Top 7 Supply Chain Trends for 2024

Leigh Chesley, Chief Strategy and Transformation Officer at Longbow Advantage, takes a look at the top 7 trends in the supply chain for 2024.

It’s an exciting time in the supply chain industry as new technologies and innovative strategies are transforming the way businesses operate. From advanced analytics to digital twins, there are plenty of opportunities for companies to gain a competitive edge.

One trend that is gaining traction in the supply chain industry is the use of artificial intelligence (AI) and machine learning (ML). These technologies allow businesses to analyze vast amounts of data and make more accurate predictions, which can improve inventory management, demand forecasting, and supply chain optimization.

To learn more about the impact of AI and Machine Learning on supply chain optimization and the six other trends we’ll explore, watch the Top 7 Supply Chain Trends for 2024 webinar below.

Speaker

Leigh Chesley
Chief Strategy & Transformation Officer
Longbow Advantage

Webinar Replay

Webinar Transcription

Leigh Chesley

Hello, and welcome, everyone, to today’s webinar. Thanks for joining me today to talk about the top seven supply chain trends for 2024. We are going to have some fun, I hope. There is a chat box that you’ll see on the right hand side of your screen. I’ve got Travis Hinkle here with me today, he’s going to be helping monitor some of that chat.

We’re also going to do a Q&A at the end. So as questions arise, throw them in the Q&A. I promise to try to save as much time as possible. And if not, we’re happy to go over and answer any questions or we can always follow up offline as well, because I know I see a lot of names that I recognize. So I appreciate everyone being here today.

One final thing: we are recording today’s session, so you are welcome to, obviously, go back and watch that as time permits. You’re also welcome to share that with others in your network or at your company. You should get an email from the platform in about a day or so. So if you don’t get that and you’d like to get a copy of it, always reach out to your customer success manager, myself, anyone here at Longbow, we’re happy to get you taken care of.

All right, so today we are running through not just seven trends for supply chain in 2024, but three opportunities as well. So if you stick with me through all seven trends, you’re going to get three key takeaways. And just a preview of what we’re going to be talking about today, and maybe what those takeaways might tie back to, everything is going to be going back to data, labor and resiliency. If you have been paying attention at all in the last few years, that should not be a surprise. But hopefully we’ve got a new spin on how all of that ties together with everything else that’s going on in supply chain today.

All right, so let’s dive right into trend number one: the continued rise of AI and ML in supply chain optimization. It wouldn’t be 2024 Without the mention of AI and machine learning. So I figured let’s talk about it at the beginning, get it out of the way.

The pressure is on for these technologies to begin reshaping traditional supply chain processes. 2023 brought us an AI revolution and we expect that pressure to continue in 2024. However, as early adopters and quick-to-market technologies begin to shake out, we expect to see 2024 normalize some of the AI and ML landscape. The abilities of these technologies to analyze vast amounts of data, identify patterns, and make decisions is revolutionizing how companies are thinking about their decision making capabilities.

There is a massive opportunity when you start thinking about what AI and ML can do with access to the amount of data supply chains—and really warehouses even, specifically—create. But what we have to acknowledge is the risk that lies in the over-reliance on AI-driven decision making. While these technologies excel at analyzing data, unforeseen circumstances or outliers may not be adequately accounted for in algorithms. I don’t think an algorithm would have predicted the pandemic, for example. So this lack of adaptability could lead to suboptimal decisions, especially in rapidly changing environments. So in 2024, I expect we’ll see AI and ML begin to be used for practical efficiencies, but we’re going to continue to see those human overlays.

When you’re thinking about accessibility to large amounts of data, a concern we’re seeing is the potential for data security breaches and privacy issues. Again, as these technologies rely heavily on vast amounts of data and sensitive information, we’re seeing that there’s, of course, going to be an increased risk. What we typically see with new technologies is that there are growing pains when it comes to security and legal challenges. While there’s no doubt that security and legal advances are going to catch up, we can’t say it’s there yet and the reality is that, unfortunately, early adopters are going to have to help navigate those challenges. They’ll get the opportunity to help shape what some of that looks like. So my recommendation is that teams do begin to dip into the AI and the ML opportunities, in low risk ways that provide efficiency gains without exposing a ton of risks to their company and their strategy.

