11 Supply Chain Trends That Will Shape Ecommerce (2024)

Nearly three years after the first lockdowns, we’re still seeing supply chain disruptions on the rise. The need to build more resilient and adaptable supply chains hasn’t gone away. 

As an ecommerce brand, you probably want to know how to best approach your supply chain strategy. Here are the top supply chain trends to implement to get ahead of the curve. 

 

11 supply chain trends to watch

1. Preventing cybercrime

2. Focusing on greater shipper visibility

3. Integrating AI

4. Optimizing last mile delivery

5. Putting supply chain executives in the C-suite

6. Preparing for risk events

7. Securing flexible contracts

8. Creating supply chain agility

9. Investing in analytics

10. Focusing on sustainable procurement

11. Evolving inventory management

 

1. Preventing cybercrime 

Cyberattacks are on the rise. Online attacks have become increasingly common in the United States, where many companies, individuals, and governments have been victimized.

According to KPMG’s 2023 supply chain report, almost half of global organizations consider cybersecurity a significant operational challenge for their supply chains in the coming three years.

As brands increasingly digitally automate internal processes and access cloud services, it leaves them more vulnerable to cyber intrusions. A cyberattack on Clorox earlier in 2023 led S&P Global Ratings to lower its outlook for the company to negative. During the attack, Clorox’s IT systems were disrupted, forcing the company to switch to manual ordering and processing, which slowed operations and affected product availability.

And that’s just one major example. Cyberattacks can affect supply chains in various ways:

• Ransomware can disrupt logistics and delay the flow of goods. 

• Data breaches can reveal sensitive customer details and trade secrets. 

• Responses to cyberattack can be costly to repair, plus there are regulatory fines and compensation to customers to consider.

• Cybercriminals can manipulate supply chain data or systems to divert shipments.

It’s no wonder cyber investments are on pace to reach $215 billion in 2024, with security services expected to account for $90 billion alone. Companies looking to build and optimize cybersecurity programs are set to succeed in the upcoming year.

2. Focusing on greater shipper visibility 

Blue Yonder found that some 87% of businesses experienced supply chain disruptions in the last year, with customer delays being a common outcome. Despite these challenges, 62% of respondents believe their supply chains are resilient.

To combat rising costs and supply chain disruptions, companies are investing heavily in technology. Fifty-six percent of investments are directed toward supply chain technologies like warehouse and order management systems, supply chain visibility tools, and transportation management. 

Early adopters are seeing these investments pay off, with 54% reporting improved efficiencies, 42% experiencing fewer disruptions, and 39% seeing revenue growth.

3. Integrating AI

AI has become ubiquitous in ecommerce. AI’s abilities are becoming increasingly diverse and sophisticated, with the ability to do such tasks as sourcing suppliers and automating negotiations. 

AI technology has the potential to process through many data sets, like enterprise systems, POS systems, and inventory levels. It can take in the data and return predictions based on what you’re looking for. The recent Blue Yonder survey found that 78% of respondents are using AI and machine learning in their supply chains for various functions, like inventory optimization and risk management.

Some examples of ways to implement AI in 2024 include:

• Demand forecasting: Algorithms can analyze past sales data, market trends, and public sentiment to predict future demand.

• Supplier selection: Harvard Business Review found that brands are using AI to find alternative suppliers last minute. AI systems can find the best suppliers by evaluating factors like reliability, cost, and quality.

• Predictive maintenance: AI can also predict when equipment needs maintenance in your warehouse, reducing downtime and extending the life of your machinery.

• Sustainability tracking and reporting: Generative-AI tools like ChatGPT can analyze sustainability data and insights, then create the base for a report. 

In a McKinsey survey conducted early in 2022, 73% of supply chain leaders said spreadsheets are their primary planning tool. But, 43% said they planned to use artificial intelligence for some planning activities. The integration of AI into the supply chain is rapidly evolving, offering new opportunities for brands to innovate and improve on their processes. 

4. Optimizing last mile delivery

The “last mile” is to supply chains what the fourth quarter is to a sporting event: the critical final stage. Last-mile costs represent between 40% and 55% of the total supply chain costs in shipping.

Grocery and retail brands are responding to these increasing last-mile costs by taking the last mile into their own hands.

