December 17, 2024 Reflections on 2024 and Predictions for the Year Ahead

Pivotal supply chain issues evolve over time, but reflecting on one year and looking forward to the next remains a valuable exercise.

By Matt Stekier, principal, supply chain and operations consulting practice at Plante Moran

The pivotal issues that test supply chain acumen and impact the performance of entire industries rarely play out within the span of a calendar year. But as in most endeavors, reflecting on the year coming to a close and predicting what lies ahead is a valuable exercise. Now is a great time to take stock of what we learned in 2024 and set a course for success in the year to come.

Of course, looking back is always easier than predicting what lies ahead. As Yogi Berra once put it: “It’s tough to make predictions, especially about the future.” In that spirit, we look at 2024 and 2025 through a supply chain lens.

2024 – Existing Concerns Continued

For most, 2024 was a year marked by lingering concerns and more than a little hype about AI’s ability to provide a fast fix. Some noteworthy issues supply chain leaders grappled with, and the lessons they learned, included:

• Generative AI was hyped in supply chains: Despite the promotional push behind it, generative AI largely remained the purview of the very largest businesses. Even there the gap between what is needed, what is wanted and what is available remains. There was even considerable variability around the definition of AI, with many “AI” solutions using existing data science rather than true AI capabilities.
• Labor issues roiled operations: The ongoing shortage of labor continued to impact supply chains, particularly in materials handling operations where warehouse staff are in short supply. Small and mid-sized manufacturers, which rely on manual processes, found themselves similarly challenged when large organizations built facilities nearby that drew from the same labor pool. This reality forced most organizations to look to automation solutions to improve warehouse storage and picking operations, increase throughput, and optimize functions like forecasting and sourcing.
• Inventory planning remained problematic: Manufacturers and the suppliers they rely on faced the reality that OEMs overbought in past years to protect themselves from stockouts. To draw down inventory and free up capital, many manufacturers significantly decreased their orders – something that made 2024 difficult for many suppliers. This underscored the need for open dialogue in supplier/manufacturer relationships.  When making a decision to draw down inventory, warehousing leaders should share plans with suppliers in order to avoid abrupt shifts that threaten suppliers’ ability to cover overhead.
• Nearshoring continued: With geopolitical events continuing to underscore the benefits of streamlining and shortening supply chains, nearshoring initiatives accelerated. For brands serving U.S. consumers, this growth was overt in Mexico.

2025: Existing Challenges Will Create a New Mindset

Prognostication is never certain, but the year to come will see supply chain professionals facing the same issues. What I predict will change is their approach to them, most notably as it relates to the following.

• Supply Chain leaders will continue to act instead of react: No one knows what will happen in the future, but we know hurricanes take place in the summer and fall, ice storms disrupt logistics in the winter, and geopolitical disruption will happen somewhere. As a result, leaders will move not only to put contingency plans in place, but also to ensure plans are actionable and backed up with the right resources.
• Businesses will move to make their supply chains an asset: Supply chain professionals will play a more active role in functions like new product introduction. In this role, they will vet the materials used in prototyping and ensure that products are manufactured as inexpensively as possible and brought to market efficiently. This will be particularly true in highly regulated industries, where any deviation in materials after-the-fact requires the registration, testing, and validation process to be repeated.
• Dual sourcing will see its day: Often talked about, but rarely implemented, dual sourcing for critical materials and components will become more widespread as organizations move to ensure they have options available. This will even occur in regulated industries, where the validation process requires a lot of extra work and costs.
• Risk mitigation efforts will be refined: Businesses are coming to terms with the fact that the greatest risk is not knowing what your most important risks are. Leaders will increasingly explore pivotal questions including; whether their supply chain is visualized, if they know what their critical components are, whether they have actionable contingency plans (and can implement them fast enough to keep operations running), and what they will do if important suppliers fail. Importantly, one question – what will demand look like? – will continue to baffle economists and supply chain leaders alike.

As we prepare to close out 2024 and begin 2025, supply chain leaders are well served to consider another astute observation, one attributed to a number of great minds: “The best way to predict the future is to create it.”  For supply chain operations in 2025, that is certainly the case.

About the Author:
Matt Stekier, principal, supply chain, at Plante Moran serves clients by quickly identifying improvement opportunities that deliver tangible results and lower costs in a variety of industries, including the medical device, food and beverage, footwear and apparel, military vehicle and automotive manufacturing sectors. Matt earned his bachelor’s in supply chain management from Central Michigan University and a master’s in business administration from Wayne State University. A 10-year veteran of Plante Moran, he previously served in supply chain roles at Mercedes-Benz Technology and Ford Motor Company.

Read more from the author:
Supply Chain Resiliency and Strenghtening Supply Chains

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