Hindsight is 20/20: A Look Back at Supply Chain Trends Over the Last Decade

“Hindsight is 20/20.” And in the year that literally bears its name, we thought it only appropriate to take a look back at the trends that had the most significant impact on supply chains over the last 10 years.

A lot can happen in a decade: New products are introduced, and some lose their utility altogether. Business models, channels, and partner relationships shift and evolve. Even stalwart companies transform or dissolve. Pre-2010 we lived in a world without autonomous vehicles, iPads, smartwatches, and delivery drones. Box subscription services like Dollar Shave Club, Blue Apron, and Stitchfix did not yet exist, but by the close of 2019, more than 7,000 companies delivered direct-to-consumer each month. 

In the last decade, new business models, technological advancements, and innovative processes have made supply chains more efficient and reactive. As we reflect, we feel compelled to ask: which processes and technologies had the biggest impact on supply chain transformation? While adoption and evolution always happen more slowly than forecasted, since 2010 we’ve seen steady progress as: 

• Information accessibility enabled the democratization of analytics. ERP implementations soared in the early 2000s, allowing companies to capture and accumulate data. But not until the last decade has this data, coupled with cheaper and faster computing, become truly accessible. In 2010, the fastest commercial processor was IBM’s z196 which ran at 5.2 GHz.¹ This year, the iPhone 11 will top that times 4.² With faster computing, increased storage capacity, and data proliferation, the shift from distant rear-view business intelligence to near real-time, actionable descriptive and diagnostic analytics finally occurred. This decade also saw enormous growth in analytics as capabilities moved from IT into the hands of supply chain functional users. In the 2015 Microsoft Excel release, enhanced analytical functionality allowed users to analyze millions of rows of data up from thousands, allowing every business user basic data manipulation. Tableau, recently acquired by Salesforce.com, grew from $34 million to over a billion in sales by allowing users to access, organize, and visualize data without programming expertise.³ Over the next decade, skills to capitalize on data visualization will become ubiquitous, and analytics will become more predictive and prescriptive. To ensure accurate and effective use of this new insight, firms will have to develop greater data governance. 
• E-commerce disintermediated channels. Over the last 10 years, e-commerce shares of U.S. retail sales grew from 3.8% to 10.2%.⁴ While still just a fraction of overall retail sales, online orders in industries like apparel and electronics now exceed a third to half of all sales.⁵ This online growth facilitated an overwhelming fragmentation of traditional supply chain flows and an explosion of logistics operating models. Rigid supply chains adapted to serve a diverse range of customers. Manufacturers now sell direct-to-consumer, suppliers drop-ship retail orders, and monthly subscription services generate two-way logistics flows. Traditional bulk manufacturers who now sell online have adapted their supply chains to serve customers directly — fulfilling individual orders, developing relationships with last-mile carriers, and managing reverse logistics. Even Amazon, the stalwart veteran of online retail, fulfilled 53% of its orders through suppliers last year.⁶ This helped spawn a new class of 3PLs, like Shipbob and Shipwire, to help companies fulfill and manage online returns. To make meaningful progress in the next decade, companies must continue to develop customized experiences that differentiate online from other channels. And as online sales grow, companies must make their networks more adaptive to new models, including adjusting cubic and physical logistics capacity to meet the ever-changing needs of smaller, direct order fulfillment. 
• Sustainability trickled from experimentation to proliferation. At the beginning of this decade, only a third of companies had a green strategy, but now more than 90% of companies set targets to reduce their environmental impact.⁷ Sustainable strategies have moved from promotional gimmicks to an expectation of everyday business. The 2010s brought the adoption of solar power energy in manufacturing facilities, smart lighting in warehouses, and electric vehicles in transportation. As consumers embraced more organic and natural products, they became less tolerant of the plastic and styrofoam waste that contain them. Many states outlawed single-use products, and companies made commitments to use biodegradable and 100% recycled materials. These goals won’t be easily attained as direct consumer business models grow in conflict with these strategies: E-commerce returns alone accounted for nearly 5 billion pounds of landfilled waste last year.⁸ To combat a growing waste problem, companies like Pentatonic, Nike, and Allbirds are taking trash and turning it into products.⁹ With more focus on the environmental crisis, many companies will adopt clean and renewable energy as well as no-waste packaging strategies in the next decade.
• S&OP reached widespread adoption. Since Oliver Wight pioneered the concept 50 years ago, Sales & Operations Planning (S&OP) has gotten a lot of lip service. In the 2000s, companies had some level of demand and supply planning integration but lacked the ability to dynamically respond to operational changes. The result? When sales created a promotion or a supplier’s facility shutdown unexpectedly, manufacturing had little visibility of the impact. Over the last decade, most mid and large-sized companies have adopted coordinated enterprise planning, a level 3 S&OP process as defined by Gartner.¹⁰ Companies are now beginning to leverage cross-functional planning capability from companies like Logility and o9 Solutions that coordinate enterprise planning and dynamically respond to promotions, product rollouts, and supplier disruptions. This move from historical, canned reports to real-time, dynamic analysis allows each department to respond to scenarios like a plant fire or product boost. But success will require more than technology. Companies will need collaborative business processes to align decision-making and C-suite support to advance their S&OP maturity. As this happens, companies will incorporate extended supply chains into these integrated processes to collaborate and orchestrate their supply chain success.
• Supply chain talent continued to grow but lacked diversity at senior levels. The Bureau of Labor Statistics recorded a 26% increase in supply chain jobs in the last decade, fueled by greater access to education and training.¹¹ In 2010, 36 universities offered undergraduate degrees in supply chain management; today that number exceeds 209. Similarly, less than a dozen graduate programs existed at the start of the decade, but now that number exceeds 46.¹² Organizations like APICS, CSCMP, and ISM have created scholarships to increase diversity in these degree programs with obvious success. Women now account for 41% of supply chain undergraduates; ethnic minorities for nearly half of graduate students.¹³ Not only did the number of degreed employees grow, but the breadth and depth of their supply chain knowledge and skills also expanded. Online services like eDX and Coursera offered access to technology skills and professional certifications in areas like data analysis and supply chain design.¹⁴ These efforts have created greater diversity among entry and mid-level supply chain management jobs — since 2010, the number of Fortune 500 companies with more than 40% diversity has tripled to 145 companies.¹⁵ But senior leadership in supply chain still often reflects the demographics of those entering the profession 2-3 decades ago, drawing further scrutiny due to the lack of diversity within the executive ranks at many large enterprises.

