Emerging Challenges: Embracing IoT Technology for Sustainable and Cost-Effective Supply Chains in 2024

In 2024, supply chain issues are evolving, shaped by a series of emerging challenges that are redefining them. Three major challenges stand out: sustainability in commerce, investment in cybersecurity, and workforce challenges. As supply chains become more complex and demand for efficiency increases, the digitization of supply chains has become essential for companies seeking to optimize their procurement operations. Investment in this digital transformation can improve logistics processes’ efficiency, visibility, and flexibility, and constitute a crucial competitive advantage.

Technological Investments in the Supply Chain

What technological investments should companies prioritize in the supply chain? How can we ensure workforce stability in the face of supply chain challenges? How can companies adapt their strategy to a context of sustainable development? A recent survey by Software Advice, which polled 200 supply chain and logistics professionals, provides insights into these questions.

Supply Chain Cost Optimization

Economic inflation emerged as a major concern for 50% of respondents, reflecting apprehensions about rising costs and pricing pressures. Logistical delays (29%) were also reported as an expected challenge for 2024. These delays result from a variety of factors, including transportation bottlenecks, disruptions to global trade routes, and interruptions caused by geopolitical instability.

The companies surveyed recognize the potential of technology to improve efficiency, decision-making, and overall supply chain performance, as well as to reduce costs. To reduce expenditure, 23% of companies surveyed plan to start negotiating contracts with their suppliers, while 62% plan to continue these discussions. Additionally, 30% of respondents plan to adopt supply chain management software, and 39% indicated that 6% to 10% of their 2024 budget would be spent on supply chain technologies.

Investment in Artificial Intelligence and Cybersecurity

Investment in cutting-edge technologies is part of the plans for almost half of the companies surveyed. 46% plan to maintain or start investing in advanced cybersecurity, 44% in artificial intelligence (AI), and the same proportion in advanced data analytics. Each of these technologies can be used to ensure supply chain integrity.

AI has become a fundamental pillar of supply chain management. It enables companies to automate and optimize their processes, such as demand planning, logistics route optimization, and inventory management. AI software helps companies anticipate fluctuations in demand and identify market trends.

Cybersecurity is a top priority to protect sensitive data and ensure business continuity. Cyber-attacks can compromise information security, disrupt the flow of goods, and jeopardize customer confidence. By investing in cybersecurity software, companies strengthen the protection of their systems and reduce the risk of data breaches.

Data analytics plays a crucial role in optimizing supply chain performance by providing actionable insights from data generated throughout the logistics process. By using data analysis tools, companies can identify trends, predict future demands, and improve operational efficiency.

AI has become a fundamental pillar of supply chain management. It enables companies to automate and optimize their processes, such as demand planning, logistics route optimization, and inventory management. AI software helps companies anticipate fluctuations in demand and identify market trends.

The Threat of Cyber Attacks

The impact of a possible cyber-attack worries 25% of respondents. In the last 12 months, 39% of companies have experienced operational disruption due to a cyber attack. Organizations that rely on complex supply chains spanning different geographies and partners are exposed to more cyber threats. With cyberattacks and data breaches on the rise worldwide, investment in cybersecurity measures has become a priority for organizations.

82% of companies want to prioritize their cybersecurity investments to safeguard their operations, reputation, and customer trust. Cybersecurity tools are perceived as essential to business success, with 84% of respondents recognizing their importance (55% consider them “very important” and 29% “rather important”).

To counter these threats, companies can implement rigorous security protocols and invest in technology and ongoing training programs. Regular awareness-raising and training of employees in security best practices are essential to ensure their involvement in protecting data and systems.

Retaining Skilled Workers

Almost a quarter (21%) of the companies surveyed have faced some kind of sourcing challenge over the past six months due to a shortage of talent. This shortage can be attributed to several factors:

1. Increasing Complexity: Supply chains are becoming increasingly complex due to globalization, growing market interconnection, and product diversification.
2. Technological Integration: The integration of automation, AI, data analysis, and blockchain is transforming supply chains, creating a demand for professionals with expertise in these emerging fields.
3. Evolving Skill Requirements: Employers are looking for professionals who can understand and analyze data to make strategic decisions and communicate effectively with partners on a global scale. This demand for specialized and versatile skills is contributing to the shortage of supply chain talent.

Indeed, 55% of respondents claim to have encountered difficulties in attracting and/or retaining supply chain specialists over the past two years. Of these, 16% have experienced significantly increased difficulties compared to previous years, while 39% have experienced moderately increased difficulties.

Addressing the Labor Shortage

Companies can improve workforce retention by implementing several strategies focused on professional development, well-being, and employee engagement. Here are a few key approaches that can help companies retain their employees:

• Expand Your Technology Base: Investment in technology and autonomous mobile robots will automate tasks and support the existing workforce.
• Expand Career Opportunities: Training, mentoring, and professional development opportunities will enable employees to progress in their careers.
• Offer Competitive Benefits: Regularly rewarding employee contributions through bonuses or recognition programs will enhance the attractiveness of your organization.
• Improve Employee Engagement: Creating and maintaining a positive, inclusive work culture by encouraging open communication, soliciting employee opinions, and involving them in decision-making processes.

