5 Trends Affecting Global Supply Chains in 2022

The recent pandemic has impacted every stage of the supply chain, from raw material sourcing to end-user satisfaction. It is putting the majority of companies worldwide’s commercial, operational, financial, and organizational resilience to the test and has revealed risks and resiliency gaps for many. CEOs want to be on the cutting edge of disruption and innovation, with 67% planning to raise investment in disruption detection and innovation processes.

Global supply chain management is constantly evolving, and in 2022, five key trends will have a significant impact. Whether you’re a small business or a large organization, knowing these trends and understanding how they will likely affect your supply and demand is essential. The Demand Driven Adaptive Enterprise model can help businesses tackle these five trends.

What is DDAE?

The Demand Driven Adaptive Enterprise (DDAE) model is a business management framework that enables companies to discover industry trends, adapt to complex and volatile ecosystems, and develop market-driven innovation strategies.

Fundamental flow management principles are combined with the emerging science of complex adaptive systems (CAS). Through its three primary components, the Demand Driven Operating Model, Demand Driven Sales & Operations Planning, and Adaptive Sales & Operations Planning, the DDAE model spans the organization’s operational, tactical, and strategic ranges.

To respond and adapt to today’s complex, changing, and volatile supply chain circumstances, the model utilizes an emergence, feedback, and selection process via adaptive cycles.

The DDAE model enables businesses to adapt quickly to changing global supply and demand patterns.

Overview of the 5 Key Trends

Five key trends will be impacting global supply chains in 2022. These are:

1. Logistics disruption

The ongoing global logistics disruptions caused by the COVID-19 pandemic continue to have an impact on businesses and consumers, as the flow of consumer goods into critical markets such as North America and Europe, Southeast Asia, and India is hampered by the continued closures of major global ports and airports, primarily in China, South Korea, and the United States.

Major logistics disruptions have a knock-on effect across global supply chains, causing goods to pile up in storage and affecting ships on their way to ports — in the form of diversions or delays as they arrive at major transportation hubs, restricting international trade flows and limiting access for businesses to import products and replenish inventory stocks.

Assuming that these disruptions subside and access to the sea and air freight returns to pre-pandemic levels, it will take some time for things to return to normal. In the meantime, consumers should expect higher prices (due to increased freight costs) and longer wait times for retail shelves to be replenished (mainly imported products). Consumers should adjust their expectations because items requiring repairs and maintenance may also be delayed in long service lines.

Government and industry leaders are attempting to define strategies for increasing resilience and strengthening domestic capabilities to reduce our reliance on regional and global supply chains. Companies should consider redesigning alternative supply chain flows, locating inventory storage closer to their customers, and determining how to improve last-mile deliveries and returned goods.

2. Increasing ESG standards

Environmental, social, and governance (ESG) will be prioritized to achieve a more sustainable supply chain by 2022. The COVID-19 pandemic has heightened public awareness of climate change, and new social movements have given rise to more socially and environmentally conscious consumers. As a result, we’ll see more transparency in ESG practices from buyers and suppliers in the coming year, as transparency speaks volumes to the interests of socially conscious investors, buyers, and customers.

Buyer and supplier organizations must take control of their supply chains to gain a competitive advantage over their competitors while lowering their risk levels.

3.  Production Delays

Delays in production during COVID-19 have made headlines. Manufacturers compete for a limited supply of critical commodities and logistical capacity, resulting in empty shelves and lengthy purchase lead times for consumers. But it’s not all doom and gloom. The pandemic has heightened the industry’s focus on supply chain evaluation and evolution, with companies evaluating and investing in long-term supply chain strategies to prepare for a new post-pandemic normal.

The days of buffering inconsistent supply with excess inventory at the lowest possible purchase cost are quickly becoming a thing of the past as manufacturers evaluate risk as a critical decision point in developing their supply chains.

4. Increasing investment in technology

Many businesses made initial investments in the previous 18 months to automate key supply chain nodes, such as intelligent automation, which enabled efficient, effective, and safe operations in stores, warehouses, manufacturing facilities, and even corporate office buildings. As companies adopt more sophisticated digital enablers like cognitive planning and AI-driven predictive analytics, as well as greater integrity and visibility into secure supply chains with advanced track-and-trace and blockchain technologies, you should expect to see an accelerated level of investment in 2022.

One can see that a lack of visibility across extended supply chains is currently troubling many supply chain managers. Leading businesses utilize cutting-edge technologies to drastically increase visibility and accelerate response to significant disruptions and variables in their local, regional, and international supply chains.

5.  Net-Zero Supply Chains

According to new research, 52% of businesses do not have a carbon reduction strategy.To achieve net-zero carbon targets by 2050, society will continue to demand environmentally friendly supply chains and build on the momentum generated by the COP26 conference. While many businesses have implemented processes to meet this demand, supply in industries such as industrial manufacturing and construction remains a significant source of carbon emissions and pollution.

Reducing carbon emissions has significant advantages for your company, customers, and our collective future. For over 12 years, we have assisted clients to confidently Measure, Manage, and Report their Carbon Footprint to drive business efficiency through carbon reduction savings in operational cost and performance. These annual savings are in the millions of pounds for some of our clients.

Each of these trends will significantly impact businesses and how they operate.

If you’re looking to stay ahead of the curve, it’s essential to understand these key trends and what they mean for your business.

How DDAE Can Help Companies Respond to These Trends?

The global supply chain is evolving. Rapid changes in technology, geopolitical factors, and ever-changing customer demands are just a few impacting how companies do business.

Manufacturers must prepare themselves for a significant transition over the coming ten years because the market is changing more quickly than ever.

The demand for raw materials is soaring due to the proliferation of new goods and technologies. Additionally, as the economies of other nations grow, they start consuming more goods and services.

The DDAE model enables organizations to increase overall resilience, lessen the impact of disruptions, and respond quickly to changes in their environments. In addition to the stock, time, and capacity buffers that are all used in the model for efficient material and information flow management, skill buffers will play a more prominent role in identifying the skill sets that are currently in demand and those that will be needed in the future and in taking appropriate action in a situation where there is a general shortage of labor.

Conclusion

Many organizations have experienced a loss of focus on existing transformation mandates due to the aforementioned supply chain issues dominating board-level discussions. Operational leaders have been asked to shift their focus away from large change projects and toward day-to-day operations and staff and customer needs. Boards are now learning to balance crisis response oversight with the strategic thinking required beyond these immediate challenges.

The successful implementation of transformation mandates will almost certainly determine an organization’s post-pandemic success. It is now more important than ever to ensure that operations are flexible and resilient, that projects are completed, and that processes are kept up to date.

Management should implement a scalable crisis management process, have adequate leadership capabilities, and document their experiences and learnings throughout the pandemic to balance short- and long-term priorities.

Interested in knowing how Patrick Rigoni can step up the game of your supply chain? Contact us today and get a free consultation.

Patrick Rigoni also offers in-depth DDMRP courses; if you are interested to know more about DDMRP for the supply chain for your company, here is the link to the NEW DDMRP Page.