According to Maggie M. Barnett, COO of Ship Hero, omnichannel retailers are curtailing the impact of global supply chain disruptions via “micro-fulfillment,” handling fulfillment directly with supplies from a local warehouse. Then, retailers offer an option like buy online, deliver from store, or buy online, pickup in-store.

Micro-fulfillment is a newer trend, but it’s picking up more steam as we move closer to peak season.

5. Putting supply chain executives in the C-suite

In 2022, Modern Retail called the role of supply chain specialist “the hottest job in retail.” Moving into 2024, this sentiment still holds true. 

In a recent episode of McKinsey Talks Operations, Knut Alicke and Radu Palamariu, authors of From Source to Sold: Stories of Leadership in Supply Chain, found that only 11% of Fortune 200 CEOs have a background in supply chain, despite its strategic importance. 

But they are looking toward the future. The narrative shift in supply chain management is in the works. Supply chains are being perceived less as problem-focused entities and more as a source of competitive advantage. 

Hiring C-level assets with a diverse background in supply chain management is both a current and a forward-looking move. The authors believe it is this diversity in perspectives that will lead to innovation in the field and help brands adapt to rapidly changing global dynamics. 

6. Preparing for risk events

An old axiom says that the best time to plant a tree was 20 years ago—and the next best time is now. That’s the approach companies are taking with unexpected supply chain disruptions. It’s already too late to deal with 2023—but it’s not too late to put a new plan on paper.

For instance, more than 60% of organizations expect geopolitical instability to detrimentally impact their supply chains in the next three years​. In short, companies are prepping for the next big event, even if it never comes. 

7. Securing flexible contracts

In recent years, companies with huge, static orders on the books are seeing the value of flexibility.

Flexible contracts split supply orders up into smaller blocks, giving the buyer the option to change orders as demand shifts. Making fewer static commitments in the form of fixed, long-term contracts with suppliers means more adaptability.

“Flexible contract manufacturing enables companies to replace more of their traditional fixed cost base with variable costs to adapt to changing demand,” says Jeff Langely of KPMG Australia.

8. Creating supply chain agility 

Not all supply chain remedies are quite so surgical. A healthy supply chain sometimes requires organizational-level improvements to business agility: your company’s ability to adapt and respond to rapid change.

According to KPMG, 67% of organizations view meeting customer expectations for speed of delivery as a critical factor affecting their supply chains over the next 12 to 18 months.

Business agility and a responsive supply chain are inextricably linked ideas. Investing in supply chain agility means adopting strategies like safety stock, buffer inventory, and inventory optimization to manage fluctuations supply and demand. 

It also means building a network of suppliers, both local and international, to reduce dependency on one single source. 

9. Investing in analytics

While data usability usually translates to improving sales and marketing processes, it can also provide more flexibility with supply chains. Predictive analytics, along with advances in big data and robotics, will have a significant impact on retailers. 

“Another trend this year is focused on the need for better quality data, not necessarily more data,” says ShipHero’s Maggie M. Barnett. “It’s becoming increasingly important to have quality data at your disposal, especially on the warehouse floor. With the widespread application of automation, AI, and other technologies, it’s critical to have data that can help those technologies become even more efficient and intelligent.

“Are you leveraging data to help predict where inventory demand will be highest? Are you using your data to identify ways to optimize your warehouse space? Take a closer look at the data you have access to and then analyze how to best put it to work.”

10. Focusing on sustainable procurement

B2B buyers have set their eyes on sustainable procurement, and organizations are meeting them there. A recent survey found that over half of them intend to increase their focus on sustainable sourcing in the coming year. 

Buyers are investing in new technology like automated approval workflows, expense management controls, and guided buying capabilities to meet goals and improve operations. 

While improving efficiency is a core focus, social responsibility was also reported as a top priority for procurement teams. 

For retailers, digital procurement investments will continue to evolve during 2024, allowing companies to easily search and buy from you and providing visibility into your products. Procurement officers are looking to buy from companies that align with their budget and core values.

11. Evolving inventory management

Volatile shipping delays, increasing raw material costs, and dealing with overstock are causing retailers to look at inventory management differently. 

