What to expect from supply chains in 2024 and beyond
Author: Anthony Beavis, Körber Managing Director APAC
Geopolitical tensions, extreme weather events and ongoing economic frailties in 2023 put supply chains to the test, underscoring the importance of handling adversary. As we head into 2024, leaders’ confidence in supply chains is starting to gain momentum again, however, embracing data-driven decisions and contingency plans is crucial. As consumer dynamics evolve alongside socioeconomic volatility, businesses are being asked to sense demand shifts and orchestrate responsive fulfillment quickly. This is and will remain a huge challenge, but technologies enabling greater agility, transparency and predictivity are easing the burden and leading to many success stories.
Warehouse automation is accelerating dramatically as facilities embrace robotics and smart systems to unlock new efficiency frontiers. Autonomous mobile robots (AMRs) can dynamically shuttle inventory for optimised workflows, and automated storage and retrieval liberates floor space while enabling rapid order processing via optimised SKU locations. Cognitive automation through robotic process automation (RPA) and conversational AI is taking on repetitive administrative tasks for businesses as well.
According to McKinsey, automated warehouses can reduce operating costs by up to 30% with throughput velocity gains over 25%, while research by MIT finds every $1 spent on control towers yields $3-$10 in cost savings. On top of this, data from IBM shows that organisations that use security AI and automation extensively save USD 1.76 million compared to those that don’t. The global average cost of a data breach in 2023 was USD 4.45 million, a figure which is on the rise every year.
Do you have the right data?
To leverage advanced technologies like cloud computing, predictive analytics and artificial intelligence, companies should first establish integrated digital foundations spanning their end-to-end supply chains. Collating the right type of customer, sales and product data is the key to driving enhanced data-driven decision making, real-time visibility, and streamlined flows. Businesses are learning to prioritise data, foregoing a one-size-fits all approach to learn the numbers that matter to their business. The transition from analog or semi-digital processes poses adoption challenges, especially around quantifying return on investment, but there is an understanding now that digitalisation is synonymous with business survival.
When supply chains become competitive advantages
Well-designed and optimised supply chains confer many advantages, including meeting customer fulfillment expectations, improving network efficiency, strengthening reliability and resilience, enabling what-if scenario modelling, and maintaining balanced inventory strategies. However, over-dependency on specific partners and inadequate agility to address unforeseen situations can prevent supply chains from achieving their full potential. In 2024, businesses will look to diversify their supply networks and partners, giving extra flexibility to dynamically shift sourcing, production or distribution based on changing cost economics, lead times or demand.
Human and machine collaboration
While automation and analytics unlock supply chain advancements, engaged talent remains indispensable. Labour shortages have hit Australia hard, and a lack of available workers is a persistent problem, which is why we need to create engaging and fulfilling roles alongside automation. Cobots are designed to work alongside humans to complete daily tasks more effectively and productively, automating repetitive tasks to provide better employee safety and wellbeing. For instance, Körber research estimates that a warehouse operator completing a picking workflow will walk around 10 to 15 kilometres a day. As the technology handles execution, employees can shift more towards value added tasks and strategic decision-making. This concept demands workforce readiness through change management, continuous skills development, and cultural alignment. By empowering people to work alongside intelligent systems, businesses will reap the full rewards of technology and innovation.
Omnichannel fulfilment remains pivotal
The pandemic has shone a light on the importance of a businesses’ every channel – ecommerce, direct- to-consumer, retail and distributors. If one channel is disrupted or underperforming, profits don’t immediately dip because demand is consolidated in every channel. Developing supply chains which facilitate this is easier said than done, however, and requires sophisticated data management tools. Order Management System (OMS) will be vital for retailers in 2024, improving fulfillment and profitability to enhanced customer satisfaction. In the era of online returns and same-day delivery, retaining customer loyalty is crucial – by increasing inventory visibility, businesses can avoid lost sales and stockouts.
What does the future supply chain look like?
In the near future, highly automated supply chains where sensors, vast data, artificial intelligence, cloud platforms and robots enable smart decision automation and precise control of logistics flows will be the standard. In 2024, the culmination of this technology is being utilised by smart businesses around the world, and it’s a matter of time before the competition is forced to catch up. A lack of capital availability might be slowing the adoption of fixed, traditional warehouse technology, but there’s no doubt that automation, software and artificial intelligence hold the future of supply chains. Flexible automation gives companies of different sizes the opportunity to explore the benefits of innovative technology without enterprise level capital investment.
