Supply chain technology adoption accelerates to increase visibility, support sustainability

The pandemic will continue to impact global and regional supply chains through 2022 due to factory shutdowns, transportation constraints, demand fluctuations, and supply constraints. These challenges place pressure on manufacturing, inventory availability, and last-mile delivery, resulting in increased technology investment in visibility and order management. The impact is being felt across both manufacturers and retailers, with IDC’s 2021 Global Retail survey revealing that the supply chain is among the top three areas of concern for Asia/Pacific (AP) retailers. In addition, sustainability is a rising requirement across the supply chain, which will have implications for traceability, accountability, and financial results, as well as ecosystem collaboration and the development of new sustainable business models.

IDC has published the document IDC FutureScape: Worldwide Supply Chain 2022 Predictions — APEJ Implications to identify the top 10 predictions for environmental, social, and (corporate) governance (ESG) in 2022 and beyond, providing organizations with context and underlying drivers for IT investments supporting ESG initiatives for the predictions below.

“Supply chains have been front and center in 2021 and will continue to do so in 2022 and beyond as companies see opportunities to collaborate to develop opportunities and build in resiliency,” said Stephanie Krishnan, Associate Vice President, Manufacturing and Energy Insights at IDC. “Disruptions are not going away, and organizations will need to continue to respond to economic, financial, environmental, or political changes. In addition to this, customer requirements are also changing as they have adapted to eCommerce and the opportunities for customization and personalization, which will place further pressure on supply chains. Being agile and flexible is a requirement for resiliency as we face continually changing requirements,” she added.

IDC’s supply chain top 10 predictions provide guidance to business leaders on the upcoming emphasis for ESG-related IT investment.

#1: Supply chain resilience: By the end of 2022, half of all manufacturing supply chains will see the benefits of supply chain resiliency, resulting in a 10% reduction in disruption impact.

#2: AI forecasting: By 2024, 40% of APeJ-based supply chain forecasts will be automated through the use of artificial intelligence, improving accuracy by 5 percentage points.

#3: Sustainability: By 2025, to improve long-term supply chain profitability, 60% of manufacturers in global supply chains will invest in software tools to support sustainability and circular economy business models.

#4: Direct procurement: By 2026, 30% of all direct procurement transactions will be based upon capacity availability instead of units or volume.

#5: Parts control tower: Resulting from pressure to improve service, by 2026, 20% of APeJ-based OEMs will establish a service parts control tower approach increasing first-time fix by 10% and shrinking spares inventory by 5%.

#6: Talent/ workers: By the end of 2023, chronic worker shortages will prompt 60% of APeJ-based supply chain organizations to prioritize automation investments resulting in productivity improvements of 20%.

#7: Order management: To improve delivery speed, agility, and visibility for B2B and B2C customers, 35% of manufacturers will invest in order management software by 2025, resulting in a 30% improvement in OTIF fulfillment.

#8: Last mile: By 2025, 50% of APeJ-based organizations will invest in supply chain systems to increase information and inventory velocity to improve last-mile delivery efficiency and boost customer experience.

#9: Geo-diversification: By 2026, as part of long-term resiliency planning, 40% of APeJ-based logistics companies will have geo-diversified their manufacturing hubs and suppliers to supplement current supply chain operations.

#10: SC cloud: By 2024, the adoption of cloud in the supply chain will grow by 25 percentage points driven in part by the specter of cyberthreats.

CT Bureau