Multinational enterprise software company Infor provides the top three supply chain predictions for 2022 and global supply chain trends that are likely to persist in the long-term.
Article by Cas Brentjens, Vice President of Infor Nexus Supply Chain Business Networks, APJ, Infor
As enterprises gear themselves for recovery in 2022, many are steeling themselves for impact — with the remnants of the global pandemic and threat of the new Omicron variant looming in the shadows. The third year of the global health crisis will have an unparalleled impact on supply chains, with repercussions from severe supply and demand imbalances reverberating worldwide.
The availability and increasing costs of labor, freight capacity, semiconductors, empty chassis, and warehouse storage spaces will continue to be areas of uncertainty and concern in the coming new year. Still, I am hopeful that we will see new supply chain patterns emerging from today’s global trade and shipping chaos. Here are three of those patterns that we will be contending with in 2022:
1. Container ship issues at major North American and Northern European ports will continue well into 2023.
Current congestion and delays are not merely an ‘ocean’ shipping problem, but a global supply chain network problem. Ongoing labor issues and the lack of container availability are conspiring with increased inbound shipping volumes out of Asia (sparked by historically high consumer demand). This will slow the loading and unloading of ocean vessels, and subsequent movement of goods from ports to inland warehouse or deconsolidation locations.
2. Supply chain visibility and resiliency will become mission critical. Companies must prioritise first mile technology investments and collaborative relationships with logistics service providers.
According to research by IDC, increasing supply chain visibility is an immediate priority for 58 percent of APAC organisations. This will be crucial to enhancing integration across their end-to-end supply chain and strengthening operational agility and resilience — especially as disruptions show no signs of abating.
Single-minded pursuits of lower costs will have to be replaced with new goals for holistic and multi-dimensional forms of real-time visibility across all supply chain functions. This ranges from considerations like freight capacity, to supplier work-in-progress and financial health, modal hand-off points and shipment chain-of-custody progress, and visibility of inventory in transit.
Resilience demands improved exception monitoring, which supports faster reaction times when issues arise within supplier networks or global shipping lanes. Ultimately, success in the final mile delivery of products will become increasingly dependent on investments made in the first mile — and organisations must look to scale their use of Cloud, Artificial Intelligence, Internet of Things, Big Data and predictive analytics to increase agility and control.
3. The following global supply chain trends we see today are likely to persist in the long-term:
- Higher ocean and air freight shipping costs will remain, even when current congestion and capacity constraints have settled into a new global equilibrium.
- Traditional ‘peak season’ shipping markets will start earlier and run for longer periods of time, while freight contracts will run for shorter terms.
- Shippers will continue expanded use of Non-Vessel-Operating Common Carriers (NVOCCs) and third-party logistics providers (3PLs) to secure more reliable freight capacity.
- More shippers will share dynamic freight capacity forecast needs with their key carriers to improve overall freight network planning.
- More shippers and consignees will be under pressure to improve their loading and unloading efficiency for trailers and containers to free up network freight capacity.
- More C-level executives will analyse global logistics and supply chain strategies, emphasising greater predictability in tandem with cost management practices, to protect their production lines, the end customer experience and total business profitability.
The rampant uncertainty around pandemic-influenced supply and demand challenges will persist — but organisations today can no longer afford to be caught off-guard by ‘unprecedented’ delays and disruptions.
2022 will see supply chain agility and predictability reign top-of-mind for business leaders. To achieve this, enterprises will look to invest in broader and more flexible partner connectivity, the addition of external data sources, and intelligent supply networks which connect demand signals and downstream stakeholders with procurement and shipment planning activity upstream. All of this will be crucial to ensuring that organisations can adapt and innovate at speed and scale, pivot nimbly, and position themselves for supply chain success amid a disruptive ‘new normal’.
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