If you’ve been anywhere near the world of retail over the past several years, you’ve heard this question before: Is the supply chain back to normal yet?
The answer has been a resounding, “What the heck does ‘normal’ even mean anymore?”
From geopolitical disruptions to labor strikes and more, it’s anyone’s guess what a stable supply chain could look like when the dust finally settles on the pandemic-fueled domino run.
One thing is clear. Resilience matters, perhaps now more than ever. In the fast-changing world of e-commerce, it’s time to find new ways to use the unknown to your advantage.
In this article, we’re breaking down the latest data and expert predictions to help you identify the global supply chain trends that will help you sharpen your competitive edge this year.
A Recent History of the E-commerce Supply Chain
Four years post-pandemic, the disruptions that first brought the phrase “supply chain” into the national vocabulary have more or less subsided. No one’s clawing empty grocery shelves for stray jars of baker’s yeast, and those toilet paper tussles finally feel like distant fever dreams.
However, a tight labor market and rising fueling costs have brought new challenges to the supply chain table. Stagnant demand and a “freight recession” have led to massive layoffs among shipping companies, warehouses, and parcel carriers.
Cost Cutting on the Rise
Supply chain managers are working to cut costs however possible, with many shifting from a “just-in-case” to a “just-in-time” approach to avoid the costs of overstocking.
However, keeping low stock levels could backfire, leaving e-commerce businesses out of stock and in the lurch — especially when you factor in increased global volatility.
Geopolitical Factors Increasing Complexity
Experts predict material shortages on the horizon this year, due in part to rising geopolitical concerns along the Red Sea.
Many believe supplier lead times could as much as quadruple overnight. Trucks may run half empty and freight rates between Europe and Asia could increase exponentially.
Meanwhile in Latin America, Panama Canal drought restrictions are reducing cargo traffic through the corridor by nearly 40%, forcing some companies to shift to rail transport. Further route diversions could result in more pressure on the already overwhelmed Suez Canal.
Although no one knows exactly how these pressures will play out, there are several steps you can take to optimize your supply chain and protect your business.
Supply Chain Trendspotting: 5 Opportunities to Watch
Many retailers are happy just to get by, but in the current supply chain climate one wrong move could spell disaster.
While most businesses cross their fingers, tighten their inventory budgets, and try to coast through the uncertainty, others are revamping their inventory management and investing in stronger retail operations.
If you consider yourself part of the latter group, now is the perfect time to dive deeper into the most impactful supply chain trends this year.
1. Generative AI
As you might expect, AI will continue to dominate the news, the workplace, and your brainspace in 2024. When it comes to the supply chain, the list of potential use cases is exhaustive, and growing.
Generative AI can help you optimize supply chain and manufacturing workflows in a number of important ways. It can be used for customer service, logistics communications, and real-time support, training and data analytics for all types of supply chain stakeholders.
Perhaps most importantly, the right AI tools can help you know your numbers and provide key decision-making insights to your supply chain managers faster.
For retailers who can stomach the hype around AI, the real value is finally beginning to emerge. For example, retailers are already using AI tools to help choose the best supplier, assist in production planning, review contracts, and deliver real-time visibility into how your business is performing.
Digital supply chain tools that use AI to help you improve demand forecasting and inventory may also become more commonplace as businesses start seeing real value from AI.
2. Predictive Analytics
Predictive analytics can help retailers avert potential supply chain disruptions before they become a problem.
But according to a recent poll, only about half of transportation and logistics managers say they use even basic data analytics in their supply chain operations. And only a third of supply chain managers use predictive analytics.
You might be wondering what predictive analytics even are. In today’s age of big data, predictive analytics combine historical data with advanced algorithms to help users plan for a range of business scenarios.
They are often used to improve procurement and inventory planning in day-to-day retail operations, but some of the more sophisticated tools can use text from newspaper articles to predict geopolitical conflicts before they happen to improve your supply chain resilience.