And in addition to security and legal catchups, there’s ethical considerations that continue to be strong considerations as these technologies evolve. As biases present in historical data may be perpetuated into AI algorithms. This can obviously lead to unfair treatment, discrimination, and unintended consequences, which raises concerns about the ethical use of AI and supply chain decision-making.
So our key takeaway here is that ultimately, while AI and machine learning offer transformative benefits, we recommend a careful and low-risk entry into these new technologies to mitigate risks and ensure responsible and sustainable, thoughtful integration into supply chain technologies. The new shiny object approach is not going to be the path that works here.

So we saw a dip in the focus on sustainability during the pandemic. But in 2022, and even more in 2023, we’ve seen that companies are seeking to minimize waste, extend product life cycles, and create a closed loop system that fosters environmental responsibility. We expect that to continue and be pushed even further in 2024.

The adoption of Circular Economy practices brings forth a multitude of benefits balanced with strategic strategic impacts that we’ll want to consider. So for many of our customers aside from the obvious environmental impacts, an additional key benefit is cost savings. By reusing, remanufacturing, and recycling materials, companies can reduce the need for raw resource extraction, lowering production costs and minimizing waste disposal expenses. This not only contributes to the bottom line, but it also aligns with consumer expectations for environmentally conscious programs and practices, enhancing brand reputation and customer loyalty.

Helping with cost savings and waste reduction, these practices promote resource efficiency. So rather than following a linear model of production and consumption, where products are made, used, and then discarded, a circular approach emphasizes the continual use of, and regeneration of resources. This not only conserves valuable materials, but it also reduces the overall environmental impact associated with extraction, manufacturing processes, and disposal.

But, you know, as with any new or call it reinvigorated area focus, there’s a lot to consider in investment adoption. As I’m sure everyone here knows, most new strategies involve an initial investment in both technology and a significant investment in change management. So adopting sustainable processes often involves restructuring supply chains, investing in new technologies, and educating stakeholders, including change management on the floor and education up to the top.

The financial commitments, defining focus, and ensuring the right reporting and visibility are in place to support your efforts are all things that you’re going to want to consider. And we can’t talk about this without talking about reverse logistics. What we’re seeing in reverse logistics, with the exception of some industries like pharma, potentially Food and Bev, is that the vast majority of brands have seen a rise in reverse logistics as consumers continue to purchase multiple items online and return what they don’t need. I think I have five packages at my door right now.

When considering sustainability, this creates unique challenges with carbon footprint and the management of return goods. Circular Economy practices involve retrieving, refurbishing, and recycling products, which demands a very robust reverse logistics system. So we really encourage brands to establish efficient mechanisms for collecting used products, disassembling them, and reintegrating materials into the production cycle, in order to avoid disruption, increased costs, potential brand damage. This means that systems need to be speaking the same language and providing insights into the inventory and status of orders in order to maximize that reintegration model.

And our key takeaway here is that with sustainability, while it is something most supply chains certainly should consider, they’re very—there are many moving pieces that we’ve got to think about that in order to get it right. It’s better to have a clear, corporately aligned plan and objectives supported by the right tech, the right reporting, and the right processes. Otherwise, the positive brand equity and the savings you’re looking to build are going to backfire.

So I don’t know about all of you, but I long for the days when we won’t be talking about the pandemic and its impact on supply chains. But unfortunately, today is not that day. Whether it’s unexpected global shifts in our supply chain or the inability to navigate vital waterways, the past few years have been a roller coaster for supply chains worldwide. It’s been a crash course and the importance of building resilient and adaptable systems to weather the storms both metaphorical and literal.

And so, if I take us back to 2020, supply chains—we all know right—they were built like a game of Jenga. Suddenly someone pulled out some crucial pieces and with lockdowns, disruptions, surge in demands the delicate balance was upset. So we found ourselves scrambling to meet unexpected challenges, and the need for resilient supply chains became glaringly obvious. Fast forward to recently with the Panama Canal, where historically low water levels threw a curveball at global trade. We faced constraints that rippled across supply chains. It was like nature itself was reminding us that even the most crucial links in supply chain are susceptible to unexpected vulnerabilities.

So if we go back to, you know, AI and ML and these other strategies, would they have predicted the Panama Canal? Potentially. Would they have predicted other disruptions that we’ve seen? Maybe, but it’s not something that I would rely on. So what should we do if we can’t expect the unexpected?

