What is the Future of Supply Chain Management in 2021?
2020 brought industry shakeups the likes of which we haven’t seen in a long time. Where supply chains were concerned, long-winded or altogether overlooked processes saw as many as 26% of businesses experiencing notable detrimental effects. Moves to remote supply chain management were certainly a culture shock for many, revealing existing processes that simply weren’t up to current challenges.
Despite these initial shockwaves, letdowns in supply chain operations were not a death sentence for businesses last year. In fact, those companies that spotted issues early on and worked to bridge them are the ones who are recovering and thriving as we enter 2021’s ‘new normal’. Specifically, companies who realised that supply chain management should be central to, rather than at the back of, operations are uniquely poised to move forward.
Business models with a focus on digital transformation in the supply chain now especially stand at the forefront of what many would argue are long-overdue improvements. This is made largely possible by Electronic Data Interchange (EDI), the often unsung workhorse of supply chain management.
In the face of recent challenges, improvements in EDI are enabling the flexibility that businesses need in 2021 and beyond. The application of cloud-based tools and managed services to traditional EDI process management has driven the EDI system accessibility and simplicity needed to upgrade supply chain management and dramatically change outcome possibilities. This trend is something we’ve called “EDI-as-a-Service” — encompassing both the delivery of EDI outcomes through managed services, and the supplementation of EDI processes with online SaaS tools and support.
But, before they can access those benefits, businesses need to reassess the ashes of their post-pandemic supply chains, and ask themselves, what is the future of supply chain management, and how can EDI help us to get there?
Suggested reading: If you want to learn more about the value of supply chain strategy, and how effective EDI can help, check out our free ebook — The Supply Chain Centered Business.
1. Agility in the age of uncertainty
2020 taught us about the need for resilience, and perhaps more importantly agility, in every aspect of our lives. From a business perspective, supply chain management was most definitely at the forefront of this realisation for many.
For companies still managing their supply chains via long-winded methods such as email and face-to-face, changes were an especially unwelcome wakeup call, sometimes meaning that supply stopped altogether at a time when businesses really needed to rally.
Unsurprisingly, then, the future of successful supply chain management, especially in these ongoing uncertain times, is largely about smooth supply integrations that enable you to respond with agility to unforeseen circumstances. Doing this requires a focus on:
- Visibility: The ability to foresee and understand supply changes before they happen.
- Flexibility: That ability to adapt to those visible focuses fast with smooth onboarding processes and more.
- Communication: The ability to easily communicate those changes to supply partners.
Strategies for success:
At its heart, planning is always behind agile business processes. You need to know what you’ll do if things continue to shift with the speed they have this past year, including backup plans for changing suppliers without downtime, and ways to communicate these changes.
EDI enables agility by digitising communication. Centralising how communication between supply chain partners occurs enables visibility, which makes it possible to plan and take action quickly. The problem with traditional EDI is complexity, particularly when engaging with partners that have limited EDI experience. EDI-as-a-Service enables far greater agility and flexibility of planning, while improving visibility and communication. It does this by:
- Simplified onboarding: Cloud based tools, for example Web EDI, make it possible for new partners to engage with your EDI system using a simple web browser. Managed services can enable smooth onboarding of more sophisticated and integrated systems when needed — ensuring total compatibility with a range of EDI protocols and standards. This means changing suppliers is easy, and updating is simple.
- Full adoption: Simplifying access to EDI ensures a 100% EDI adoption rate across your organisation. This is critical for achieving the level of visibility needed to effectively respond and plan at speed.
No matter how it’s achieved, agile supply chain management requires a digital and flexible system that enables you to understand your suppliers and respond in near real-time to changing circumstances.
2. Co-sourcing for more cohesive supply chains
Pre-2020, seven in ten UK companies outsourced services in key areas, including IT (34%) and, more importantly, supply chain processes such as distribution. Of these, 48% stated that outsourcing was best due to a lack of in-house knowledge/expertise.
