The late business guru Peter F. Drucker once stated, “Whenever you see a successful business, someone once made a courageous decision.” For years, business consultants have encouraged businesses to become data-driven. They could just as well have insisted that businesses become decision-driven — it is the decisions made as a result of analyzing data that are really important. The better part of decade ago, Bain analysts, Michael C. Mankins and Lori Sherer, noted, “The best way to understand any company’s operations is to view them as a series of decisions.”[1] They added, “We know from extensive research that decisions matter — a lot. Companies that make better decisions, make them faster and execute them more effectively than rivals nearly always turn in better financial performance. Not surprisingly, companies that employ advanced analytics to improve decision making and execution have the results to show for it.” That observation has withstood the test of time because it makes perfect sense. Supply chain professionals understand that. They have always been decision-driven; and, that’s good for business. As Lora Cecere, founder of Supply Chain Insights, has insisted for a long time, “The supply chain IS Business, not a department within a business.”[2] So, what lies ahead for supply chains in 2024?

Supply Chain Trends

Matthew Lekstutis, CEO of SGS Maine Pointe, writes, “While predictions are as volatile as the future they predict, trends are often more reliable, and preparations for those trends are well within the abilities of every company in every industry. Some of the trends companies must prepare for include increased interest rates, global political and economic turmoil, increased effort to reduce carbon emissions, and digital transformation.”[3] Other trends worth following include:

Improved Decision-making

Can supply chain professionals become even better decisionmakers? Freelance writer Bridget McCrea thinks so. Improving supply chain decision-making is the first of six trends she has identified as important in the area of supply chain management for 2024. Caleb Thomson, Senior Director and supply chain analyst at Gartner, told her, “Larger organizations, in particular, now have pretty good approaches in place to drive decision alignment and ensure access to quality data that can be used to support more efficient, effective supply chain decision-making.”[4] At Enterra Solutions®, we are convinced that future belongs to decision-driven companies. That’s why we have created the Enterra Systems of Intelligence™ — a set of interconnected business applications that span across the value chain of an enterprise and work in concert to perform end-to-end optimization, planning, and decision-making at scale and at the speed of the market. The Enterra Systems of Intelligence works alongside existing client systems by sending instructions to and coordinating the actions of client systems of record and then learns from the outcomes.

Continued Push to Digitize Supply Chains

Systems of record are important because they contain the data that artificial intelligence (AI) solutions need to function properly. Despite the fact that we are well into the Digital Age, the staff at Material Handling & Logistics (MH&L) notes, “2024 will see continued push to digitize supply chains.”[5] They base this prediction on a survey conducted by Deloitte. The survey found that, in spite of improvements, supply chain challenges still exist. “To address these issues manufacturers are looking to continue to digitize their supply chains.” The survey found, “76% of manufacturers are adopting digital tools to gain enhanced transparency into their supply chain.”

Risk Management and Simulations

Another trend identified by McCrea is the use of supply chain simulations. She notes, “[There is a] high demand for risk evaluation software that companies can use to run simulations.” Michael McCullough, a Vice President at Capgemini, told McCrea, “Supply chains are moving faster and more resiliently right now, and companies are becoming even more focused on evaluating risk — both in terms of their supplier bases and their manufacturing/sourcing sites (i.e., those situated offshore).” McCrea also notes, “More vendors are now adding simulation capabilities in their applications, and especially on the planning side. These models can be used to simulate different scenarios and to test different strategies. This, in turn, can help companies make better decisions about their supply chains and answer risk-related questions.” The Enterra Global Insights and Decision Superiority System™ (EGIDS™) is one such application. It pushes the bounds of what’s possible by running countless scenarios to find the combination of actions that maximize business goals most effectively, freeing up employees to attend to other tasks and to support loftier business goals. EGIDS lies at the heart of the Enterra Enterprise Growth WarRoom™ capability.

Blockchain Implementation

The MH&L staff observes, “Distributed ledgers such as blockchains, or smart contracts, which automate contract execution within blockchains, are gaining interest from some manufacturers. About one-quarter of manufacturers surveyed plan to implement these technologies within the next year, hinting at a potential new wave of adoption and innovation.”

Generative AI Impacts

Thompson told McCrea, “We’re hearing about some interesting opportunities from technology service providers that are using generative AI/ChatGPT-like functions in their [solutions].” Enterra’s Autonomous Decision Science™ (ADS®) and Generative AI powered business applications transform how enterprise optimization, planning, and decision-making are performed. Enterra’s business applications pair industry-specific business knowledge and data, with Enterra’s proprietary math and human-like reasoning engines, to generate insights and recommendations with the subtlety and judgment of a company’s best experts — but at a level of speed and accuracy humans can’t achieve. Aila™ is the name we use for Enterra’s anthropomorphized Generative AI.

Rise of Microservices

Howard Turner, Jr., Director of supply chain systems at St. Onge Co., told McCrea what was once called modular software has “morphed into what are now known as ‘microservices.'” McCrea adds, “[Microservices are a] software architectural approach that structures applications as collections of ‘loosely-coupled services,’ microservices are made up of self-contained services that can perform a single function. Turner told her, “Microservices isn’t a new term, but we are fielding more requests from companies that want to know what it means and how it works.” The reason microservices are gaining popularity is “because they let companies implement only the functionality that they actually need.” And, according to Turner, “Microservices also reduce risk because those deployment timelines are shorter.”

Cloud Operations Continue to Grow

According to McCrea, “The cloud has become a crucial backbone for many organizations. In fact, 94% of them are currently using cloud services — an adoption rate that drove up the value of the global cloud computing industry to a whopping $480.04 billion [in 2022].” Turner told McCrea, “Cloud is becoming the preferred model for [supply chain management] applications. The traditional approach of buying SCM software and licenses — and then installing the applications in your data center and waiting for software updates to be sent — is definitely going away.”

Changing Use of Labor Management Tools

“Historically,” McCrea writes, “labor management systems (LMS) have been used to track employee time and attendance; manage schedules and payroll; comply with labor laws; and monitor workforce metrics like productivity, absenteeism and turnover.” That makes labor management systems sound a bit like big brother surveillance and monitoring. Norm Saenz, partner and managing director at St. Onge Co., insists that is changing. He told McCrea he “is seeing companies put the software to even better use as an employee coaching, support and retention tool.” He added, “Companies are concerned about the labor market. They want to treat their employees as fairly as possible, ensure those workers are being paid the right compensation and that they have the chance to provide proper feedback.”

Concluding Thoughts

Lekstutis concludes, “Companies are always going to face the unexpected and unpredictable. Economic upheaval, geo-political instability, new regulatory mandates, and an AI revolution are trends clearly apparent — no need for a crystal ball. The hard part is knowing how to prepare for these supply chain trends strategically.” As noted above, simulations are way to approach “what-if” planning so that the best strategies to face the future can be adopted. The start of the new year is a great time to prepare. Happy New Year!

Footnotes
[1] Michael C. Mankins and Lori Sherer, “Creating value through advanced analytics,” Bain Brief, 11 February 2015.
[2] Lora Cecere, “Sage advice? Only for turkeys.” eft, 1 February 2013.
[3] Matthew Lekstutis, “Strategic Responses to Supply Chain Trends,” SupplyChainBrain, 6 September 2023.
[4] Bridget McCrea, “Six emerging supply chain software trends to watch,” Supply Chain Management Review, 1 September 2023.
[5] Staff, “2024 Will See Continued Push to Digitize Supply Chains,” Material Handling & Logistics, 7 November 2023.