Well, first, we have to be able to weather the storm. Having a resiliency plan is like having a sturdy umbrella in a sudden downpour. You might not need it every day, but when the storm hits, you really aren’t glad you have it. Resilient supply chain shield businesses from unforeseen disruptions whether it’s a pandemic, natural disaster, or any other unexpected event that can throw a wrench into the gears of commerce. So building resilience involves more than just stockpiling goods. It’s about having the flexibility to adapt, the foresight to predict, and the nimbleness to navigate challenges. It means having a diversified network of suppliers so if one falters, there’s always a backup to step in.

The lessons from recent years underscore the need for a holistic approach. It’s not just about mitigating risks, it’s about seizing opportunities to innovate. Resilience is not a static state. It’s a continuous process of learning, adapting, and evolving to stay one step ahead of the curve.

While building a resilient supply chain comes with numerous advantages, there are also challenges we need to be realistic about. Resiliency can increase costs in the short term and may impact some of your key metrics, like warehouse utilization, ongoing. Having a leadership team that understands and supports where the investment is worth the eventual payoff is key and providing the metrics to support your strategy, when that inevitable time comes is going to be critical.

Another challenge is in the complexity of a resilient strategy, is that it can add to any operation, right? Managing multiple suppliers, regions, 3PLs, 4PLs… It all adds additional complexity and relationships and contract management along with visibility and reporting challenges. So diversifying your supply chain has to have a consolidated management approach. It’s got to be supported by a team of people who understand, very clearly, how to manage relationships, how to manage data, risk, communicate.

And finally, the biggest risk we often see when building a supply chain is when companies over-architect their strategy. You cannot plan for every scenario and odds are rare that the same impact will happen twice. So really, the key takeaway is that with resiliency, you’ve got to be creating a strategy that has flexibility for the unknown. It isn’t possible to expect every unexpected solution and it doesn’t make financial sense to try to do that. We need to have systems and people in place to adjust to changing demand and circumstances and trust that the strategies that you’ve put in place are going to help you weather the storm.

The next trend that we’re going to talk about for 2024 is an increased focus on the potential for digital twins. A digital twin is like a digital mirror reflecting every intricate detail of the supply chain in real-time. At least that’s that’s the dream of what digital twin sells us. So let’s talk through some of the realities and think about what considering a digital twin really means for your business.

Okay, so first, let’s talk about efficiency. The digital twin revolution seems like a dreamland of streamlined operations. It allows for predictive maintenance, anticipating hiccups before they become full blown headaches. If you can imagine a world where machines tell you when they need a tune up before breaking down, that’s the power of a digital twin. Downtime becomes a distant memory and the entire supply chain hums along like a well-oiled machine.

Sound too good to be true? Well, let’s not ignore the risks that come with digital twins. As I’ve said a few times already today, there’s an issue of data security. With every corner of your supply chain replicated digitally, the stakes are just going to be higher. A breach could expose sensitive information from production schedules to customer data. And we all know that’s a Pandora’s box that we just do not want to open.

Then there’s of course the initial investment. Implementing a digital twin is not going to be cheap. There’s the cost of technology, integration with existing systems, and the need for training and for an advanced team to manage it. And finally, as with the other new technologies we’ve discussed earlier, there’s the potential for information overload. With so much data at your fingertips, it’s easy to drown in the sea of information. Without the right analytics and decision making processes in place, the digital twin could become more of a burden, overwhelming teams rather than empowering them.

So our key takeaway here is that, in the end, the digital twin revolution could be a double-edged sword. Could be a powerful ally that can revolutionize your supply chain, or it can be a massive distraction that can cause you time and money. Digital twins are something we recommend teams begin to educate themselves on. But with so many other technologies to create efficiencies, leveraging other emerging tech, it’ll really take the right use case for the effort to be worth the impact in 2024.

And speaking of emerging technologies, the logistics industry is gearing up for a Jetsons-esque makeover, courtesy of the transformative power of these emerging technologies that are beginning to enter more warehouses each year. Even though we’re seeing huge advancements—and I know if I walked the floor Modex or Promat, I am always amazed at what I see—it’s interesting to think about a world where drones, autonomous vehicles, and cutting edge software orchestrate an entire symphony, redefining the very essence of supply chain operations. We aren’t there yet. But I do think we’re closer than we’ve ever been before.

