As they head into 2024, companies will be looking to accelerate the delivery of data-driven intelligence to better manage global supply chains and increase on-time customer deliveries, according to a report from electronics and connectivity provider Molex.
They will attempt to do that through continued advancements in supply chain infrastructure, along with increased adoption of digital tools and artificial intelligence (AI), according to Don Hnatyshin, senior vice president and chief supply chain officer at Lisle, Illinois-based Molex.
“Regardless of the expected and potentially unexpected trends in the coming year, organizations that pursue digital transformation will be best positioned with the agility to respond to the market changes and global shifts in 2024,” Hnatyshin said. “The key is having the vision to build out a platform that can adapt, protect and reinforce customers’ timelines and market initiatives across a wide range of known and unseen scenarios.”
More specifically, Molex offered five factors they predict will play pivotal roles in 2024:- Market Demand Will Remain Uncertain. Continued fluctuation in market demand will be an overarching issue in 2024. Each industry sector—from automotive and consumer devices to data centers and electrification—is moving at a different pace, creating both upticks and downturns in market demand. For instance, 2023 was a strong year in the automotive sector, but uncertainty in global interest rates and forecasted headwinds in the electric vehicle (EV) market could cause demand declines in the new year. While EVs remain in an innovation cycle, inflationary material costs are moving price points past what was previously anticipated.
- Optionality is Key to Addressing Ongoing Trade and Tariff Issues. Trade and tariff issues are a constant concern for global supply chains, which is why it’s increasingly critical to select the right suppliers in the most favorable regions closest to end customers. As global markets rebalance inventory levels, optionality becomes a core strategy to mitigate the impact of issues such as foreign currency exchange rates and geopolitical volatility. This strategy will be particularly important in the electronics industry in 2024, with an even stronger bias in Mexico and Southeast Asia.
- An ‘Inventory Hangover’ Will Persist. High demand in 2021 and 2022 led to significant inventory investments. The result, which has been called an “inventory hangover,” loomed heavy in 2023. However, this should dissipate by the second half of 2024—or possibly during the third quarter of next year – as inventory levels continue to rebalance. This will occur first at the component level, then work through raw materials.
- There’s a Sunny Forecast for Freight and Logistics. One bright spot in 2023 was logistics costs returning to a balanced state that almost approached pre-pandemic levels. The primary challenge in 2024 will be commodities costs, which are expected to remain high, driven by labor inflation and currency exchange rates. Optionality in supplier selection will go a long way toward mitigating these costs in the coming year.
- AI and Analytics will Gain Momentum and Acceptance. Increased adoption of AI, predictive analytics, digital twins, and machine learning (ML) will gain greater momentum and acceptance in the year ahead. Together, these advanced data-driven tools will deliver real-time visibility and actionable business insights to help companies respond with greater speed in bolstering supply chain resiliency. In 2024, ongoing investments in enriching data ecosystems will elevate overall demand and supply planning initiatives. Excess inventory is a great example, as machine learning and AI can optimize inventory health and velocity while generating a much clearer picture of potential outcomes to improve decision making.
