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2024 Supply Chain Trends

Clarkston’s team of supply chain consultants have highlighted the top supply chain trends that businesses should consider. Read all 5 trends for 2024 by downloading the full report here.

From planning, procurement, and inventory management to fulfillment, logistics, and distribution, supply chain leaders in 2024 are seeking ways to keep pace with the evolutionary nature of supply chain demands along with the complexity of further uncertainty. As the past five years have shown, industries have and are expected to continue confronting the ongoing challenges of staffing shortages and/or skill gaps in addition to a lack of end-to-end supply chain visibility. It’s further anticipated that in 2024, there will be an increased emphasis on improving business cash flow, including but not limited to cost reductions and inventory optimization. We also expect that consumer action groups will return to demanding improvements from companies to restart their pre-COVID sustainability goals. 

As we move into 2024, these trends will remain pivotal in shaping the future of advanced supply chain management practices and ensuring reliability and compliance across industries.  

2024 Supply Chain Trends

Trend #1: Supply Chain Staffing and Skill Gaps 

The ability to identify and/or retain skilled supply chain staff remains the top supply chain executive concern as we enter 2024. In a 2024 HR report by isolved hcm results indicated there was a slight improvement in employee burnout from 2022; however, 72% of respondents reported that burnout has and continues to impact an employee’s performance. performance.  

Further complicating the ability to recruit skilled supply chain staff is the expected rise in labor shortages, as reported in the most recent U.S. Chamber of Commerce labor report. It’s expected that labor constraints will be experienced across multiple industries, beginning with durable goods manufacturing, and followed by wholesale, retail trade, and health services. Additionally, the ability to relieve these gaps is further challenged by the fact that even if every unemployed person with skills in durable goods were employed, there would still be a labor shortage of 25%.  

Taking into account these challenges, supply chain executives and leaders should keep a few considerations in mind. First, employers can provide employees with adequate time off – especially for those with institutional knowledge and the needed job-specific skills – to help alleviate employee burnout. Cross-training plans, including the documentation of processes and decision-making matrixes, can also further support knowledge retention. Organizations can also consider establishing succession plans to help ensure continuity if organizational changes occur. Lastly, a simple solution of implementing a regular cadence of check-ins with employees can be helpful, as incorporating consistent one-on-ones is a proven technique that improves employee morale. This time can be used to provide recognition and appreciation for the employee while offering an opportunity for the manager to assess an employee’s flight risk. 

While these recommendations can be considered quick wins, the ability to address supply chain staffing and skill gaps will require a longer-term solution. As we move into 2024, supply chain leaders will need to continue examining how to incorporate and/or advance prior best practices (i.e., outsourcing supply chain operations) and increase the ability to leverage Artificial Intelligence and Machine Learning to improve data analytics and decision-making.   

Download the Full 2024 Supply Chain Trends Report Here

Trend #2: Outsourcing Supply Chain Operations

Supply chain leaders are continuing to explore how to address the increasing challenge of skill and labor shortages. One of these solutions includes Supply Chain as a Service (SCaaS), which was first reported by Gartner in 2021, when companies in the tech, retail, and healthcare sectors were said to be launching, beginning the use of, and/or exploring the use of this service. Within SCaaS, three different areas can be outsourced: (1) assets and contract operations, also known as Business Process Outsourcing (BPO); (2) business process as a service (BPaaS); and (3) digital business.  

The growth within the BPO of SCaaS is also known as Contract Manufacturing Organizations (CMO), or outsourcing. It’s expected that supply chain executives will begin and/or expand their investigation into moving their supply chain operations – from customer service, procurement, manufacturing, inventory management, warehousing, 3PL, logistics, and last-mile delivery, to other back-office areas such as accounts payable, accounts receivables, HR, IT, and engineering – outside, growing the industry to become a multi-million-dollar one. The benefit of using BPO is to leverage the provider’s knowledge and expertise to reduce your expenses. Depending upon needs and the business model, a company can outsource any and/or all of its many business processes. This model, if implemented correctly, can provide improved execution while offloading the associated costs and tactical responsibilities, allowing the company to focus on commercial growth and brand equity.  

It should be noted that while the execution of the tactical aspects can be outsourced, the business decisions remain the responsibility of the business. These decisions may include identifying and/or selecting qualified suppliers and manufacturing partners, or establishing quality, engineering, and purchasing standards to ensure the product or services meet your brand’s expectations. Furthermore, the ownership and management of the sales and operations/integrated business plan (S&OP/IBP) will also remain the responsibility of the business. 

Another emerging area in outsourcing that has rapidly gained traction is Business Processes as a Service (BPaaS), which takes BPO to the next level. BPaaS is the delivery of BPO services sourced from the cloud and constructed for multitenancy, allowing organizations to leverage the SaaS cloud system by only paying for the electronic business processes it uses, in addition to any standard business processes used across other organizations. Take, for example, invoicing. This electronic business process is executed by every company, and it typically doesn’t vary. Therefore, most companies should be able to leverage the same invoicing process, regardless of the technology. This would allow companies to focus on their core competencies instead of how to improve their invoicing process. By leveraging this model, an external company could deliver its invoicing business process model over the internet, as the cloud has made it more scalable and favors “units-economics” versus building an entire technology that must execute all the functional aspects of an entire business 

In essence, a technology company using a SaaS model could build separate electronic business processes and leverage its expertise to improve each process separately. They could then sell these services out to a volume of users, removing the highly transactionally focused, repeatable, and non-value-driving processes from a business’s daily work. 

The pandemic was a catalyst to push supply chain executives and IT leaders to examine how they could more effectively integrate data with more intelligent technologies. BPaaS can integrate with an organization’s Software as a Service (SaaS) cloud system while leveraging the power of artificial intelligence (AI) and machine learning (ML) to generate insights to answer problems both identified as well as predicted. The use of BPaaS can also be used to reduce inefficiencies. Transactional tasks can be automated by software bots, freeing people up for more critical tasks and helping to mitigate staffing issues. These are just a few examples of how BPaaS can be leveraged, but there are many others. 

While organizations have used or considered some aspects of SCaaS, the global market is expected to continue to grow and expand as companies seek visibility improvements through real-time data and insights into all areas of the end-to-end supply chain. The ability to integrate processes, data visibility, AI/ML, and decision-making support, along with improved predictive versus reactive analytics, will keep this as a trend to monitor for many years. Continue reading by downloading the full report below.

Download the Full 2024 Supply Chain Trends Report Here

Read last year’s Supply Chain Trends Report here.

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Tags: 2024 Trends