So firstly, let’s talk drones. We’re seeing drones used and more aspects of our life than I know I ever imagined. From light shows at NFL games to food deliveries and more. It’s definitely evolved from the airplane with a tiny SD card I gave my dad for Christmas 10 years ago. Drones are poised to revolutionize inventory management, picking, packing, security, machine monitoring, last mile… just about any other activity you can imagine. It’s not just about speed, though, it’s about efficiency, cost effectiveness, and minimizing repetitive or physically taxing activities. There’s also potentially a sustainability play here, right, so the logistics landscape is about to become a playground for flying hardware.

And both on the highway and inside the warehouse, autonomous vehicles are going to be next in line. We’ve already seen trucks navigating the highways without a human driver in sight and plenty of warehouses are using some sort of automation in their moving vehicles. It makes sense because these smart vehicles promise to enhance efficiency, reduce labor costs, and improve safety. And as with drones, they’re being seen as a tool to reduce redundancy and improve quality of life for workers with physically demanding jobs.

That said, large robotics implementations can take years and are a heavy investment. The ROI can be decades out. And we are going to continue to see consolidation within that market, which only, I think, begs the question of what is the ROI, and what is the long-term commitment on these products going to be? So we really encourage people to be thoughtful about their robotic strategy and think about it again within the whole of their goals and not going after the shiny object once again.

When we consider the impact of emerging technologies, there’s always going to be human factors to keep in mind. First, there’s a hot topic of automation versus human capital. As drones and robots take on more tasks, some believe that the human workforce might find itself navigating a difficult job landscape. We really believe it’s not an either/or discussion and that the key here is adaptation. Providing training and opportunities for workers to transition into roles that complement these technologies advances and uses robotics to improve the working lives of teams in the warehouse. We also believe that having complementary robotics and human capital strategies builds the most resilient supply chain strategy. And we’re going to talk about that a little bit more in trend seven.

So our key takeaway is that, you know, we think about these emerging technologies is our world really ready to catch up? Are our roads, skies, warehouses, legal teams, data teams, and wallets geared up to support these groundbreaking technologies? It’s like we’re in a race and the finish line is an evolved tech-savvy infrastructure, and it just keeps getting pushed out.

And let’s not forget the cybersecurity twist. As our logistics world gets more connected, there’s even more risk, so safeguarding our data and making sure, you know, the entire supply chain stays rock solid becomes even more important

All right, let’s dive into my personal favorite twit trend for 2024. And that’s real-time visibility, that’s turning the supply chain into a blockbuster show, if you will. So imagine having a backstage pass to a Broadway show that not only lets you watch but also control the entire performance. Supply chain is the only thing in companies that is constantly moving. Our concept of real-time is different than what the rest of the organization needs to effectively do their jobs. Having real-time visibility pulls together accurate views of what’s happening, and allows operators to adjust their plan in the moment. It’s not just about predicting what’s coming, it’s about adjusting the script of the play as that story’s unfolding.

Supply chain managers with purpose-built visibility strategies and tools become scriptwriters, adapting to changes in the plot with every passing moment. Strategic real-time visibility shines a spotlight on the strategic decisions and the supply chain narrative. With point-in-time visibility, it’s not just about having a glimpse, it’s about having a clear view of critical scenes within the production. Decision makers can now make strategic moves in the supply chain storyline, ensuring every twist and turn aligns with the overarching plot.

And of course, there’s things to keep in mind when planning any visibility strategy. True visibility involves integrating systems, especially in an acquisition or 3PL- or 4PL-heavy supply chain, which can be a challenge without the right data partner. Supply chain managers need to invest in the right technology and the right people to create a successful visibility strategy.

And additionally, visibility requires massive amounts of data movements, and access to that amount of data can be a risk. Every data strategy should be supported by a strong security plan and executed with partners who treat your data like their own.

And finally, with point-in-time visibility, teams need to be trained to read the data in real-time. Which means every KPI and every dashboard needs to be well thought out, purposeful, and insight-driven in order to increase comprehension and adoption. Teams that don’t have true a true real-time visibility strategy that allows them to see what’s happening with labor costs, inventory status, and revenue goals—or really whatever KPIs that leadership teams are looking at—both during the shift and at specific times during the day, the week, the month, will be left behind. As supply chains and 3PL and 4PL networks become more complex, visibility is going to be critical in monitoring the success and profitability across the chain and in strengthening those relationships with 3PLs and 4PLs.