In 2024, predictive analytics could play a key role in risk management, sourcing, and supply chain diversification as retailers seek active ways to protect their profit margins amid ongoing crises.
When used in tandem with AI, predictive analytics can also help manufacturers perform what’s called predictive maintenance so that they can spot and correct equipment failures before they happen.
3. Supply Chain Visibility
Many supply chain issues stem from the lack of transparency beyond Tier 1 and Tier 2 suppliers. Without this transparency, businesses are left vulnerable when a delay or disruption occurs.
But in 2024, more companies will take a proactive approach, deploying new technologies to streamline supply chain processes. Recent McKinsey data shows that when supply chain professionals implement digital solutions for end-to-end visibility, they may be twice as likely to avoid the consequences of major disruptions.
One approach is to implement a digital control tower. This is essentially a cloud-based software solution that allows companies to view, track, and share information about inventory, production schedules and other logistical details across the entire supply chain.
Another emerging approach is the use of digital twins, which combine a variety of technologies like sensors, robotics, virtual reality (VR), the internet of things (IoT) and more, to replicate physical entities, spot patterns, and learn to make better decisions over time.
For example, digital twins can model how materials will behave under different stressors, such as high or low temperatures, to predict how new packaging materials will hold up during their journey to the customer.
This and more digital twin data can be used to increase optimization all along the supply chain, from warehouse design, packaging selection, and more.
4. Sustainable Supply Chains
Last year, 86% of executives surveyed said their supply chain operations were an important part of their company’s ESG strategy. However, most had yet to take action on future plans to measure their supply chain’s impact.
Fortunately, data shows that more executives are open to improving environmental and social practices. Companies are actively leveraging technology to measure and reduce Scope 3 emissions. Expect to see increased efforts to implement responsible return policies, renewable energy practices, and more.
Another growing trend in this area is the use of electric and autonomous vehicles in transportation. Many businesses are already adopting green transport, particularly in warehouses and at the last-mile level. Companies with their own fleets may even convert to fully electric or hybrid vehicles, or use AI technologies and data analytics to optimize routes and reduce driving distance.
If this sounds out of reach for your current growth stage, don’t worry. A great place to start is to gather data about your suppliers’ Scope 3 emissions. From there, you can determine which suppliers to continue partnering with based on compatibility with your sustainability goals.
5. Hyper-Regionalization
Major retailers like Amazon and Target are doing everything they can to move products closer to customers, implementing regional distribution strategies, shortening last-mile distances, and pushing sellers to send in more inventory, more often, to keep local warehouses full.
The supply chain outcome? An extremely robust last-mile network that all but guarantees two-day-or-less delivery of in-stock items. And, taken to its logical extreme, a fulfillment center in every small town.
For sellers who rely on marketplace distribution networks, a shorter supply chain means fewer delivery delays and a better customer experience. With the right tools, it could also mean more balanced inventory levels.
For example, Amazon’s new Minimum Inventory Level metric gives sellers access to machine learning-powered inventory recommendations to help take some of the complexity out of demand planning and avoid sending too much or not enough inventory to its centers.
Depending on your current setup, now may be a good time to explore partnering with a growing 3PL with plans for extensive nationwide coverage to take advantage of low rates before your competitors do the same. It may also be a prime time to look into new marketplaces, channels, and regions that may have fewer inventory requirements.
Elevate Your Operations with Flexible E-Commerce Funding
For most retailers, today’s supply chain is manageable — but there’s still a lot to contend with.
To finally get in front of your supply chain challenges, make this the year you embrace advanced tools, technology, and data for an active and profitable strategy.
From investing in your own warehouse network to transacting with new suppliers in a new market, SellersFi’s complete suite of financial solutions can help you make it happen. Built exclusively for sellers, there’s a funding solution to see you through whatever growth scenario you’re facing.
Stay ready. Explore SellerFi’s flexible e-commerce funding solutions, or reach out to our team to learn more about how we can help.
