What is Supply Chain Planning? The Most Anticipated Supply Chain Trends for 2024

Supply chains are the circulatory system of the body of a business. Supply chain planning is akin to the brain telling the blood where to flow to keep the whole thing running.

The Supply Chain Planning process is an interesting topic of discussion as of late. We have quite a few new variables in the mix in 2024. AI and automation technology are progressing by leaps and bounds, not to mention that global supply chains have become the norm for most businesses after the e-commerce market boom.

The logistics sector is also shaking up, with the move to electrically powered logistics networks further impacting supply chain efficiency. With more and more companies offering international delivery and service in vast regions, the importance of the supply chain planning process is at an all-time high.

In fact, Precedence Research reports that the supply chain planning and management market is set to grow at a tremendous CAGR of 10.9% between 2023 to 2032.

This growth in the market is a clear indication that the message hit home for business owners that supply chains need more attention.  This is important so that the business world is never again forced to a standstill by a global crisis. Huge investments are being made into developing technology, strategies, and training supply chain planning and management professionals to bolster our defenses for the unexpected.

Your business needs to invest in supply chain planning and management for the future. There is efficiency to be pursued and optimization to be implemented.

Staying updated on supply chain trends is essential for businesses to remain competitive, manage risks, optimize costs, satisfy customers, drive innovation, and uphold sustainability and CSR commitments.

So come aboard and strap in as we run through the most anticipated trends in supply chain planning in 2024.

What is Supply Chain Planning?

Supply chain planning is the first phase businesses need to master on the road to tomorrow’s supply chains. All good results come from good planning, and supply chains are no different.

The supply chain process involves many intricate steps such as:

• Supply and demand forecasting,
• Budgeting,
•  Inventory Management,
• Logistics and Transport Management,
• and Supplier Relations Management, etc.

On top of all this, the supply chain function is intricately linked with the marketing, accounting, and sales functions. If the supply chain is not working in sync with these other functions, then the whole thing can come to a grinding halt.

For example, imagine if the accounting function were not told that a specific payment was required to be released at a certain time to ensure ample stock was available. This one communication gap will mean that the business will end up understocked and disappoint the consumer base.

All of this could have been prevented if the planning phase had hashed out the proper payment schedule in advance and alerted the accounting function.

Mistakes like these are strewn all over the modern business world, and the focus on supply chain planning this year is to reassess and implement change in the supply chain planning phase that will reverberate across the supply chain and uplift all of the business functions.

The Most Anticipated Supply Chain Planning and Management Trends for 2024

1- Surge in AI and Automation Technology Integration

AI and automation technology are here to stay, and if the research is to be trusted, it is here to make everything much better. As reported by CTMfile, a new report by ResearchAndMarkets.com concludes that supply chains leveraging AI were found to be 67% more efficient than traditional supply chains.

Generative AI is at the forefront among these new technologies, bringing to the table heretofore unseen data generation and processing capabilities. Generative AI can assist with crafting data-based market models which can be used to make more accurate demand plans.

On top of that, algorithms can handle regulatory and compliance responsibilities, identifying any potential rule-breaking and suggesting corrective measures to boot.

Generate AI is also phenomenal in improving manufacturing and logistics workflows, drawing seamless production schedules that fit demand, and charting the optimal logistics route for faster order fulfillment.

The choice is clear in this particular area. The technology will only continue improving, and with time its value will also balloon and the cost will skyrocket. Now is the best time while AI is in its infancy to start experimenting and integrating it into your business.

This integration cannot be limited to singular functions. For generative AI to function optimally, the business must be rethought and restructured around these technologies. Developing these systems is no easy or quick task, but it is nevertheless of paramount importance.

2- Increased Focus on the Role of Data in Supply Chain Planning

With AI and automation technologies at our disposal, the next big anticipated trend in the realm of supply chain planning is a greatly increased focus on data itself.

While true that we can almost instantaneously process terabytes of data with current technology, the results of this processing greatly depend on the data itself. Businesses cannot be feeding just any data into their supply chain systems.

The issue we have at hand now is that we simply have too much data nowadays. So, it becomes impossible to process it all and make it coherent. The various functions of the business have a high chance of becoming their own isolated data silos, which impedes any attempts at demand forecasting and other planning tasks.

The goal this year for many supply chain experts is to tear down these data silos and implement a properly structured flow of data throughout the business.

Centralized ERP systems go a long way in achieving this goal, keeping all the data in a single spot and accessible to the appropriate personnel ensures that there are no surprises.

The point of supply chain planning as a whole is to eliminate as much volatility as possible and set up circumstances so that the business only stands to gain, varying only in the degree of success achieved.

3- Working Towards Tier 3 Supply Chain Visibility and Transparency

Another new expected shift in strategy this year according to KPMG is an effort to break down the barriers in multi-tiered supply chain structure. To simplify things, let’s go over the system briefly.

Tier 1 suppliers are the direct links the business gets its products from. They are manufacturing and production partners. Tier 2 suppliers are the ones responsible for providing tier 1 suppliers with their supplies. Tier 3 suppliers are even further back, usually the raw material suppliers that kick off the production process.

So, imagine a car dealership. The dealership gets cars from tier 1 supplier Ford. Ford makes cars using parts like tires from tier 2 suppliers like Michelin. Michelin makes its tires by procuring rubber and other raw materials from a tier 3 supplier.

This is the basic explanation of a multi-tier supply chain, and the goal this year is to try and increase visibility beyond tier 1. The main reason for this is that there is a lot of room to optimize further back in the supply chain. The more you know about what’s happening as far back as your tier 3 suppliers, the better you can form your risk management strategy, as well as work on sustainability.

Furthermore, your decision-making abilities are enhanced once you know every company working to get a product from the raw material stage into the customer’s hands. This can inform your supply chain planning strategy, and may even prompt a change in suppliers once you notice a problem beyond tier 1 in your existing supply chain. Maybe your tier 3 supplier is selling materials at a premium, which snowballs into your tier 1 supplier’s prices being raised. You can then work towards finding a better supplier or negotiating with the existing tier 3 supplier to bring costs down.

4- Drone and Electric-based Logistics

Drone and electric-based logistics are on fire, with Fortune Business Insights reporting a projected CAGR of 54% between 2021 and 2028, with the market value ending up at $31.2 billion by 2028.

Battery electric (BEV) trucks are projected to reach 17% of truck registrations in 2025 globally and hit 43% in 2030 according to Interact Analysis. This is a massive growth spurt and a sign that logistics are about to undergo terrific change as we switch to more sustainable and eco-friendly logistics.

Climate change is a vital subject to stay informed on going forward and trying to implement it where possible in the supply chain. Supply chain planning experts are now tasked with the duty to find and leverage these new electric and drone logistics to contribute to the global push toward sustainability. Customers will be far more likely to support your business if you are actively addressing growing concerns about the environment.

The logistics part of the supply chain is the main culprit when it comes to harming the environment, so choices must be made to reduce the overall carbon emission by the supply chain to stay in good standing with the public and regulators, as well as lower logistics fuel costs and optimize supply routes.

Conclusion

There you have it, EA’s most anticipated supply chain trends for 2024. As always, we encourage readers to dig deeper and look beyond this publication before finalizing their perspective. Our vast resource banks are filled with nuggets of information on this topic. Whether it be inventory management strategies or demand and supply planning, we have you covered.

You can also check out our own outsourced supply chain management services, where you can skip all the boring parts and hop on a call with EA CEO Haroon Jafree, an expert in the field of supply chain planning and management.

Best of luck to everyone for 2024!