As we head into 2024, several key trends are expected to shape the landscape of supply chain management globally, including in the Philippines.
These trends reflect the ongoing evolution of the industry in response to recent challenges and technological advancements.
Here are some of the major trends to watch for:
Increased Digitalization and Automation: The integration of advanced technologies like AI, machine learning, and robotics will continue to drive efficiency and accuracy in supply chain operations. Purchasing and Supply Chain Management expert Ricardo Sison notes, “Technology must be more accessible, meaning more intuitive and able to easily integrate with other systems.” Automation in warehousing, logistics, and inventory management is expected to reduce manual errors and improve overall productivity.
Sison warns against relying solely on technology without a solid underlying strategy. He advises that technology must be accessible, graphical, mobile, scalable, and secure to truly empower users and facilitate strategic development and delivery.
Enhanced Supply Chain Visibility: With the help of Internet of Things (IoT) devices and real-time data analytics, companies will aim for greater visibility across their supply chains. “It should be more graphical, easy to use, and mobile; in other words, it must empower the user,” Sison asserts.
With the integration of technologies like IoT, RFID tags, and advanced analytics, companies can achieve end-to-end visibility, from procurement of raw materials to delivery of finished products. This level of transparency allows for more accurate forecasting, better inventory management, and timely identification of potential disruptions. It also enables businesses to respond proactively to changing market demands and customer needs, improving overall efficiency and customer satisfaction.
Sustainability Focus: Environmental considerations will become more crucial, with companies increasingly adopting green supply chain practices. This shift will involve more sustainable sourcing, reduced carbon footprints in logistics, and eco-friendly packaging solutions. “Change the formula for cost of goods to include the cost of disposal when deciding where to purchase,” Sison advises. He stresses the importance of considering environmental impacts in purchasing decisions, advocating for a more sustainable approach to procurement.
The sustainability focus in supply chains extends to various aspects, including sourcing eco-friendly materials, optimizing energy usage, reducing waste, and ensuring fair labor practices. Companies are looking to implement circular economy principles, where the life cycle of products is extended, and the end-of-life disposal is considered right from the design stage. In logistics, this might mean investing in fuel-efficient transportation and optimizing routes to minimize carbon emissions.
Resilience and Flexibility in Supply Chain: The disruptions caused by the Covid-19 pandemic have highlighted the need for resilient and flexible supply chains. Businesses will likely continue to diversify suppliers, increase stock buffers, and develop contingency plans to quickly adapt to unforeseen events.
“Return to the practice of using buffers of ‘safety stock’ to avoid shortages,” advises Sison. He emphasizes the importance of a ‘just-in-case’ approach over ‘just in time’ in building a more resilient supply chain, suggesting that businesses select critical points for building backup capacity for financial viability.
Sison predicts a shift in the trade-off between cost and risk due to global geopolitical tensions. He highlights the growing importance of managing volatility, developing supplier partnerships, and securing innovations in supply chain decisions.
Localized Supply Chains: In 2024, the shift towards localized supply chains is anticipated to gain significant momentum in the Philippines. This trend, underscored by Sison’s insights on dual/multi-sourcing and near-shoring, reflects a strategic move away from over-reliance on distant and often volatile global supply networks. By bringing supply chain operations closer to home, companies aim to reduce lead times, mitigate risks associated with international logistics, and gain greater control over their production processes.
In embracing localized supply chains, businesses in the Philippines will need to carefully assess their supply chain networks, identify key areas for localization, and invest in developing strong relationships with local suppliers. This approach not only fortifies the supply chain against global disruptions but also positions businesses to more effectively meet the evolving needs and expectations of their market.
E-commerce and Direct-to-Consumer Models: The rise of e-commerce in the Philippines will continue to impact supply chain strategies, with an emphasis on direct-to-consumer delivery models. This trend will necessitate more robust last-mile delivery solutions and efficient reverse logistics for returns.
Consumer trends will heavily impact supply chain strategies. “As the region’s middle class grows, so do consumer demands,” Sison remarks, indicating the need for businesses to adapt to these evolving preferences. He also notes the need for multinational companies to establish a regional production presence. He anticipates shifts in sourcing strategies and the continual evaluation of in-shoring/off-shoring decisions.
Blockchain for Supply Chain Integrity and Strong Supplier Relationship: Blockchain technology is set to play a transformative role in enhancing supply chain integrity in the Philippines. This technology can be employed to create a tamper-proof record of every transaction and movement of goods, from the point of origin to the end consumer.
The application of blockchain in supply chains addresses several key challenges, including counterfeiting, fraud, and compliance with regulatory standards. It facilitates better collaboration between various stakeholders in the supply chain. By providing a single, shared source of truth, it reduces disputes and streamlines operations, leading to more efficient and harmonious business relationships.
Advanced Analytics for Better Decision Making: Big data and advanced analytics will be crucial for predictive modeling and decision-making. This includes optimizing routes for logistics, managing inventory more effectively, and predicting consumer demand patterns.
“From experience, the most effective forecasting tool is one that takes both seasonal and cyclical fluctuations into account. Needless to say, the more historical data you have, the more accurate your forecast can be,” Sison acknowledges. He advises regular review and calibration of forecasts to accommodate current factors like supply shortages or regulatory changes.
Collaborative Ecosystems: There will be a greater emphasis on collaboration within the supply chain, including partnerships with suppliers, logistics providers, and even competitors, to optimize resources and information sharing.
“Your supply chain is only as good as your supplier relationships,” states Sison. He emphasizes the importance of clear communication and agreement on expectations and metrics with suppliers, advocating for performance management systems that support multiple dimensions of value.
Cybersecurity for a ‘Fully-Secure’ Supply Chain: As supply chains become more interconnected and reliant on digital platforms, they also become more vulnerable to cyber threats. These can range from data breaches and ransomware attacks to more sophisticated supply chain intrusions that can disrupt operations and erode trust.
To counter these risks, businesses in the Philippines will need to invest in advanced cybersecurity solutions that can protect sensitive data, monitor supply chain networks for potential threats, and ensure the integrity of digital transactions. By prioritizing cybersecurity, businesses can safeguard their operations against disruptions and maintain the trust of their customers and partners, which is crucial for long-term success in an increasingly digital world.
Preparing for the Future Workforce
Looking towards the future, Sison notes, “By 2025, 75% of the global population will be Millennials.” This demographic shift will require supply chain leaders to understand and cater to the expectations of this new generation. He notes their preference for meaningful work, creative collaboration, and aversion to rigid hierarchies.
The supply chain landscape in the Philippines for 2024 is poised for significant evolution, driven by digitalization, sustainability, resilience, and collaboration. Insights from Ricardo JV Sison provide a valuable framework for businesses to navigate these changes effectively. As the sector continues to grow and adapt, staying informed and agile will be key to success in this dynamic environment.