It’s human nature to want to start a new year with new goals—the ever-present new year’s resolutions. Typically, we make it at least one month into the new year before we have to revise our plans. However, it’s only early February 2024, and we already have several major disruptions impacting supply chains. As Alan Amling at the University of Tennessee put it, “2024 is riddled with uncertainty.”
Supply chain professionals are facing disruptions on multiple fronts, including rising geopolitical tensions among countries and regions, shifting maritime trade lanes, labor disruptions and layoffs, increased sustainability/ESG compliance requirements, more frequent extreme weather events, multiple national elections, growing movements to reshore/nearshore/ally shore, and much more.
This is an important time for the supply chain profession. Supply chains are in the news, on governments’ agendas, and in the spotlight. Now is the time to rise to the occasion and plan for success amid the uncertainty.
Performance in 2023 was not as positive as we might have hoped, and it was a harder year than many had anticipated. A majority of organizations (62 percent) missed their 2023 business goals, and four in five organizations reported falling short of their competitors’ or peers’ performance (Figure 1). Fewer organizations achieved their business goals in 2023 than in any recent year, aside from 2020. Yet organizations remain focused on the future, with many anticipating further digital developments and investments in their supply chains.
Five Year Performance on Business Goals (2019 – 2023)
When it comes to organizational priorities across supply chain functions for 2024, APQC finds that supply chain planning remains in the top spot for the fifth year (selected by 90 percent of organizations). With the continued challenges facing supply chains, that is no surprise. Sourcing and procurement comes in close second at 88 percent, followed by innovation at 87 percent. Logistics and inventory management rounds out the top four focus areas at 82 percent. Other critical functions include order management, manufacturing, and product development. Interestingly, observing respondents by industry shows that no two industries prioritize their supply chain investments in exactly the same order.
In sourcing and procurement, the top focus area for 2024 continues to be supplier/vendor relationship management (SRM). Multiple disruptions and ongoing challenges have made clear the connection between an organization’s success and its suppliers’ success. With this recognition, there is a greater interest in improving critical supplier relationships.
Innovation helps organizations stay ahead of the curve even when facing rapid changes, multiple disruptions, and rapid technological advancements in a global context. The top focus area in innovation for 2024 is operational/process innovation, which enables organizations to find new and different ways of going to market and operating their organizations and supply chains.
In line with the past several years, inventory management continues to be the top focus area in logistics. In addition to cost savings, having optimized inventory management can help balance cash flow with customer satisfaction. Supply chain visibility emerged as a close second for 2024. Having visibility across the entire supply chain can help leaders anticipate and mitigate some risks and make quicker, data-driven decisions in the face of uncertainty.
APQC’s research finds that compared to prior years, more respondents expect more things to impact supply chain in a major way in the next three years. Last year I thought the percentages were high, and now they are higher. Supply chains are facing ambiguity and will remain so for the foreseeable future. The top three trends, innovations, and developments anticipated to impact supply chains by 2027 are:
Good news: 55 percent of organizations across all industries expect their budgets for supply chain management tools, technology, innovation, and initiatives to increase compared to last year. Another 38 percent expect that investment to stay the same, and only 6 percent anticipate a decrease in funding. Ideally, this increased funding will ensure that the best-laid plans become reality.
To ensure that supply chains can withstand the unknown unknowns that have been happening (and keep happening) with increasing frequency, supply chain leaders need to stay focused on driving success.
The post 2024: Planning for Success Amid the Uncertainty appeared first on Logistics Viewpoints.