2021 Supply Chain and Inventory Management Trends

4 min read

2021 Supply Chain & Inventory Management Trends


2021 Supply Chain and Inventory Management Trends for the US

Last year’s list of supply chain and inventory management trends to look out for in 2020 included things like “greening” the supply chain (that is, the growth of environmentally-friendly practices in every step of the supply chain), the growth of artificial intelligence (AI) and machine learning and globalization for small- and mid-sized businesses. Then 2020 was thrown into chaos by the global COVID-19 pandemic. Here we are, one year later, trying to determine the 2021 supply chain and inventory management trends to adopt.

Small- and mid-sized businesses have been disproportionately affected by the pandemic. International trade and logistics were stalled with the volume of global trade in goods down by 17.7% in May 2020 compared to May 2019, especially affecting exports from the US, Japan and the EU. Even now, the global GDP for 2020 contracted by an estimated 4.3% for 2020.

All this to say that the global economy was hit hard in 2020 and there’s no real end to the pandemic in sight. Resiliency is now the name of the game for supply chains. With that in mind, here are a few trends for 2021 that could help your business outlast the pandemic:

  1. Supplier Diversification
  2. Automation
  3. Focus on eCommerce
  4. Cloud-based Technology

Let’s look at the impact of each of these trends and see how you can incorporate them into your supply chain for 2021.

Supplier Diversification

Supplier diversification is a key component for supply chain resilience. The US has created a robust international trade network, with suppliers often being across international borders. Both international and domestic suppliers have their advantages: for international suppliers, products are typically cheaper – resulting in higher profit margins for distributors and sellers – and they have a higher production capacity, but these pros are coupled with longer lead times, higher shipping costs, additional tariffs, and often a higher MOQ. For domestic suppliers, the opposite is typically the case. In addition to shorter lead times, lower shipping costs, no tariffs and a typically lower MOQ, domestically-source products usually are higher quality – plus, sourcing domestically can work as an attractive marketing strategy. However, these tend to be less efficient and products are usually more expensive.

Global Supply Chain Management
It’s a tough decision to make; distributors and sellers need to determine their priorities and what they can manage when choosing a supplier. However, 2020 has proven that age-old adage to be correct: “don’t put all your eggs in one basket”. When COVID-19 hit early in the year, international trade was disrupted and left distributors and sellers scrambling to source products needed to fulfill orders as borders closed and restrictions changed. This is where supplier diversification comes in. While it’s not a foolproof answer to every supply chain disruption, diversification can mitigate the negative effects of supply chain disruptions and keep sourcing options open.


Automatisering av logsitikkedjanAutomation can come in a few different forms, but ultimately automation is using technology to manage a workflow and improve processes. People usually think of robots in the warehouse or self-driving trucks when they mention automation within the supply chain. Hardware is one prime example; we don’t have drones delivering packages quite yet, but robots can be found within warehouses such as Amazon. Amazon has introduced 200,000+ robots moving inventory within fulfillment centers around the US, creating a more efficient supply chain.

But automation is penetrating other areas of the supply chain as well – as software. Now, most supply chains – even for SMBs – are ‘going paperless’; that is, they’re digitizing. This is apparent with companies using Enterprise Resource Planning (ERP) software or Warehouse Management Systems (WMS) to manage the overall business, supply chain and warehouse. While these tools still require some manual input, now there are a multitude of software add-ons that will automate any number of tasks – from inventory optimization to credit card processing to shipping solutions – to minimize mistakes and increase productivity. These outcomes of automation with software are especially vital as the pandemic rages on and SMBs need to fight to stay profitable.

Focus on eCommerce

eCommerce really came to the forefront in 2020; the pandemic “accelerated years of growth in just weeks“. While this rate is expected to slow in 2021, eCommerce remains a valuable platform for sales and will continue to grow. But eCommerce is more than just having a website for shoppers to peruse – it includes speedy and reliable order fulfillment. Consumers are now used to fast and free shipping. The bar is set, and it’s set pretty high, but eCommerce isn’t only for B2C anymore. B2B eCommerce transactions are projected to reach $1.8 trillion by 2023.

ECommerceFor 2021 and beyond, it’s imperative that small- and mid-sized businesses optimize their operations for eCommerce. To maximize profits, businesses using eCommerce need to have lean and efficient supply chains. They also need to accurately forecast customer trends, competitively price (as price comparison is easier online) and efficiently fulfill orders. Likely eCommerce is only one piece of an omnichannel sales strategy, so it’s also important to have an accurate overview of inventory throughout the supply chain to prevent stock-outs or even excess stock. eCommerce is an important piece of staying profitable and relevant in 2021 and beyond, but it requires careful management for success.

Cloud-based Technology

With supply chains extending across borders and managed by software comes an uptick in the need for cloud computing. Cloud computing is on-demand computer system resources, like data storage, servers and computer power, delivered over the internet. Cloud-based services help you lower your operating costs and easily scale your business as it grows. Cloud-based technology especially benefits SMBs as they no longer need to invest in extensive and expensive technology infrastructure. Cutting these extraneous costs is one of the ‘no-brainer’ ways to save money in 2021.

Of course, cloud-based technology has the added benefit of being accessible from almost anywhere – also key, as COVID-19 is forcing more and more people to work remotely. Since it’s delivered over the internet, information and data can be easily shared throughout the supply chain with suppliers and customers, keeping avenues of communication open and ensuring that information is accessible to everyone who needs it. The Cloud is helping businesses stay connected to their supply chain while cutting costs, making businesses more competitive than ever.

Looking Ahead to 2021

There are no guarantees for the year ahead, which is why it’s so important to make your supply chain operations an asset instead of a liability. The biggest 2021 supply chain and inventory management trends are focused on building a resilient supply chain that allows companies to quickly adapt to sudden changes and disruptions.

Looking for additional ways to safeguard your supply chain and build your business back up? Check out our whitepaper below:

Whitepaper - Using inventory optimization software supply chain recovery plan


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