Supply chain insights and considerations in 2022
Supply chain disruptions in 2021 plagued a number of industries as a result of the COVID-19 pandemic and high demand. All parties across the supply chain can see negative consequences as a result of these disruptions. They generally have a large impact on the supply of materials from manufacturing to consumers, as well as prices and revenue. With high demand and low supply comes an increase in costs across goods and services and, according to a report from Conexiom, 94% of businesses reported experiencing a negative impact on revenue as a result of supply chain issues.
Coming into the new year many organizations are wondering what the supply chain will look like moving forward. Going into 2022, here are supply chain insights for businesses to consider:
Demand is still high
While many industries would benefit from a decrease in demand, unfortunately, that isn't the forecast in 2022. Demand is still extremely high and a number of industries and businesses are struggling to keep up. This only adds to the negative impact disruptions are causing. However, the most efficient way companies can attempt to tackle this issue will be increasing inventory levels as much as possible while accounting for the lengthy transportation times that are also expected to continue.
Technology is increasing
More positive news in terms of the supply chain is the integration of improved technology that supports the process. Technology is only predicted to continue upgrading, and utilizing these tools will be invaluable for reducing labor costs, streamlining data, reducing manual errors and offering consistent up-to-date information. However, it's up to individual companies to begin integrating these devices to see these benefits and keep pace with their competition.
Rates are expected to stay high
Because there's still high demand, costs and shipping rates are forecasted to remain steep for the time being. The overall market turmoil is having a detrimental effect on these rates, and it's significant to remember that improvement and progress take time. However, it's well known that rates are dynamic and, therefore, subject to change. Thus, it will be important for industry leaders to pay attention to market fluctuations along the way.
Improved management is still your best defense
Disruptions throughout the supply chain have underscored the importance of improving your management structures. Proper supply chain management is an organization's most effective shield against continuing issues. Some of the key elements of improving management include optimizing inventory, embracing technology, improving supplier relations, and reviewing your procedures regularly. All of these factors are valuable to stay on top of the process while improving resiliency and agility for any future issues you might encounter.
As disruptions in the supply chain continue to be an issue for organizations, the priority of implementing proper management moving forward shouldn't be underestimated. A report from Zippia found 57% of companies believe supply chain management gives them a competitive edge and 70% believe supply chains are a key driver for excellent customer service. Because drastic improvements aren't expected in the near future, it's up to individual companies to amp up their supply chain management structures to drive operational efficiency and keep pace with competitors.