In response, retailers are leveraging techniques like: 

• Cutting SKUs

• Promotions

• Price hikes

Women’s intimates brand Lively has been “laser-focused” on making sure top sellers are in stock, prioritizing its top 10 items, Modern Retail reports. Via customer feedback, it’s also reduced inventory by cutting down on launches and designing products that will be in demand. 

Other brands, like Weezie Towels, don’t plan to cut SKUs, but will focus on bundling top-selling products. The core theme? Being in touch with what customers expect from your brand and producing those items, be it top sellers or new lines. 

Strategies for future-proofing your supply chain

Localize your supplies

When Louis Vuitton built a 100,000-square-foot factory in Texas, it wasn’t necessarily because it liked barbecue. 

The leather-goods manufacturing shop trains and hires its own leather employees, creating leather goods with the Made in USA label attached. Given many of the brand’s properties are in France, Louis Vuitton’s stateside investment means there’s one less ocean to travel every time a new product ships to the American market.

If you want to invest in the efficiency of the supply lines between you and your customers, set up local delivery with your Shopify presence.

Diversify your supply chain

In investing, experts say spreading your money around reduces risk. It’s the same with supply chains: the more options you can turn to, the steadier your inventory will be.

Check on the health of your current suppliers. Who’s supplying the suppliers, and what are their vulnerabilities? 

Finally, look for viable alternative suppliers to add diversity to your supply chain, stabilizing your options when a crisis hits. And browse third-party fulfillment providers to select one that will make your agile supply chain more resilient. 

Invest in the customer experience

Ultimately, customers have finite patience. They want their items to their door as quickly as possible, and when there’s a delay, they’re likely to cancel the order. That makes your supply chains a vital part of the customer experience. 

Don’t hide your supply chain issues from your customers. Instead, be proactive and reach out to customers in a way that lets them know when supply chain disruptions are out of your hands.

Invest in analytics

Sometimes you don’t know your supply chain vulnerabilities until you can see your data right there in black and white. That requires an investment in the analytics that drive all of your numbers.

Take the Shopify data analytics course from the Shopify Academy to learn how to uncover insights into every aspect of your business—not just the supply chain.

Hire a supply chain specialist

The past few years have exposed the downfalls of the modern supply chain, forcing retailers and brands to hire experienced leaders for their logistics operations. 

As your brand expands into multiple retailers that need managing, logistics become more difficult. Hiring supply-chain-focused roles can help better manage supply and manufacturer connections, problem-solve supply chain issues, and create excellent vendor relationships. 

Invest in automation

One way you can take proactive action during an era of disruption is through automation. Supply chain leaders are increasingly investing in new technologies to fill the gaps humans can’t manage. 

Supply Chain Brain reports on three ways supply chain leaders use artificial intelligence and automation: 

1. Building a digital twin. Retailers are creating a digital supply chain replica, including all assets, warehouses, and materials, and acting out “what if” scenarios to improve planning. For example, if there is political unrest or a factory closure overseas, the digital twin can predict how it will impact the supply chain. 

2. Utilizing the Internet of Things (IoT). Retailers also use self-reliant, internet-connected devices to gather data, monitor supply chains, and reduce risk. With IoT, you can get real-time data on product locations, improve inventory tracking, build fully automated warehouses, and speed up the process of loading and unloading goods. 

3. Harnessing machine learning. You can use machine learning for endless reasons. These systems quickly analyze swaths of data, recognizing patterns and trends so you can make adjustments as needed. For example, you could determine the most cost-effective transportation routes in a region, factoring in fuel costs, vehicle usage, and risk of theft or damage. It helps you keep products in stock during high demand. 

Automation doesn’t mean reducing your workforce, however. The goal is to help your supply chain flow more smoothly and enhance supply chain resilience. 

Future-proofing your supply chains for the challenges ahead

There is no way to totally future-proof your entire supply chain. But given the industry’s resilience and digital transformation over the past few years, you might not need one. 

Building reliable relationships with a diverse list of supply chain partners and logistics providers—especially if they’re local—can serve as an “emergency valve” that gets you through the next supply crisis.

And you don’t need a crisis to justify the investments you make. Today’s supply chain managers find that enhancing resilience can help hedge against other challenges, like higher transportation costs.