How to prepare your supply chain for 2025 – 5 Projections

January 3, 2023

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Supply chain management for the company stands for the planning, organization, and administration of goods, services, and information from raw materials to final consumers. But the supply chain in today’s globalized economy has become increasingly complex, as goods and services are frequently obtained from multiple countries and moved over international borders. Businesses of all sizes need to ensure that their products are delivered to clients quickly and cost-effectively.

A competitive modern supply chain requires integrating different stakeholders, including suppliers, manufacturers, distributors, and customers, to coordinate procurement, manufacturing, distribution, and logistics. As a result, it becomes challenging for the excellent supply chain to remain competitive and fulfil its consumers’ growing expectations. Given the focus of the senior leadership on the competitive edge that the supply chain provides, its future will experience substantial investments and changes. High technological advances and the rising customer focus and demand for sustainability will drive these changes.

Supply chain management conditions in 2023

Current supply chain management faces several obstacles and opportunities. The necessity to balance cost and service levels is one of the primary obstacles. It hasn’t been more than a decade since even the most prominent companies have formalized their supply chain teams. The smaller companies today still see it as an expense that they sometimes try to reduce. As organizations strive to minimize costs and boost productivity, they may still be tempted to reduce service levels, such as delivery speed and product availability. This can be challenging, resulting in dissatisfied customers and lost sales.

Uncertainty and danger are further obstacles that supply chains currently need to overcome. Natural disasters, economic recessions, and geopolitical conflicts can affect the supply chain, resulting in delays, shortages or even lost sales. Increasingly, supply chains must build robust contingency planning and risk management measures to mitigate these threats.

Today businesses realize that supply chain management offers several potentials for innovation, improvement and achieving customer delight. The utilization of data analytics and digital technology is a growing side of the supply chain. By collecting and analyzing data from several sources, such as sensors, RFID tags, and consumer feedback, organizations may obtain a more precise and real-time perspective of their business and make more educated decisions.

In 2023, there is also a rising emphasis on sustainability and corporate social responsibility. Companies are becoming aware of the significance of lowering their environmental footprint and ensuring that their supply chain is morally and socially responsible. This involves supporting local communities and reducing waste. In addition, the rise of e-commerce and the popularity of subscription-based business models are altering commodity production, distribution, and consumption and substantially impacting supply chain management.

5 projections for supply chain management in 2025

While it is difficult to accurately foresee what the next three years will bring to the supply chain management industry, the emerging trends are nothing less than exciting and provide a great indication of what to project. Technology will play a significant role in this, from using automation and artificial intelligence in supply chain operations to advanced data analytics. Here are the top 5 important forecasts for the future of supply chain management in 2025.

1. Increased use of automation and artificial intelligence in supply chain operations

Automation and artificial intelligence (AI) in supply chain operations are expected to expand. The prevalence of automation technology, such as robotics and machine learning algorithms, will grow, resulting in greater productivity and precision. Demand forecasting and inventory management will be optimized using AI and ML algorithms. AI-powered chatbots and virtual assistants will improve customer service and perform regular chores.

Additionally, autonomous vehicles and drones will see increased adoption and better clarity on regulation guidelines for transportation and distribution. While these developments can enhance efficiency and cut costs, they may also eliminate the need for human work, which can impact the labor market.

2. Greater emphasis on environmental responsibility and sustainability

Increasing emphasis on sustainability and environmental responsibility is another trend in supply chain management. Companies realize the significance of minimizing their environmental impact and ensuring that their supply chain is socially and morally responsible. This involves supporting local communities and reducing waste. Governments and customers are also becoming increasingly conscious of these challenges and demanding more sustainable company practices. Businesses that demonstrate a commitment to sustainability are likely to have a competitive edge. Many global giants have made commitments to sustainability. Here are some of the top examples:

Unilever: Unilever has set a goal of becoming carbon positive by 2030 and halving the greenhouse gas effect of its products by the same year. Additionally, it has set a target of responsibly sourcing 100 per cent of its agricultural raw resources by 2030.

Ikea: Ikea has set a 2025 goal to produce the same amount of renewable energy as it consumes in its operations. In addition, by 2030, it intends to employ 100% renewable energy in its manufacturing and supply chain.

Nestle: By 2025, Nestle’s packaging will be 100 per cent recyclable or reused, according to the company’s stated goal. In addition, by 2030, it wants to employ 100% renewable electricity in its operations.

HP Inc.: By 2025, the technology giant will use only renewable energy to power its operations. Additionally, it wants to achieve carbon neutrality throughout its whole value chain by 2030.

Mars: The multinational food firm has set a goal to eradicate all greenhouse gas emissions from its supply chain by 2060.

3. Greater utilization of data analytics for improved decision making

Data analytics will play a more significant role in the future of supply chain management than anything else. By collecting and analyzing data from several sources, such as sensors, RFID tags, and consumer feedback, organizations may obtain a more precise and real-time perspective of their supply chain and make more educated decisions. This will allow them to respond swiftly to changing market conditions and customer demands.

4. Augmentation of digital platforms and technology: Blockchains and IoTs

There will undoubtedly be a growing emphasis on digital platforms and technologies in supply chain management. This involves utilizing cloud computing, blockchain, and other emerging technologies to enhance supply chain collaboration, transparency, and safety. Digital platforms will also make communication and coordination between stakeholders, suppliers, manufacturers, distributors, and customers more effective and smooth.

5. The potential impact of automation on the labour market

In the coming years, the employment of technology such as robotics, machine learning algorithms, and autonomous vehicles is anticipated to increase. Automation can significantly increase efficiency and cut costs, but it also has the potential to disrupt the supply chain labor market.

As automation technologies become more widespread, they may reduce the need for human labor, especially for regular or repetitive work. This may result in job losses or the requirement for individuals to acquire new skills and assume new jobs. However, automation may also generate new employment opportunities in programming, data analysis, and system maintenance.

It is essential for organizations to assess the potential impact of automation on their workforce and to build transition management strategies. This may include training programs to help employees acquire new skills, job rotation programs to expose employees to new duties, and attempts to involve employees in the design and implementation of automation systems. Governments and policymakers must also address the possible effects of automation on the labor market and adopt regulations to assist workers who may be impacted.

conclusion

In conclusion, the future of supply chain management appears promising, with numerous new developments imminent. Automation and AI will undoubtedly play a more significant role in enhancing productivity and precision. Sustainability, environmental responsibility, and data analytics for improved decision-making will grow in significance. Additionally, the prevalence of digital platforms and technology will increase, allowing for more effective communication and coordination across stakeholders. In the following years, businesses that can adapt to and embrace these changes will be well-positioned for success.