Click to learn more about author Vikas Mathur.

COVID-19 exerted a disruptive impact on virtually every aspect of business across every sector — and supply chains were no exception. In a recent report, Deloitte said the pandemic might be “the black swan event that finally forces many companies, and entire industries, to rethink and transform their global supply chain model.”

But how will supply chains evolve and react in the coming years? Companies are looking closely at the way their systems are operating, trying to position them for success in a post-pandemic world. They’re examining relationships, practices, and business approaches. While different companies will pursue different plans, all will rely on one common set of resources — their strategic use of data. These are my predictions for data and supply chains in 2021.

Prediction 1: Data Will Help the Supply Chain Recover from Future Shocks

The world’s supply chain suffered a debilitating shock at the beginning of the COVID-19 outbreak in March. Demand for a wide range of products — everything from personal protective equipment to hand sanitizer to baking flour to bicycles — surged. Meanwhile, supplies plummeted early on as states implemented factory shutdowns, creating consumer panic and delays in the supply chain across a broad set of industries. The event was so sudden and widespread that it took months for the system to catch up.

Supply chains will encounter future shocks, perhaps as early as sometime in 2021. They’ll exert an impact — but retailers and distributors will be in a better position to weather these shocks as their strategic use of data will help anticipate them more effectively and recover more quickly. Additionally, manufacturers are expected to tighten sales and operations planning (S&OP) processes to provide a transparent view of inventory, factory production schedules, and delivery times for improved decision-making on what to produce at a centralized level.

Leveraging data analytics to get a glimpse into real-time data for existing supply chain processes, distribution networks, and transportation solutions can also help find pain points and opportunities, which in turn can proactively improve the supply chain before issues arise. Looking at current and predicted delivery lead-times, logistics expenses, and inventory assets are also good data points to find a path to improved efficiency and effectiveness to make data-driven decisions. The more transparency and collaboration between the various levels and players involved in the supply chain, the better organizations can meet demand.

Prediction 2: Supply Chains and Consumption Will Start to Merge

If one were to design a perfectly functioning supply chain, it would be frictionless for every participant along the line and smart enough to deliver products at the precise instant consumers decide they need something. Consumption and the supply chain would merge to become one continuous feedback loop.

Digital commerce surged 32 percent in 2020, so society’s not going to make it all the way to supply chain perfection in 2021 — but it likely will take several large steps in that direction. What we’ll see is consumers committing more to digital ordering and retailers doubling down on investments in data analytics, AI, and IoT.

Consumers who may have bought gifts sporadically on Amazon threw themselves into the online shopping experience during the pandemic — because they felt they had to. They grew comfortable ordering groceries, meals, clothes, and assorted services over the web, eliminating dozens of physical transactions and narrowing the gap between supply and demand. Traditional industry silos are breaking down as new fulfillment players are emerging to address “last mile” supply chain service needs; for example, now you can get an item delivered from Walgreens via DoorDash.

Expect much more of that in the next few years. The pandemic changed people’s shopping patterns and encouraged them to experiment more. How much of a leap would it be for consumers to embrace automated ordering systems that shipped regular deliveries of staples like bread, water, and milk? Or for IoT-equipped smart fridges to remind owners that the meat stash is getting low?

Retailers and distributors are already using IoT to gather usage data and AI to perform all kinds of tasks, including demand forecasting. As technologies continue to advance, suppliers will not only fill the store shelves with more products the customer base wants — they will sharpen and extend their relationships with end-users themselves. Consumers will connect more readily with brands and look to them to not only keep items stocked but recommend purchases that will enhance their lifestyles. 

While we’re at the early days of the supply loop tightening trend, we’ve taken an unexpected leap in the linkage between service, consumption, and supply that wasn’t seen before. The “digital lubricant” to enable this transformation of the modern supply chain will be real-time data, both at the edge and in the cloud, that will facilitate and accelerate the disruptive change that is coming. Time to buckle up your supply chain seatbelts; the ride is just starting.