In the ever changing landscape of supply chain, trend seven is focused on the role of people in shaping the supply chain future. So this trend shines a light on the massively important role of human capital within the dynamic trends of 2024. And while labor costs are important—and we’ll talk about that in a minute—we’ll also look at the importance of labor as we update our technology strategies.

As the supply chain has embraced technological innovations and disruptions, it’s easy to get lost in AI and robotics. But what we’ve also seen is that this trend of technological advancement puts a consistent emphasis on the significance of intuition, experience, and adaptability.

So for example, in the digital twin revolution, where virtual clones of supply chain processes come to life, human professionals are actually the architects, leveraging technology to optimize operations and enhance efficiency. When we talk about real-time visibility trends, it highlights the essential role of humans as decision makers, in defining and interpreting data, strategizing responses, and ensuring the smooth functioning of the supply chain. Even in the quest for resilient supply chains humans play a crucial role. Beyond technology driven risk mitigation, human expertise is crucial in anticipating and navigating unforeseen challenges, contributing to the agility and adaptability of the supply chain.

And importantly, as I’ve hit on before, within the trend of transforming logistics through emerging technologies, humans remain at the core of any emerging technology. Whether it’s managing autonomous vehicles, overseeing drone deliveries, or ensuring seamless integration of new technologies, human professionals provide the intelligence and oversight necessary for these advancements.

All of this leads to the need to capture and ensure labor strategies are being put into place and are current and are helpful for the operations. As we look at these new emerging technologies, and the trends within resiliency, labor strategies with warehouse operations may need to be restructured. Oftentimes, when we have partners come to us for the first time, they share that maybe they’ve implemented labor in the past, but they weren’t able to get it off the ground, or they had it implemented for a short short time, and it became shelfware.

A lot of times, we find that this is primarily due to a breakdown in the change management process. So as we all know, in the labor program was rolled out if it doesn’t have correct data from the start, associates immediately lose faith in the system. And this makes the odds for success of the program go down significantly. This is really important to think about as you’re thinking about adding different technologies and strategies to your business, as we look at these seven trends that are going to impact your labor. And so change management across not only the technology, but into your labor program, is going to be extremely important. It’s also why we like to recommend that companies starting on a labor management journey, think about it as a crawl, walk, run approach when this performance tracking is new, or even having that to fall back on if there’s significant disruption in the warehouse.

So for teams that already have a labor solution in place, continuing to analyze the current program and being realistic about your KPIs and how people are performing to benchmarks, as you implement new strategies into the warehouse, you can pretty quickly get an idea if the program is being impactful, if it’s being followed. And you can make training and management changes where needed. So oftentimes where, you know, if KPIs are off, we go back to, again, change management and training.

The human element is never going to leave supply chain or the warehouse. So whether it’s looking at more time-based labor planning—or solutions—or growing into discrete labor, manufacturers need to be thinking about what their labor strategy should look like and making sure all data is correct and up to date, as well as having a plan in place to execute against it so that you can have really great visibility into how implementing these new trends is impacting your ability to be successful.

So it remains true that robotics and other emerging technologies are complementary to a human warehouse and supply chain. Given the benefits of intuition and communication human interaction provides, coupled with steep startup costs and the need to have teams to train on and support these new techs, there will always be a role for our workforce in the emerging tech area. We’ll just need to evolve our labor strategies as these technologies evolve and become more commonplace.

All right, so what do these mean? I promised three opportunities.

So one huge opportunity we see is in the increasing integration of technologies such as AI, robotics, and digital twins. This is an opportunity to create transformative benefits with successful integration and visibility strategies. You should obviously includes strategic planning and address challenges like data security, infrastructure, and workforce change management.

The second significant takeaway is the paramount importance of building resilient supply chains. Recent disruptions emphasize the need for us to prioritize resilience. It’s not only inventory management, but also incorporating adaptability, diversified networks, and technology-driven mitigation strategies to navigate those risks.

And finally, a consistent thread weaving through all seven trends is the indispensable role of human capital in successful supply chain management. So from decision-making and data and emerging tech strategies, to the adaptability required for resilient supply chains, and the collaborative efforts and labor management, the human element remains central. Ensuring teams are equipped with the right skills and embracing continuous learning will continue to be critical.

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