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Supply Chain Management Trends for 2024

Supply Chain Management Trends for 2024

Nov. 27, 2023
Diversification within the supply chain leads to better resilience.. 

With 2024 around the the corner, the American Journal of Transportation  offered these trends for supply chain management.  (The following is an except from the article.)

Building resilience with concurrent cost pressure

Extreme weather events, political crises, pandemics: As general conditions for the economy have changed in recent years, the priorities of supply chain managers have also shifted. For example, reducing costs in the supply chain used to be at the top of the agenda. At the latest since the Covid-19 pandemic, when certain products were temporarily unavailable on shelves even in highly developed countries, the topics of product availability and resilience have become increasingly important.

As a general rule, resilient supply chain management enables the responsible managers to get the supply chain back into operation as quickly as possible after a disruption by external events. In addition, diversification within the supply chain generally leads to better resilience. To ensure robust supply chain management, leading companies therefore build up a broad portfolio of suppliers and various transportation routes for sensitive products, materials, and components.

Nevertheless, they must not lose sight of the issue of cost reduction. The best of the best have already awakened cost awareness within the workforce. If you want to move in this direction, you should involve employees in revenue and cost development with open and transparent communication. Another important point is greater flexibility. Companies need to
identify the biggest cost drivers and develop measures to reduce them. 

Global and regional supply chains are being mixed

Companies need a mix of global and regional value chains. After crises, companies can identify areas in which regional production makes sense, but the economy still benefits from globalization and networking. Depending on the industry, companies need to take individual approaches to procurement in order to get more resilient.

After the Covid-19 pandemic, leading companies began to analyze the areas in which regional production makes sense. Investigations by car manufacturers revealed that re-shoring or near-shoring certain products or components makes sense. Although this may be more expensive, it stabilizes the supply chain. In the consumer goods industry, on the other hand, the enormous cost difference between Europe and the USA on one hand and Asia on the other means that it makes more sense to keep production largely in the Far East and the previous sourcing countries without looking for nearby factories or even building new ones.

High energy costs, rising interest rates or the slow decline in inflation are arguments against the establishment or further expansion of nearshoring or reshoring in many industries. In addition, when it comes to profits, purchasing, procurement and supply chain management are becoming increasingly important. This is because the opportunities to push through higher prices in the lower and mid-range product segment have become rare. Prices are becoming increasingly transparent for customers thanks to purchasing platforms. Today, profits are generated through procurement - or more precisely - through process optimization. 

Cyber security becomes a top priority

As there have been more cyber-attacks with serious consequences for companies in the recent past, companies have taken additional measures to protect themselves against criminals. According to a survey by the digital association Bitkom, every other logistics company in Germany tightened its IT security measures in 2022. According to the survey, the management of IT security is given a correspondingly high priority in most companies: In almost nine out of ten companies, the area of IT security is anchored at board or management level.

Leading companies also regularly train their employees on this topic and have security audits carried out. And this is time well spent: the tools for cyber security are available, but the greatest weakness is the human being. Cyber-attacks have shown that even large companies with expert IT specialists can be paralyzed and damaged for days. The issue is playing an increasingly important role, especially in logistics and supply chain management, because cyber criminals can gain access to sensitive data due to the ever-increasing networking and digitalization of companies. And this data usually originates not only from the company directly affected, but also from its network.

See the full article for a complete list of all ten trends. 

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