Top 10 2024 Supply Chain Trends: 1. Digital Supply Chain

Likely, by now you’ve read about the release of the Association for Supply Chain Management’s (ASCM) top ten 2024 supply chain trends.

If  you missed them, they were announced in September at the ASCM’s annual conference in Louisville, Kentucky. For the first time in four years, big data and its close cousins — advanced analytics and automation — were bumped from the top spot.

Instead, this year’s number one supply chain trend award was bestowed on none other than the digital supply chain.

Given the lessons learned during the COVID-19 pandemic about how poorly archaic supply chain practices hold up during profound and never-ending disruptions, the digital supply chain’s heightened importance may come as no surprise.

And if you’re wondering which trends rounded out the remainder of the top-ten list, here they are:

In this post, we’ll dig deeper into the digital supply chain to discuss current trends and learn more about why it took this year’s top spot. Over the nine weeks to follow, we’ll do something similar with each of the remaining categories as we move into the new year.

What is a digital supply chain?

Describing a digital supply chain, Oracle’s Abby Jenkins notes that in contrast to a traditional, linear supply chain in which each step depends on the previous one, a digital supply chain “integrates internal systems and data with external information, both structured and unstructured.” This enables much more end-to-end supply chain visibility, allowing organizations to address both potential and real challenges before and as they happen.

“There’s two-way sharing with suppliers and full visibility into the supply chain for all stakeholders,” Jenkins writes. “New technologies collect, monitor and analyze data to make predictions and recommend actions in real time.”

She defines a digital supply chain as a “set of processes that use advanced technologies and better insights into the functions of each stakeholder along the chain to let each participant make better decisions about the sources of materials they need, the demand for their products and all of the relationship in between.”

While the full integration of legacy supply chain management technologies is needed as a first step, Jenkins says that “truly digitizing” a supply chain includes mining data from those technologies — as well as Internet of Things (IoT) devices that provide sensing and monitoring capabilities.

“Through the use of gateways, that data can be shared with stakeholders along the supply chain,” Jenkins writes. “The data is then aggregated and used by stakeholders to assess whether they can reliably expect the products they need.”

The fact that this is all performed in near real time is the key that enables such significant improvement in end-to-end visibility, she says.

Source: NetSuite on YouTube

Why is a digital supply chain so important?

Before the COVID-19 pandemic hit, many organizations were a bit reluctant to take the digital supply chain leap. But in the midst of such unprecedented disruption, a sense of urgency emerged regarding the need for supply chain capabilities that could address supply chain breakdowns — and help prevent them in the future.

In our August 2021 article, Digital Supply Chain Networks: The Growing Urgency for Adoption, we cite two Deloitte experts — Jim Kilpatrick and Adam Mussomeli — who asked, “Could COVID-19 be the black swan event that finally forces many companies, and entire industries, to rethink and transform their global supply chain model?”

Describing how the pandemic “has already exposed the vulnerabilities of many organizations,” Kilpatrick and Mussomeli underscored the urgent need for a new supply chain model: “A decades-long focus on supply chain optimization to minimize costs, reduce inventories, and drive up asset utilization has removed buffers and flexibility to absorb disruptions–and COVID-19 illustrates that many companies are not fully aware of the vulnerability of their supply chain relationships to global shocks.”

Similar to Jenkins, they underscored the important role of technologies such as the Internet of Things (IoT), artificial intelligence (AI), robotics, and 5G to optimize end-to-end visibility.

“Whether it is a ‘black swan’ event like COVID-19, trade war, the act of war or terrorism, regulatory change, labor dispute, sudden spikes in demand, or supplier bankruptcy, organizations that deploy DSNs [Digital Supply Networks] will be ready to deal with the unexpected,” they wrote.

Why the digital supply chain made the top spot

In an analysis of ASCM’s Top 10 2024 supply chain picks, Informatica’s Scott Jennings says the digital supply chain has “risen to prominence” because it’s considered the “backbone for streamlining various supply chain activities.”

Noting that digital capabilities create a more “agile supply chain architecture,” Jennings says that by using it, companies can respond more quickly to ongoing changes and gain better resiliency to manage through future shocks to the supply chain.

“The pandemic, one of the most notable disruptors, almost single handedly brought the supply chain digital agenda from behind the curtain to center stage,” Jennings writes. “…The overwhelming disruption drove digital innovation and the necessity to completely transform antiquated supply chain processes and capabilities.”

As a result, he says organizations around the world are working toward a complete digitization of their supply chains.

“Interestingly, the ASCM board was unanimous in their agreement on data’s role,” Jennings adds. “Through this ongoing supply chain transformation, ASCM now emphasizes the paramount importance of data in bringing about a more agile supply chain.”

He also notes that the board underscored the need for data to be “relevant, clean, and governed” to ensure the accuracy of the analytics and predictions it enables.

“Otherwise, the risk of running down the wrong rabbit hole becomes very real,” Jennings says.

Building a digital supply chain

Noting that there isn’t a signal path to digital transformation, Oracle’s Jenkins builds on the data theme by saying that companies can start by asking a simple question: “How can we use data to solve problems?”

Here are seven steps she recommends as a potential framework for development:

For a detailed look at her recommendations, please see the full post: “Digital Supply Chain Explained.”