In 2021, battered and bruised supply chains got back in the game. In retrospect, it looked a lot like what the sports world calls a “rebuilding year”—one with a lot of change, a lot of attention, and muted expectations. A rebuilding year can be exciting at times, but it’s mostly exhausting, and that’s certainly what 2021 felt like for supply chains and the professionals who manage them.
In APQC’s 2022 Supply Chain Management Priorities and Challenges research, we learned that in 2022, supply chains are planning to get back to basics. Lofty ambitions and distractions have fallen by the wayside as professionals focus on getting their data and process houses in order first and foremost.
Professionals have set their sights on the foundational work of benchmarking, implementing best practices, and standardizing processes in core focus areas such as supply chain planning, procurement, and logistics. Yet, they also understand that whirlwind change is the new normal, so they’re seeking to boost collaboration and innovation across the supply chain.
Many supply chain teams will walk into this year with bigger budgets, but they’ll still need to think very carefully about spend. There are many attractive technologies out there, but supply chains must ensure they’re also investing in their people to get ahead of emerging employee engagement problems and stay resilient for the road ahead.
IN 2021, SUPPLY CHAINS IMPROVED BUT CHALLENGES REMAIN
In 2021, supply chain performance improved as challenges continued. Supply chains were better able to adapt to ongoing disruption and many supply chains returned to pre-pandemic performance against high-level business goals.
Unfortunately, many cracks are evident beneath the surface of this improvement. The pre-pandemic status quo was not strong, with only about half of supply chains hitting their high-level business goals. Moreover, supply chain performance against targeted goals around customer service and satisfaction, cost savings, inventory, and ROI remained weak in 2021.
TOP 3 ANTICIPATED TRENDS FOR 2022 AND BEYOND
Supply chain professionals anticipate that the following trends, listed in descending order, will impact supply chains over the next three years. Compared to the prior year, more respondents expect more factors to impact supply chains looking forward.
- Big data and analytics, which allow supply chains to aggregate and pull insights from vast amounts of internal and external data.
- Digitalization of the supply chain, which improves supply chain visibility and efficiency.
- Process standardization, which provides the foundation for building business continuity plans and making the most of technology investments.
BIGGEST OBSTACLES TO IMPROVEMENT
According to respondents, the top three obstacles to improving supply chain processes are:
- Lack of collaboration across functions and externally
- Regulations/requirements that make change difficult
- Limited workforce engagement
Collaboration is the most pressing issue, but the good news is that fixing it can help with other challenges. Collaboration is key to ensuring compliance with regulations and requirements, and a collaborative work environment boosts employee engagement. Perhaps more importantly, collaboration is an actionable obstacle, unlike last year’s top obstacle of “too much change.”
Fortunately, most supply chains are taking a proactive approach to tackling challenges and have the budgets to back up their plans. Almost 80 percent of respondents report that they have modified their strategy to help head off obstacles this year, and two thirds said they expect budget increases for 2022.
FOCUS AREAS AND PRIORITIES FOR 2022
According to respondents, these are the top areas where organizations are investing resources, innovation, and hiring for supply chains in 2022.
- Supply chain planning (89 percent), where organizations are focused on demand planning and analytics and are prioritizing best practices, benchmarking, and new technologies.
- Sourcing and procurement (87 percent), where organizations are focused on supplier relationship management and automation and are prioritizing best practices, benchmarking, process standardization.
- Logistics (87 percent), where organizations are focused on inventory management, analytics, and inbound material flow and are prioritizing best practices, process standardization, and reducing transportation costs.
- Innovation (87 percent), where organizations are focused on operational/process innovation as well as product and service innovation and are prioritizing the integration of innovation into organizational goals, shifting toward a culture of creativity, and embracing new business models.
MOVING FORWARD IN 2022 AND BEYOND
For supply chain professionals, “resilience” is the key word for 2022. It’s been a rough couple of years for supply chains, and professionals need to do three things to stay resilient for the road ahead:
- leverage available knowledge in and beyond your organization,
- get your data house in order, and
- invest in people and collaboration.
APQC members can read the full white paper for more in-depth information and analysis. For a quick overview, this executive summary is open to the public.
For further guidance and industry-specific insights, see APQC’s Supply Chain Priorities and Challenges collection.