2022 Supply Chain Predictions: The Year of Addressing Multi-Enterprise Challenges
Nulogy VP Hank Canitz sets out his predictions for 2022, and shares how multi-enterprise supply chain collaboration can prepare your business for the coming year.
I enjoy reading “prediction” articles both prior to and then again after the year for which the predictions are made. When it comes to predicting global supply chain trends, those after-year reads can be quite amusing. Therefore, it is with a bit of trepidation that I toss my hat in the arena and make my 2022 supply chain predictions for the supplier ecosystem part of the supply chain.
From all indications, 2022, should I dare say, will be a very interesting year for supply chains and supply chain practitioners. Overall, I predict that there will be more focus on building multi-enterprise data visibility and process collaboration to enable efficient, effective, and resilient supply chains. The nirvana of supply chain management today is end-to-end visibility and collaboration.
I realize there is ambiguity in the term “end-to-end”. My definition of the term is upstream, company-wide, and downstream from your supplier's supplier to your customer's customer. How do we get this end-to-end visibility and collaboration?
In my opinion, it is through the adoption of solutions architectured to facilitate multi-enterprise visibility and collaboration. Multi-enterprise platforms, and the enhanced visibility and collaboration they enable, will help address some of the challenges I believe will plague the global supply chain in 2022 and beyond.
We have all seen the pictures over the last few years of produce rotting in the field, raw materials being disposed of due to spoilage, and excess packaging ending up in the garbage dumps—or worse—while at the same time empty shelves at the grocery store.
Consumers are becoming more aware of sustainability issues and are demanding more sustainably produced products. As opposed to 10 years ago, customers are actually willing to spend more on eco-friendly products. Investors are investing in companies that have sustainability programs and goals, and governments are strengthening carbon emissions regulations and establishing tighter multilateral environmental agreements. Being “green” is becoming an increasingly important business necessity.
It is estimated that over 80% of all potential sustainable improvements are tied up in the end-to-end supply chain. However, greening the end-to-end supply chain can’t happen through individual company efforts alone.
The only way to truly minimize waste in a supply chain ecosystem is to take a holistic approach minimizing the common practice of shifting inefficiencies and waste from one partner to another. This requires enhanced multi-enterprise visibility and collaboration to enable holistic decisions and optimal tradeoffs around costs, customer service and yes, sustainability.
The scarcity of semi-skilled labor seems to be common across the entire supply chain, but none more than the supplier ecosystem. Outsourcing of manufacturing, primary packaging, and secondary packaging grew by leaps and bounds over the decade prior to the onset of the COVID-19 pandemic. In some industries, like the Fast Moving Consumer Goods (FMCG) Industry which produces many of the products we find in big-box retail and grocery stores, we know from our experience that upwards of 25% of goods are produced by partners. Contract manufacturing and packaging companies fight for the same labor sources that work in distribution centers, retail stores, construction, and other employers of semi-skilled employees. Quite frankly, there just aren’t enough workers to go around.
This scarcity has lit a fire under businesses to automate repetitive tasks and augment workers to higher levels of efficiency. However, to automate or augment usually requires data generated from digitally-enabled operations. Since the scarcity of labor isn’t a problem that can be solved in the short-term, supply chain operations need to invest in laying a digital foundation upon which advanced automation and augmentation capabilities can be built. This digital foundation is also needed to build multi-enterprise data visibility and process collaboration.
The clock speed of the end-to-end supply chain needs to increase to match or exceed the ever increasing clock speed of the marketplace. Increasing the speed of sensing, analyzing and responding to supply changes is essential to remain competitive. In fact, some believe that to be competitive in the near future in some markets, the supply chain clock speed needs to increase by a factor of 10x. Sounds like a daunting task. However, leading companies in many industries are well on their way to making this happen.
The first step is digital transformation and enabling digital models of the physical supply chain. The second step is to enable real-time internal visibility and collaboration. Many companies have made it to this second step through Industry 4.0 initiatives. Because most companies do not own their entire “concept to consumer” supply chain, the next step is to enable multi-enterprise data visibility and process collaboration.
In the case of the supplier ecosystem, supplier operational data can supercharge the investment in Industry 4.0 infrastructure to extend digital twins, planning and optimization to upstream partner operations enabling multi-enterprise what-if scenarios, simulations, and advanced capabilities like available and capable customer order promising. Multi-enterprise capabilities accelerate the speed to sense, analyze and respond.
During the pandemic, many companies have delayed introducing new products to focus on a core set of products to maximize overall equipment effectiveness (OEE) and product output. We have all noticed that certain sizes and product variations (flavors, scents, features, etc.) have been difficult to find.
At least in the FMCG industry, many new products and lower-volume products are produced by contract manufacturers and co-packers which have more flexible manufacturing capabilities to accommodate smaller production runs cost effectively. Research and development into new products hasn’t stopped during the pandemic, so at some point there will be a surge of new product introductions. When that happens, the supplier ecosystem will be stressed to respond and FMCG companies will be challenged to find partners with capacity with the right capabilities to build their products.
Once again, this challenge can be addressed through solutions architectured for multi-enterprise business flows. Companies need only one connection to a multi-enterprise platform to be able to conduct business with any other company connected to this platform. This enables partners to quickly connect or disconnect as needed to meet new product and seasonal needs.
The past year has shown more than ever that supply chains must be agile to deal with market and supply fluctuations and resilient to rebound from ever-frequent disruptions. The change and disruptions aren’t going away. Over the last couple of years, disruptions like natural disasters, trade wars, Brexit, economic uncertainty, cyberattacks, and labor and political unrest have become the new normal. Although the COVID pandemic has completely changed the supply chain, it only accounts for about 4 % of total supply chain risk. Even when the pandemic is a distant memory, supply chain professionals will still need to deal with the other 96% of supply chain risks.
Most of these disruptions take place outside the operations of a single company. To respond and recover quickly requires the ability to quickly sense the disruption wherever it occurs in the end-to-end supply chain, analyze its impact, develop scenarios and simulations to evaluate options and collaborate and respond. Multi-enterprise data visibility enables the ability to sense when a disruption happens and provides the necessary data to develop and evaluate options. Multi-enterprise collaboration enables fast bi-direction communication to develop the appropriate response that enables a speedy recovery.
Last by certainly not least, cybersecurity is a growing concern for supply chain professionals. It is estimated that at least 50% of all cybersecurity attacks originate through some type of partner system connection. Cyber criminals can gain access to systems by hacking a partner’s systems and piggybacking into a business’s main systems. Considering that most supplier ecosystems use manual and/or antiquated legacy solutions, it’s not surprising that cyber criminals find easy access through partners.
Supplier portals that directly connect a supplier to their customer’s enterprise systems are a prime example of a potential entry point for cyber criminals. Another common practice is to provide a supplier a remote login into enterprise systems. Again these remote login terminals can be penetrated by cyber criminals providing direct access to enterprise systems. A SaaS-based Multi-Enterprise Supply Chain Business Network (MESCBN) platform eliminates many of the avenues a cyber criminal can use to penetrate a company's enterprise system architecture. A MESCBN platform provides a high-security way to exchange data and to collaborate.
A year from now I am sure we will all get a good laugh by revisiting this piece, but I am hopeful that at least a few of my predictions will hold true. I am eager to see the advancements in the discipline of supply chain management that awaits us in 2022 and beyond. Here’s to a successful and prosperous 2022.
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