7 Supply Chain Trends to Watch in 2021
The COVID-19 outbreak demonstrated that pandemics can seriously wreak havoc on supply chains around the globe. Supply chains are an essential aspect of businesses today, and fortunately in 2021, we’ll see several groundbreaking trends take shape.
The dramatic changes that we are seeing in buying behaviors during the COVID-19 pandemic has created a much greater need for real-time insights throughout the supply chain. Automation in the supply chain will play a key role in supply chain strategies this year, with an emphasis on AI, machine learning, digital twins and IoT sensor technologies to increase visibility across the entire supply chain network.
Below are seven key trends identified by Cloudleaf CEO Mahesh Veerina that will drive supply chain transformation in 2021 and beyond. Here’s to a healthy, safe and prosperous year ahead!
Cloudleaf CEO Mahesh Veerina’s 2021 Supply Chain Trends to Watch For
- The acceleration of e-commerce buying behaviors spurred by the pandemic will necessitate soft asset tracking and a new digital standard to enable more agile supply chain operations.
The eCommerce boom has completely changed the last mile distribution and how products are distributed to customers. The sudden increase in online shoppers in 2020, including purchases for both shipping and in-store or curbside pickup, is fueling the need for supply chain entities to adopt new digital touch points to help deliver products both safely and efficiently. In the next year, the last mile distribution will see larger retailers move from operating through large distribution centers to utilizing stores as drop-off points and act as micro warehouses to complete micro fulfillment operations. However, unlike distribution centers, stores are not equipped with the necessary software to track assets -- which is vital for products that require cold chain storage, such as grocery items.
In 2021, supply chain organizations will require continuous, real-time visibility to gain access to valuable insights -- such as the location, environmental conditions and temperature of products -- to optimize inventory, planning and logistics, as well as keep up with ever-increasing eCommerce demands and mitigate risk.
- Supply chains will become more resilient and agile in view of new standards set by the pandemic.
The adaptation of strategy and technology occurring in the critical COVID-19 pandemic scenario will serve supply chains of all industries in becoming more resilient and agile in the year to come. Adoption of IoT sensors to establish real-time ground truth about where products are at all times and what condition they’re in will enable companies of all types to better meet supply and demand. This will be especially critical for providers whose traditionally vulnerable supply chains are essential to seeing the world through the pandemic, including the pharmaceutical and food supply chains. The long-term visibility and ability to react that sensor-based ground truth provides will be the foundation that helps these industries save billions in the longer term, beginning in 2021.
- Technology advances like digital twin, AI/ML, and IoT will enable more granular tracking and impact the end-consumer experience.
Today, IoT is a ubiquitous technology for supply chain tracking purposes. In recent years, applications for AI/ML and digital twin technology have also risen in relevance for the industry. Beginning in 2021, companies will start to employ a concerted strategy around these technologies to construct a complete and real-time picture of products as they move through the supply chain, as well as to obtain prescriptive and predictive analytics to make informed business decisions.
In this strategy shift, we will see the gaps of visibility close where the supply chain has remained most weakened even with the use of IoT alone, such as in low coverage areas when product is in flight, adding critical value to pharmaceutical and food supply chains, which lose billions annually in spoiled products. Additionally, we can expect to see this visibility get even stronger as 5G takes complete shape most likely in 2022, offering more connection and even more to-the-minute information.
- Artificial intelligence and machine learning will play a much more integral role in supply chain strategy than in previous years.
The need for more real-time insights throughout the supply chain will continue to grow in 2021, especially as supply chain organizations re-evaluate their operations due to sudden changes in buying behaviors during the COVID-19 pandemic. To address this need, supply chain organizations will need to look to artificial intelligence (AI) and machine learning (ML)-enabled technology to upgrade from current, descriptive and prescriptive analytics, and leverage predictive analytics -- which provide recommended actions before an incident occurs based on previous actions.
Oftentimes, companies experience a mess of silos and fragmentation due to being acquired by large companies that have different systems. In 2021, supply chain stakeholders will look to deploy digital twins across all modules as an extra layer of visibility and to ensure synchronization between a company’s existing systems and new technology, such as sensors and nanosensors, which are coming to market in increasingly larger volumes.
- The mass production of an eventual COVID-19 vaccine will have residual impacts on broader delivery of other vaccines.
The need to quickly deliver a COVID-19 vaccine will put enormous pressure on the supply chain to share resources with other products that demand cold chain transit, including flu vaccines, cancer treatments, genomics and precision medicine. The industry will make an unparalleled collaborative effort to communicate and share resources. New capabilities for tracking their assets such as palettes and temperature-controlled transport and storage devices will be the underpinning for this success. Furthermore, the work done in the cold chain for COVID-19 has put the industry 16-18 months ahead of schedule on digital transformation. In the long term, the supply chain practices adopted in response to the pandemic will position companies to avoid costs associated with lost or damaged products - a critical capability as the future of medicine points toward smaller batches of more personalized, higher value medicines, many of which will require cold chain transit.
- Increased regionalized production of active pharmaceutical ingredients will catalyze a long-term policy shift throughout the global supply chain.
As a result of the drug shortages and stockpiling witnessed at the start of the COVID-19 pandemic, combined with current global political tensions, pharmaceutical manufacturers will look to partner with local, near-shore active pharmaceutical ingredient (API) suppliers. This in turn will ensure that pharmaceutical products can be produced in the event of another global crisis -- eliminating the possibility of drug shortages.
In 2021, the near-shore regionalization of APIs will cause a long-term policy shift throughout the global supply chain, fueling changes in supply chain behavior such as the creation of a larger, connected ecosystem within the supply chain. This ecosystem will result in the building of new partnerships between not only drug manufacturers and API suppliers, but also logistics providers, vendors and other organizations throughout the supply chain. As supply chain entities work to quickly form these new partnerships, the element of “blind trust” between long-time business partners will no longer be a factor and organizations will look to adopt new solutions that provide real-time visibility into a product’s location -- reassuring both parties that each other is on track.
- Mitigating food insecurity through supply chains will be more critical than ever in a post-pandemic world.
The economic fallout of the pandemic has already dramatically increased food insecurity in the U.S, with 22.3 million (about 10%) Americans reporting sometimes or often not having something to eat in the past week. Feeding America projects 6-8 billion meal shortages in the next 12 months and estimates that 17 billion pounds of food will be needed to mitigate this -- 3 times more than last year.
Food chain logistics providers will experience increased pressure to address this challenge, particularly to reduce the more than 104 billion pounds (52 million tons) sent to landfills every year in the U.S. alone. These providers will implement more advanced practices and technology to decrease the cold chain failures that cause spoilage and lead to food being thrown out, which will help reduce over 20% of annual food waste (20.8 billion) over the next ten years.
In 2021, decision making will become far more data-driven and automated, thanks to advances in AI, machine learning, IoT and digital twin technologies. Make sure you have the best-in-class digital visibility platform that can provide you with the visibility and agility you need to transform your supply chain into a data-driven strategic asset.