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Trends Affecting Modern Business Supply Chains
Working capital is essential to any business, whether it deals with rising costs or wants to tap into new technology to run more efficiently. Most companies are struggling with slow-paying clients and supply chain issues, so cash flow is becoming more of a trickle.
FREMONT, CA: Recent years have disrupted supply chains completely. There is widespread blame for the pandemic. COVID-19 helped accelerate the issue, but changes were afoot before anyone knew about it. Below are some of the latest supply chain trends and how they affect businesses:
Sustainability is becoming more prevalent in supply chain management (SCM) as climate change concerns mount and consumers seek out green brands. Nielsen surveys reveal that 66 percent of consumers are willing to pay more for green brands. Sustainability-focused brands experience four percent revenue growth, while their counterparts gain only one percent.
The Oxford Economic survey states that nearly 90 percent of supply chain decision-makers already have or are in the process of creating a sustainability mission statement. Still, only about half have reduced shipping miles.
The business shift has lagged, but some specific changes have been observed. Warehouses, for example, are adopting energy-efficient lighting and electric forklifts, as well as new technologies that help optimize fuel consumption and energy usage.
Linear Supply Chains vs. Circular Supply Chains
The circular supply chain involves breaking down discarded products and reusing them. This reduces overall costs and decreases market volatility. Circular supply chains will continue to gain popularity as government regulations shift and recycling incentives increase.
Supply chain integration is on the rise
The transportation industry has traditionally specialized in one area, like land or sea, but more companies are offering to improve customer service and optimize delivery speeds. A rise in third-party logistics (3PL) providers and 3PL technology is also evident.
A globalized workforce
Capgemini predicted that 80 percent of manufacturers would have multi-country operations by 2020. The pandemic may have delayed predictions, but the conditions that led to them remain the same. Most businesses find it more cost-effective to source talent globally, particularly in the United States, where qualified candidates are in short supply.
Logistics Processes Are Getting More Flexible
Running fast and lean is only half the battle. As seen during the pandemic, consumer demand can change at a moment's notice. For this reason, elastic logistics, or the ability to scale as needed, are crucial. Larger companies are increasingly using artificial intelligence (AI) to enhance their logistics processes, while smaller companies will continue to face scaling challenges.
SCM and SCaaS support is in high demand
Businesses are increasingly tapping into larger networks to manage their supply chains, even though they still handle their supply chain management in-house. SCaaS, or Supply Chain as a Service, and on-demand SCM support result from this and a need to maintain smaller in-house teams.