The Future of the Supply Chain: 5 Changes to Implement Immediately

5 September 2022

Discover the results of a Gartner survey on the future of the supply chain and the organization’s vision on the ongoing changes

We live in a period of great transformations triggered by the Covid-19 pandemic. These changes have impacted society as a whole and have also affected the supply chain. The various challenges faced today have shown that some strategies need to be applied to change direction. From manual to digital, from global to regional, from physical to online, from in-person to remote… There is much to be done, and actions must start immediately.

The ongoing transformations involve not only investments in technological tools for operations but also a new management vision and openness to new business models. As published by Gartner, an international research organization specializing in technologies, 38% of supply chain leaders fear that their companies are not well-positioned to face the challenges of the next two years. For the agency, the Covid-19 crisis has been a catalyst for the transformation of logistics companies, but a radical change is still ahead.

In this new scenario, Gartner highlights five changes that will occur in the next five years. You will learn about them in this text. Get ready to enter the future of the Supply Chain!

Supply Chain: A Challenging Future

Supply chain digitalization; globalization and offshoring; new business models; migration to e-commerce; remote and distributed teams: these are the five supply chain changes highlighted by Gartner in the next five years. To adapt to them, it is necessary to have a good structure, rely on advanced technologies, be innovative and flexible. And, most importantly: put the customer experience at the center of priorities.

1 – Supply Chain Digitalization

According to Gartner, 23% of supply chain leaders plan to have a digital ecosystem by 2025. These professionals see digitalization as the key to shaping business opportunities in the next decade.

For the agency, greater digitalization translates into more resilient and agile logistics, powered by technologies such as the Internet of Things (IoT), digital twins, and blockchain, which can optimize network collaboration, visibility, and risk management. According to Gartner, digitalization and end-to-end real-time information sharing enable companies to respond better and faster to unexpected changes in demand or supply.

2 – Globalization and Offshoring

According to the survey conducted by Gartner, 46% of supply chain leaders foresee a decline in globalization, and 61% of them foresee a decline in production offshoring in the next five years.

According to Gartner experts, globalization is under pressure in the current scenario due to the complexity of supply, the demand for goods manufactured in other countries or continents (for example, the IFA for vaccines, produced in China), the increase in capital turnover, and delivery times. In this sense, a reassessment of offshoring and network strategies is recommended, as well as seeking a balance in reshoring, to contain costs, address tax implications, and local market availability. The strategy must, therefore, move towards rebalancing between local, regional, and global supply chains.

For the future, Gartner sees a scenario of seeking productive diversification to improve resilience and agility already underway before 2020. “Almost half of supply chains will move production to different countries or regions. Companies will invest in localized sourcing aiming at resilience, agility, and sustained growth in local markets – for example, training small local businesses to produce for global supply networks,” the agency emphasizes.

3 – New Business Models

According to research conducted by Gartner, 79% of supply chain leaders believe that an Internet/platform-based approach is the new business model to support post-pandemic recovery. According to the organization, CEOs will seize the opportunity to “reset” or rebuild their activities for new realities.

To this end, it is essential to revisit and realign supply chain strategies with new business models. This includes paying attention to customer segmentation and costs to meet demands. According to Gartner, supply chains will develop operational capabilities to deliver each of the outcomes associated with different values.

4 – Migration to E-commerce

The Gartner survey also highlighted that 69% of supply chain organizations foresee a decrease in consumer willingness to visit stores in the next five years.

Government-imposed lockdowns and public concern about Covid-19 contamination have caused a reduction in traffic to physical stores. Consumers have started spending more on e-commerce, harming companies that did not integrate their online and offline channels or even those that did not open sales on the Internet.

Therefore, it is necessary to change as soon as possible, improving logistics to offer excellent customer service. Gartner’s recommendations include: developing scalable capabilities, including online order and return services, and reviewing network design to enable a more profitable operating model that supports the shift in volumes towards e-commerce.

For the future, Gartner sees an effort by companies to offer the best shopping experience and meet the preferences of every customer “to the extreme.” This includes offering personalized products and services, available anytime and anywhere. Investments in the right tools will combine cost reduction and a better buyer experience.

5 – Remote and Distributed Teams

Finally, a significant finding made by Gartner: 98% of supply chain leaders believe that remote work will increase in the next five years.

Culturally, logistics companies have always relied on local and in-person work. But with the pandemic, this scenario has begun to change, and the trend is that it will continue to change. Garner managers are advised to: “demonstrate empathy and flexibility. Support a hybrid workforce and develop ways to improve the productivity of distributed teams.”

In the next five years, Gartner experts believe that supply chain organizations will have a hybrid workforce, transitioning from in-person to remote work. For the agency, the increase in remote work will provide greater access to talent. “Technologies to monitor productivity will be widely used, as will virtual practices to record time and monitor computer use. Physical facilities, warehouses, and corporate offices will continue to exist but will increasingly become spaces for collaboration and innovation,” Gartner emphasizes.

Is Your Company Ready for the Changes?

The transformations highlighted by Gartner are already underway. Now is the time to try to implement them in your company, always aiming for a balance between business success and customer centricity. Being prepared for present and future challenges is a way to achieve both goals; therefore, the main movement, as Gartner emphasizes, is “being purpose-driven,” “focusing on innovation and collaboration,” “taking positive steps to improve the environment and community well-being,” “benefiting all stakeholders.” Change begins today!