The Top Supply Chain Trends in 2024
Ongoing disruptions, rapidly advancing technology and the need for continual improvement are reshaping the supply chain. The 35th Annual Council of Supply Chain Management Professionals (CSCMP) State of Logistics Report® uncovered several trends altering the supply chain landscape.
Uncertainty Remains
Higher interest rates, declines in growth and inflation continue to drive uncertainty in the supply chain, which has become nearly constant. Additionally, increased global conflict is making supply chains more fragile. The Russia-Ukraine war continues to affect supply chain operations, and disruptions at the Suez Canal and on the Red Sea have caused ships to reroute, adding transit time and creating additional costs.
There are converging forces that indicate uncertainty will remain a major theme in the global economy for years to come. To help address uncertainty, shippers and their logistics providers are focusing on strategic projects and gathering resources to improve resilience.
Efficiency Is King
Shippers are rewiring their distribution networks and supply chains, looking at systems as a whole and redesigning them to create new savings and a strategic advantage. According to the report, the increase in network redesign reflects cost consciousness and resilience.
Carriers are also focusing on efficiency to remain successful amid low rates and razor-thin margins. The report noted that the most successful carriers will be those that can focus on capacity optimization and collaborate with shippers and 3PLs to minimize empty miles. Freight forwarders are also working to improve operations by adopting route optimization technologies to reduce the number of vehicles in use and the distance traveled.
Companies are increasingly using automated systems for real-time updates, inventory management and cargo tracking to boost efficiency and streamline operations.
Technology Is Essential
The use of technology in supply chains is increasing across the board. “Investing in technologies to help improve agility and resilience will better position organizations and the industry as a whole to seamlessly navigate future disruptions,” said Andy Moses, senior vice president of solutions and sales strategy for Penske Logistics.
Shippers are drawing upon a new generation of increasingly sophisticated technological tools for monitoring and managing their trucking shipments. These include digital freight-matching tools that allow fleets to tap into third-party shippers to reduce deadhead miles, route optimization software to minimize empty miles and transportation management systems to keep shippers connected with their freight.
Although the use of technology has increased, the report found there is still significant potential for additional tech-related improvements.
Improved Sustainability
Environmental concerns are pushing companies to adopt sustainable practices in their supply chains, and the report found that there have been significant strides in this area.
Innovative business models, technological partnerships and policy advancements to fund emission-reduction targets all play a part in companies reaching their environmental goals. Efficient technology is also helping shippers, 3PLs and carriers reduce wasted miles, which has a direct impact on emissions and fuel consumption.
Companies are primarily focused on scope 1 emissions — those from their company’s facilities, vehicles and operations — and scope 2 emissions from energy the company purchases from outside entities. Scope 3 emissions — those from a company’s entire value chain, including suppliers and carriers — are typically harder to identify and track. However, to hit net-zero goals, companies will need to look at all three.
Nearshoring Is Increasing
Nearshoring has continued to grow in popularity. Kearney’s Reshoring Index Report found that 73% of CEOs had been approached by their board of directors about the prospect of nearshoring operations in 2023.
Inventory and inventory management are critical parts of the supply chain, and companies are reexamining the location of their inventories, looking closely at their suppliers and sourcing agents and the effect nearshoring would have on supply chain resilience. The report found companies are extending this through the second and third tiers of their supply network.
The report anticipates that global trade fragmentation and geopolitical instability will continue, which could drive further nearshoring efforts.