Top trends for 2024

February 29, 2024

Things are changing in supply chain management: while cost-cutting has long been at the top of the agenda for many executives, in future they will be increasingly concerned with resilience, transparency, technological advancements, and the shortage of skilled workers.

Ralf Duester, board member of Bochum, Germany-based supply chain management (SCM) software specialist Setlog, reveals which trends will be important in 2024.

Skilled labour shortage forces action: The shortage of skilled labour is putting companies in industrialised nations in increasingly difficult situations. If you want to stand out from the crowd, you need to offer attractive conditions to existing and future employees. Leading companies are also stepping up their commitment to career guidance and catering to the needs of Generation Z. As studies show, young people place a high value on flat hierarchies and want modern IT systems in their day-to-day work. Many companies can, and must, become even more efficient or make workplaces more attractive.

Building resilience with concurrent cost pressure: Extreme weather events, political crises, pandemics – as general conditions for the economy have changed in recent years, the priorities of supply chain managers have also shifted. For example, reducing costs in the supply chain used to be at the top of the agenda. Since the Covid-19 pandemic, however – when even in highly developed countries certain products were temporarily unavailable on shelves – the topics of product availability and resilience have now become increasingly important.

As a general rule, resilient supply chain management enables responsible managers to get the supply chain back into operation as quickly as possible after a disruption by external events. In addition, diversification within the supply chain generally leads to better resilience. To ensure robust supply chain management, leading companies therefore build up a broad portfolio of suppliers and various transportation routes for sensitive products, materials, and components.

Transparency is becoming increasingly important: Transparency is a prerequisite for resilient and diversified supply chains. If it exists, managers can recognise more quickly which part of the chain is affected by an external event. Due to the high volatility in the economy, many companies are reviewing existing contracts. Flexibility plays a central role in the realignment of contracts. In order to be able to plan better, trust-based collaboration between all partners along the supply chain is necessary, which often requires new communication platforms.

Modern IT tools can be used to share data, pool resources, and make quick decisions in the event of dynamic fluctuations in demand. Companies that use IT tools and suitable algorithms to manage demand and supply globally will be a decisive step ahead of competitors who still rely on emails or spreadsheets.

Supply Chain as a Service is crucial to competition: Software as a Service (SaaS) has been utilised by companies for years. However, more and more businesses are moving towards outsourcing parts of their supply chain: for example, manufacturing, distribution, procurement, logistics, or transportation management. The digital supply chain of the future will increase the need for companies to outsource – in other words, to use Supply Chain as a Service (SCaaS) or services from specialists in Fourth Party Logistics (4PL).

According to studies, this trend is becoming increasingly important because many companies do not have the expertise, financial means, or resources to use all the new technologies available. At best, large corporations will do this work internally – at least in part – in the future.

The benefits of the transition to a digital supply chain include end-to-end global electronic connectivity, higher productivity, lower costs, better service, and greater flexibility. If this is not driven forward, it will lead to a lack of competitiveness and consequent financial problems.

Cybersecurity becomes a top priority: As there have been more cyber-attacks with serious consequences for companies in the recent past, many have taken additional measures to protect themselves against criminals.

According to a survey by the digital association Bitkom, every other logistics company in Germany tightened its IT security measures in 2022. According to the survey, the management of IT security is given a correspondingly high priority in most companies: in almost nine out of 10 companies, the area of IT security is anchored at board or management level.

Leading companies also regularly train their employees on this topic and have security audits carried out. This is time well spent: the tools for cybersecurity are available, but the greatest weakness is the human being. Cyber-attacks have shown that even large companies with expert IT specialists can be paralysed and damaged for days.

The issue is increasingly critical, especially in logistics and supply chain management, because cybercriminals can gain access to sensitive data due to the ever-increasing networking and digitalisation of companies. It should also be remembered that this data usually originates not only from the company directly affected, but also from its network.

Automation projects are progressing: Due to global political conditions and current consumer behaviour, company coffers in some sectors are not as full as they were a few years ago. Nevertheless, many companies are pressing ahead with automation and digitalisation projects that have already begun, or are initiating new ones. Only those that can keep up with high-performance logistics and the highest service levels will lead the market.

Money budgeted for planning automation, robotics, digitalisation, energy savings, and personnel is capital well invested. In internal logistics, for example, manual processes need to be automated and digitalised. Robotics and machine learning play a major role in speed on the one hand and minimising the error rate on the other. IT experts are looking at digitalisation along the entire supply chain and initiating new projects in several links of the chain at the same time.

Open-source software is increasingly convincing: The use of open-source software as operating systems for computers is nothing new. While many IT departments in supply chain management have resisted this trend, there are now very successful practical examples based on clear rules, such as those of the Open Logistics Foundation.

This non-profit operating foundation, based in Germany, advocates the promotion of open-source applications in logistics. Its members no longer invest dozens of hours in programming simple standard interfaces themselves, but instead use existing interfaces from their partners, with whom they are sometimes in fierce competition. However, anyone who engages in this kind of cooperative work needs a new mindset within the company. A rethink is also necessary in other areas – for example, when it comes to relying on new technologies such as artificial intelligence (AI) to make decisions.

One thing, however, is clear: the best of the best will automate processes even more and use the advantages of AI in the area of prescriptive analytics and autonomous agents to achieve efficiency gains. With new tools and technologies, companies can speed up everything from planning to delivery, reduce buffers, manage processes efficiently, and ultimately counteract the shortage of skilled workers.

In all IT activities, it is more important than ever that companies protect themselves professionally against hacker attacks on their systems, as the serious consequences of recent attacks on the IT landscapes of large logistics companies have shown.