However, since the health crisis hit, outsourcing weaknesses have made a rather unwelcome appearance, with companies who outsource overseas, particularly, experiencing notable delays/operational setbacks. Complicated third-party supply chains were especially hit hard, with many companies outsourcing globally finding that providers in countries such as India simply didn’t have the resources to continue in the WFH landscape.
All of this revealed some worrying supply realisations, including the fact that two-thirds of companies can’t confirm the vital business-continuity arrangements mentioned above across each stage of an outsourced service. That’s a mistake they’ve certainly paid for, and has led to the rise of a notable trend known as ‘co-sourcing.’
As the name suggests, this new working model is a part step back to in-house processes but implemented alongside outsourcing benefits. Here, internal and external teams aim to work alongside each other in ways they never have before.
The in-house control that this focus provides can bring benefits including:
- Lower costs
- Increased flexibility
- Improved security
- And more
Strategies for success:
Amazon is a great example of a company that has succeeded by keeping a substantial portion of its supply chain in-house. Once hailed as ‘bold’, these supply chain strategies are now becoming commonplace, or at least they should be.
Most notably, Amazon has long realised the value of improving supplier communication by facilitating productive, shared partnerships. And, this is something that effective EDI implementation can help enable. Fundamentally, free-flowing information is key. Cloud-based EDI developments, in particular, could direct plenty of processes back in-house, without risking an overload to your team by cutting out the third-party altogether.
The simplification that EDI-as-a-Service trends bring to EDI enables a more effective flow of information throughout the supply chain — helping both you and your suppliers optimise operations. This closes the gap between in-house and outsourced, making the reality of co-sourcing that much more obtainable.
3. Getting globalisation right again
For obvious reasons, globalisation took a hit in the first weeks of the pandemic. As global markets slowed to an almost standstill and earned the nickname ‘slowbalisation’, some experts predicted the end.
Luckily, this doom-and-gloom thinking didn’t come to fruition. As online sales across industries skyrocketed by 10% last year, border limitations especially became irrelevant from a supply standpoint.
This is, of course, good news, but the scare alone has led countless companies to reassess global supply chains. After all, as mentioned above, supply issues largely came down to suppliers in certain outsourcing hotspots not having access to the tools or technology for survival. And, that’s before we consider the impact of slower shipment times and, in some cases, entire movement disruptions.
To some extent, increasing control with methods like co-sourcing as mentioned above is a major step in the right direction here. But, as well as bringing more processes back home, many companies are also aiming to relocate supply chains to more sustainable/reliable global shores, and are doing so at a time when immediate integration is non-negotiable.
Strategies for success:
Fundamentally, the successful integration of new global markets comes back to flexibility. From an EDI standpoint, it becomes ever-more critical to accommodate a wide range of standards and protocols in use across the globe.
Traditional EDI systems struggle to accommodate the full spectrum of options, particularly at speed. It’s important to harness the capabilities of multiple types of EDI, provide support for different levels of regional expertise, and fully integrate your system to achieve the needed flexibility and visibility.
Rather than standing in the way of globalisation, the right EDI-as-a-Service implementation can specifically address these pain points with the help of cloud-based tools that ensure global accommodations of all suppliers, even those who aren’t well versed in EDI themselves.
Taking the transparent path to a more stable future
While each of these trends targets a different aspect of the supply chain on the surface, a deep dive into each topic reveals one ultimate trend — transparency.
Making sure that every aspect of your supply chain is out in the open/well-communicated leads to the efficiency, and stability, that all supply chain teams need right now. The automated, centralised access possible with EDI-as-a-service ticks all these boxes and more, making way for cloud-based and simplified supply chains that open up a range of business benefits such as:
- Improved efficiency
- Higher margins
- Positive feedback loops
- Centralised access
- Increased adoption
- And more
In an age where processes continue to shift and the future, specifically of supply, is still very much unknown, that’s a level of security that no business should go without. 2021 is a big year, and with the right EDI solution in place, you will be able to match it with sustainable planning and effective communication — across your entire supply chain. Get in touch if you want help building the right solution for your business.