You may be surprised by our omission of some of the last decade’s most promising innovations, including autonomous vehicles, drones, and augmented reality. While these technologies hold promise, we believe they failed to broadly make significant impacts on the supply chain in the last decade. Will they ever fulfill the lofty expectations? What impact might we expect from these and other advancements in the next decade? Stay tuned for our next blog to see which innovations we predict will have the most impact on supply chain management in the 2020s. 

^{1. Processing Power Compared: https://pages.experts-exchange.com/processing-power-compared ↩}

^{2. Apple’s iPhone 11 A13 processor boosts chip performance 20%: https://www.cnet.com/news/apples-iphone-11-a13-processor-boosts-chip-performance-20/ ↩}

^{3. MacroTrends: https://www.macrotrends.net/stocks/charts/DATA//revenue ↩}

^{4. E-Commerce Surpasses 10% of US Retail Spending: https://www.marketplacepulse.com/articles/e-commerce-surpasses-10-of-us-retail-spending ↩}

^{5. Ecommerce is more than a third of all apparel sales: https://www.digitalcommerce360.com/article/online-apparel-sales-us/ & Online consumer electronics report: https://www.digitalcommerce360.com/article/online-consumer-electronics-report/ ↩}

^{6. Percentage of paid units sold by third-party sellers on Amazon platform as of 3rd quarter 2019: https://www.statista.com/statistics/259782/third-party-seller-share-of-amazon-platform/ ↩}

^{7. The Rise of Corporate Sustainability Goals: Some Hard Data: https://sustainablebrands.com/read/marketing-and-comms/the-rise-of-corporate-sustainability-goals-some-hard-data ↩}

^{8. Those Amazon Returns? They’re Killing the Environment: https://www.bloomberg.com/opinion/articles/2019-11-13/those-amazon-returns-they-re-killing-the-environment ↩}

^{9. Amazing products made of trash: the resource of the future: https://www.cnbc.com/2018/03/28/companies-hope-to-turn-trash-into-treasure-.html ↩}

^{10. Supply Chain Maturity Assessment for Sales and Operations Planning: https://www.gartner.com/document/3971060 ↩}

^{11. Labor Crisis: A proactive approach to filling Logistics Jobs: https://www.logisticsmgmt.com/article/labor_crisis_a_proactive_approach_to_filling_logistics_jobs ↩}

^{12. 2020 Best Colleges with Logistics and Supply Chain Management Degrees in America: https://www.niche.com/colleges/search/best-colleges-with-logistics-and-supply-chain-management/ ↩}

^{13. Top 25 North American Supply Chain Undergraduate University Programs, 2018: https://www.gartner.com/document/3880468 ↩}

^{14. BLS Job Outlook for Logisticians: https://www.bls.gov/ooh/business-and-financial/logisticians.htm#tab-6 ↩}

^{15. Alliance for Board Diversity: https://theabd.org/ ↩}