Trends that will impact the global supply chain crisis in 2022

The global supply chain crisis has caused major challenges for retailers across the globe. Managing stock and sourcing alternatives have become the difference between profitability and financial distress.

Below are some of the trends that Channel Features believes will make a difference in 2022.

An across-the-board increase in automation
The Great Resignation caused employers within the supply chain to have trouble hiring this year, leaving many positions unfilled indefinitely. This worker shortage will persist well into next year. So much so that by the end of 2022, 75% of supply chain organizations will make investments in automation, improving productivity by 10%.

Improvements to Asia’s chip manufacturing market
Spurred by COVID-19, the increased demand for electronics led to the current chip shortage. In addition, a wave of digital transformations by businesses strained the market. As a result, the shortage has caused issues for a range of industries, from automotive to consumer electronics. In May, chip sales were up approximately 26% compared to the prior year, but the supply wasn’t available. Production delays due to the coronavirus stymied the major global producers of chips, Taiwan, China and South Korea.

However, government and industry are addressing the problem. Over the next three years, Taiwanese semiconductor giant TSMC will invest $100 billion to increase production capacity. By 2025, the Chinese government plans to spend as much as $200 billion to address the semiconductor shortage.

Government action to address the chip shortage
2021 will see the fruition of legislation either proposed or passed this year. The European Commission has suggested that the European Chips Act address the expansion of chip manufacturing on the continent.

As for the U.S., the Biden administration signed an executive order earlier this year to tackle the shortage. Moreover, the U.S. Senate did its part by endorsing $52 billion in subsidies for computer-chip manufacturing, despite criticism that there’s not enough focus on how the money will be precisely spent.

We may see more autonomous delivery vehicles on the rad soon
Photo By: Claudio Schwarz via Unsplash

Sustainability initiatives
As the supply chain crisis continues, businesses are finding innovative ways to do their part for the environment. Not only is sustainability good for a greener world, it’s no mystery that it can reduce company expenses.

Green supply chain management is the process of incorporating sustainable environmental practices into the supply chain. This means tracking all aspects of the chain, including energy use, material sourcing and selection, manufacturing and production, operation and end-of-life management. As costs rise because of supply chain chaos, financial savings due to sustainability initiatives can be passed down to the consumer in 2022.

A Push for Autonomous Vehicles
This year witnessed an international shortage of truck drivers. At the end of 2021, it was estimated that the U.S. had a shortage of more than 80,000 drivers. In the U.K., that number was even greater, at 100 000.

This has tremendous implications for the supply chain, but it’s not only a shortage of drivers. There are not enough warehouse workers to load and unload cargo or handle the paperwork. As a result, next year will see a rise in the use of autonomous vehicles. And it’s not only for the trucking industry. The shipping industry, which has also been a victim of the shortage, will see fully autonomous cargo ships taking to the sea.

The microchip shortage needs to be addressed
Photo By: Brian Kostiuk via Unsplash

Advances in Procurement
In 2022, companies will be adapting to new disclosure requirements for supply chain financing (SCF). The new ways of financing will utilize technology to handle concerns surrounding late or slow payments.

For example, machine learning will help suppliers get paid early on their invoices. Ultimately, this cash flow will improve the global supply chain.

Accelerating the Circular Economy through Partnerships
Similar to sustainability models for business, the circular economy is the idea that resources be kept in use as long as possible so that the greatest value can be extracted from them. It’s predicted that in 2022 more supply chain leaders will practice the principles of the circular economy, saving resources, money and helping the environment.

However, adopting these principles often means partnering with another business. An analysis by Gartner demonstrated that 77% of supply chain organizations collaborate with at least one of the following: startups, specialist recyclers, foundations and international groups. 2022 may be the year of the partnership for a greener, more viable economy.