Top 4 Supply Chain Trends for 2022: A start-up perspective
At Pelico, we are on the cutting-edge of technology, developing completely new solutions that simply didn’t exist before. Our clients work with highly complex supply chains, so we like to keep a close eye on industry trends. That way, if anything changes, we can adapt accordingly and help supply chain managers and directors manage new challenges.
Most of Pelico’s existence as a company has taken place during the Covid-19 pandemic. And, just as we were slowly starting to imagine what supply chains would look like post-pandemic, the world was confronted with yet another global crisis: the Russia-Ukraine war. The country represents 200 million tons of transit potential, making it a crucial hub component for European and global supply chains.
Faced with these developments, will things go back to the way they were, or will this altered situation prove to be permanent?
Top 4 Trends for 2022
After analyzing over 50 articles, blogs, and reports outlining supply chain and manufacturing future scenarios, we have identified 4 main trends for 2022 and further into the future.
Our firsthand experience as a fast-growing startup supports these insights. We’re seeing an acceleration in the adoption of new digital solutions across the board. At the same time, value is being delivered at previously unthinkable speeds, and the number of partnerships between large organizations and startups such as Pelico are increasing dramatically.
Despite the major challenges that lie ahead, startups are thus transforming the supply chain and manufacturing industry by offering digital solutions that provide real value.
1. Prepare for constantly-changing supply chains
What do post-Covid supply chains look like? If one thing is clear, it is that supply chains will never go back to the way they were in 2019. The pandemic has highlighted the fragility of global supply chains. It is now abundantly clear that the core architecture underpinning supply chains will have to adapt to changing customer demands, as well as geopolitical and environmental factors.
Besides efficiency, the resilience and flexibility of supply chains will become increasingly important in the future. Whatever the future has in store, the key challenge for supply chain and manufacturing managers will be adapting to ever-changing circumstances.
At Pelico, we are thrilled to be able to help dozens of organizations of all sizes adapt to disruptions and even improve their performance.
2. Mass adoption of digitization to deal with persistent volatility
As a digital companion for supply chain teams, at Pelico we keep a close eye on digitization trends. Our experience with clients shows that digital transformation is very high on the agenda, as it becomes impossible to deal with the complexity of supply chains without the help of robust digital tools.
The key areas of focus when it comes to digital in supply chain and manufacturing are transparency and visibility, decision making support, and automation.
- Visibility: The pandemic has exposed the need for continuous monitoring and intelligence. We need to give operations teams better visibility of real-time information across networks, so that they can anticipate and understand the impact of volatility and better deal with complexity.
According to Industry Week, greater digitization will “increase visibility into processes, scheduling and the supply chain to predict problems before they occur and help make better decisions in real time. The technology has proven its value, and 2022 will be the year of mass adoption across the industry.”
- Decision making support to deal with volatility: according to an industry report released by Deloitte and MHI, material handling, logistics and supply chain industries association, nearly 50% of supply chain leaders have increased spending on technologies such as predictive analytics and AI during the pandemic. This trend is likely to continue to climb in 2022 considering the operational efficiency these tools offer, and the growing realization among operations managers that these tools can be trusted to provide accurate results and reduce their stress.
Besides tools for planning and analytics, there will be increased investment in decision support tools that help operational teams react fast when things do not go according to plan—a likely scenario, due to persistent volatility and complexity in the supply chain industry.
New tools are urgently needed to effectively manage fast-changing supply chains. The good news here is that Pelico is proving its value exactly in situations where critical decisions need to be taken and looking for contextual information is simply too time-consuming.
- Automation and AI: throughout the pandemic in 2021, operations leaders continued to invest in automation technology to assist them with inventory management and product restocking. What’s more, paired with Artificial Intelligence (AI), more complex tasks such as analyzing workflows and self-driving trucking were able to be performed. This trend is set to continue to grow, because even though automation isn’t a silver bullet for a resilient supply chain, it is certainly a critical component.
3. Don’t forget to invest in talent upskilling
It goes without saying that the most advanced technological tools cannot replace human talent and leadership. And now, more than ever, companies are struggling with talent retention. The OECD estimates that in the last two years, 20 million workers exited the labor market in the world’s 38 most industrialized nations. This effect, also known as the Great Resignation, has created an extremely competitive environment for companies looking to attract the most skilled talent.
The Ferrari group predicts that the Great Resignation will hamper the manufacturing industry's ability to transform supply chains in 2022 and beyond. Companies that want to survive and thrive will need to reimagine the way they hire, train and retain talent. What’s more, they will need to carry out a comprehensive reassessment of their compensation, benefits, employee career planning and other human resource management practices. Digital tools can help with this. They can also help improve employee well-being and decrease job related stress.
We advise companies and decision-makers to invest in Artificial Intelligence and machine-learning driven knowledge acquisition and retention systems that will enable them to automate business process intelligence, but also to better manage employee knowledge in specific operational or planning needs.
4. Prepare for climate change disruptions
Last and definitely not least, we must take into account climate change. According to the World Economic Forum’s 2022 Global Risks Report, environmental risks will dominate both in the short and long term.
Extreme weather events pose the number one risk to supply chains in the short term (0-2 years). Climate hazards will increasingly start to interrupt production, raise costs and prices, and hurt revenues. Supply chains that are highly geographically concentrated in regions with an increasing probability of relevant climate hazards, such as semiconductors, are especially vulnerable. In fact, it is predicted that the probability of a hurricane of sufficient intensity to disrupt semiconductor supply chains may grow two to four times by 2040.
This brings us back to our first trend prediction, namely that supply chains will never go back to the way they were in 2019. All the more reason to accelerate your digital transformation and embrace the aforementioned tools.
Embracing digitization to manage complexity and risk
Some of the above mentioned trends will pose significant challenges to manufacturing business in 2022, and global supply chains will likely continue to experience disruptions and unforeseen events.
There are also positive developments, however. In Germany, a leading manufacturing country, the order books are more filled than ever. This means that investing in more resilient and flexible supply chains will help companies unlock the benefits of rising market demand.
The good news is that supply-chain startups like Pelico are being called upon to help all sorts of stakeholders looking to digitize and innovate — and that’s what we do best!
Tarik Benabdallah, Pelico CEO & Founder: “Supply chains are more complex than ever to manage in this persistently volatile context. Increasing complexity and volatility are a fact of life and teams need to be empowered to confidently deal with it with digital tools. All the trends we see point in the direction of faster digitalization for the benefit of established manfuacturers.”