The task of managing a company’s supply chain used to be relatively straightforward: Find predictable partners that met quality and specification standards, ensure reliability, and fine-tune the phasing. Bringing products or components from China, or manufacturing in Asia or South America, was relatively routine business.

But then came the Covid pandemic, which caused havoc to the supply chain predictability. Then came heightened geopolitical concerns, shipping disruptions, and additional supply chain considerations from resource nationalism and retaliatory tariffs. At the same time, the speed of business increased, putting additional strain on supply chain management and introducing new business models that have required deeper coordination with external partners.

Supply chain management isn’t as simple anymore.

As a leading ERP implementation partner that helps businesses with supply chain issues across a wide range of industries, we hear a lot about how supply chain management is evolving. So we asked Ralph Hess, one of our ERP consultants who speaks with companies on a daily basis, what supply chain trends he’s seeing right now.

Trend #1: Multiple Sourcing

Supply chain diversity has become more than just a next-level consideration. Redundancy and a range of supplier options in diverse geographies is increasingly standard as a method for minimizing business disruption.

“Covid really made a number of customers rethink their supply chain, and instability in the Middle East and the global economy also has played a role,” says Hess. “So as we take a look over the last three years, people have been moving beyond single sourcing to embrace multiple sources across a range of different routes.”

Trend #2: Greater Production Harmonization

Increased tracking and ERP connectivity with third-party systems is allowing businesses to get more precise with supply chain coordination for more efficient production processes.

“There’s greater emphasis on harmonizing a company’s source of supply, its inputs, with production capabilities,” notes Hess. “Businesses are syncing up the availability of people, machines, equipment downtime, cycle times, and things like that with their supply chain inputs. This is helping businesses produce things in a more streamlined fashion."

Trend #3: AI-driven Predictive Routing

Because sourcing redundancy has increased and there are greater levels of harmonization with production, companies are leaning on analytics more for making supply chain decisions.

“Businesses are increasingly using AI and analytics for making supply chain decisions. They are asking their ERP system to tell them which of their five suppliers to use if they need a product in a manufacturing facility by a certain date,” he says. “Previously, somebody would have to go through a spreadsheet, run reports, pull that into a new spreadsheet, and create their own model. Right now, the system is making that prediction and representation for companies.”

Trend #4: Increased Just-in-Time Precision

Just-in-time ordering and manufacturing isn’t new. But as technology is evolving, the level of precision is increasing.

“Obviously you have the whole concept of just-in-time, but just-in-time has become even more so with the ability of businesses to easily connect with other systems and gain greater visibility across their supply chain,” he says. “This is coming from businesses having a comprehensive view of their supply chain, which they didn’t really have before.”

Trend #5: More Third-Party Warehousing

The use of third-party logistics firms (3PL) for outsourced warehousing is on the rise as 3PL competition has made the space easier and more cost-effective.

“One thing that has really changed quite a bit over the last three years is that people are starting to get rid of their own warehouses and really distributing more through third-party logistics companies such as DHL, UPS and FedEx,” Hess explains. “Those freight companies now have 3PL operations that are competing with some of the largest 3PL operators. So rather than maintaining their own warehouse and the overhead that goes along with it, companies now are often going to market through 3PLs.”

Trend #6: Outsourcing Manufacturing

With greater visibility and coordination, businesses also are relying more on contract manufacturers instead of in-house production.

“There's been a move to not just outsource the fulfillment of products but also to outsource the manufacture of some products,” he says. “This is partially because systems connectivity has made it possible to really coordinate and outsource more of a business. You can go all the way from connecting with your suppliers, to shipping inputs to your contract manufacturers, to connecting with your contract manufacturers so you can see the inventory they have on your behalf, to routing this production directly to your 3PL for just-in-time fulfillment.”

Technology is Driving Supply Chain Trends

All of these supply chain trends are driven by technology that is making increased levels of visibility and coordination possible. Specifically, newer cloud-based ERP solutions have opened the door for more sophisticated communication, modeling, and automation.

Learn more about how a modern ERP solution can help your business refine its supply chain dynamics. Contact our experienced ERP consultants by calling (801) 642-0123 or writing us at info@nbs-us.com.