience, and efficiency. Efficiency and financial viability have always been a major concern for managers in any business unit. However, in the years ahead, it will become even more important to focus on staying profitable in the face of disruptive change. For that reason, it is important for SCM professionals to focus on building supply chains that are resilient and can withstand those changes.

In short, we are in the midst of a new industrial revolution that is reshaping the way the global economy operates. 

Adapting to this paradigm shift will certainly require effort and planning, but, given the scope of the changes coming down the pipeline, they will be mandatory – also, and just as importantly, upgrading one’s supply chain can confer a competitive advantage.