Sourcing Strategies: Sustainability First

With 88% of companies planning to make sustainable development investment efforts, there is growing recognition of corporate environmental and social responsibility over the long term. In addition to the directives implemented by the European Union concerning corporate obligations in terms of sustainable development, France has adopted a duty of vigilance law since 2017. This legislation aims to make large companies accountable for respecting human rights and the environment throughout their global supply chains. Sustainability is becoming increasingly important for companies because of their impact on the environment, the social responsibility they entail, the legal compliance required, and consumers’ growing expectations of transparency and ethics.

Group purchasing can help companies improve their procurement strategy in several ways:

• Negotiating Better Prices: Group purchasing allows several companies to pool their purchasing volume, enabling them to negotiate better prices with suppliers due to their greater purchasing power.
• Cost Reduction: Group purchasing enables companies to reduce their overall procurement costs. This involves not only savings on product prices but also a reduction in order processing and inventory management costs.
• Supplier Management: Group purchasing helps companies identify and select suppliers. It enables suppliers’ capabilities, reliability, and compliance with regulatory requirements to be assessed, thereby reducing procurement risks.

Nearshoring for Stability and Sustainability

Companies recognize the importance of proximity and localization in their supply chain strategies. 53% of respondents stated that a majority of their suppliers are located close to or within their country. Against a backdrop of geopolitical uncertainties, 30% of respondents say their company plans to start using local or geographically close suppliers, while 48% plan to maintain momentum and continue these efforts. Over the past six months, companies have faced supply problems, notably related to delays (54% of respondents) or product unavailability (41%). Therefore, companies are increasingly turning to a strategy of nearshoring, relocating business activity to a country geographically close to its consumer markets. This facilitates exchanges with suppliers and promotes better quality and compliance management.

The adoption of localized sourcing aligns with broader trends in sustainability and responsible supply chain management.

Companies recognize the importance of proximity and localization in their supply chain strategies. 53% of respondents stated that a majority of their suppliers are located close to or within their country. Against a backdrop of geopolitical uncertainties, 30% of respondents say their company plans to start using local or geographically close suppliers, while 48% plan to maintain momentum and continue these efforts.

Leveraging IoT for Supply Chain Sustainability and Cost Savings

IoT technology offers significant opportunities for supply chains, warehouse facilities, and distribution centers to enhance sustainability and achieve cost savings. Here’s how:

• Real-Time Monitoring and Analytics: IoT sensors can provide real-time data on various environmental factors such as temperature, humidity, and light. This data can be used to optimize energy usage, reducing both costs and environmental impact.
• Predictive Maintenance: By monitoring the condition of machinery and equipment, IoT devices can predict when maintenance is needed, reducing downtime and extending the lifespan of assets.
• Asset Tracking: IoT-enabled asset tracking improves inventory management and reduces losses. By knowing the exact location and condition of assets, companies can optimize storage and transportation, leading to significant cost savings.
• Automation and Robotics: IoT technology supports the deployment of robotics and automation in warehouses and distribution centers. Automated systems can handle repetitive tasks more efficiently and accurately than human workers, reducing labor costs and increasing productivity.
• Supply Chain Visibility: IoT provides end-to-end visibility of the supply chain, from raw materials to finished products. This transparency helps companies identify inefficiencies, reduce waste, and make informed decisions that support sustainability goals.
• RFID for Reusable Packaging: Leveraging RFID technology to manage reusable packaging assets can significantly reduce waste and cost. RFID tags can track the location and condition of packaging materials, ensuring they are returned, cleaned, and reused efficiently. This not only saves on the cost of new packaging but also supports environmental sustainability by reducing waste.

Engaging Suppliers and Trading Partners

Successfully leveraging IoT for supply chain sustainability requires the active engagement of suppliers and trading partners. Here are some actionable strategies to get them on board:

• Collaborative Workshops: Organize workshops to educate suppliers and partners about the benefits of IoT and sustainable practices. Demonstrate how these initiatives can lead to cost savings and efficiency gains.
• Shared Goals and Metrics: Establish shared sustainability goals and metrics with your partners. This ensures everyone is aligned and working towards the same objectives.
• Incentives and Support: Provide incentives such as preferred supplier status or financial support for partners who adopt IoT and sustainable practices. This can encourage faster adoption and greater commitment.
• Transparent Communication: Maintain open and transparent communication with suppliers and partners about your sustainability goals and expectations. Regular updates and feedback sessions can keep everyone engaged and accountable.

Choosing the Right Supply Chain Technology

When asked about supply chain challenges encountered over the past six months, 25% of companies surveyed reported technology-related difficulties. This is where supply chain management software becomes crucial, enabling companies to optimize their operations and remain competitive. Investing in technology while ensuring workforce stability and adopting a sustainable approach is essential to meeting current and future supply management challenges.

By leveraging IoT technology, companies can transform their supply chains into more efficient, sustainable, and cost-effective systems. The future of supply chain management lies in the successful integration of advanced technologies, strategic investments in cybersecurity, and the development of a skilled and engaged workforce. Are you ready to embrace the future of supply chain management?

Investing in technology while ensuring workforce stability and adopting a sustainable approach is essential to meeting current and future supply management challenges.

By focusing on these critical areas, businesses can not only navigate the challenges of 2024 but also build a resilient and sustainable supply chain for the future.

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