Trend Compass 2020: Digitalization is accelerating

The coronavirus crisis is clearly accelerating digitalization within companies in the Netherlands, according to Supply Chain Media’s extensive research for the Trend Compass 2020 study. The survey of 122 Dutch supply chain directors and managers reveals that pandemics, such as the current COVID-19 outbreak, have a lasting impact on corporate strategies and innovation. Differences are already emerging in innovation per strategy.

By Martijn Lofvers

In early 2019, Greta Thunberg single-handedly succeeded in putting sustainability on every company’s agenda. Now, just over a year later, the whole world – including the world of business – is in thrall to COVID-19. The burgeoning digitalization trend has received a tremendous boost, partly because modern technology enables employees to work from home and partly because companies have realized that they must develop more digital business models in order to survive this crisis and future ones. For many companies, this means a tighter focus on – and sometimes recalibration of – their supply chains.

Rise of sustainability

Just like last year, the Dutch supply chain directors and managers surveyed identify digitalization (and the associated technological changes) as the megatrend with the biggest longer-term impact on them. Then comes globalization, closely followed by the megatrend of sustainability, climate change and scarcity of raw materials. The respondents rank pandemics such as COVID-19 the fourth most important megatrend.

The coronavirus crisis has been a major trigger for the other megatrends. It has not only increased the focus on sustainability, for example, but the supply problems (particularly from China at the start of the crisis) have also put the megatrend of nearshoring – the relocation of production activities closer to the sales market – higher on the list of priorities. Respondents’ individual comments clearly illustrate that COVID-19 is hugely accelerating the key megatrend of digitalization.

The megatrend of urbanization and depopulation of outlying areas ranks bottom in the survey, but should not be ignored. During the coronavirus lockdowns, most attention has been focused on city-dwellers, store replenishment and delivering e-commerce orders. Pandemics have been included in the Trend Compass 2020 as a new megatrend, alongside longer-running megatrends such as globalization (since around 1990), digitalization (since 2010) and sustainability (since 2015).

These megatrends lead to macrotrends – medium-term changes – and translate into drivers for businesses and consumers. Such trends often spark counter-trends, such as minimalism in response to overconsumption. The drivers determine companies’ and people’s purchasing behaviour. For example, whereas one customer makes price-driven buying decisions, another will be motivated by convenience. Some drivers are paradoxical, such as convenience and experience, and companies must be particularly innovative in order to address them both.

Costs the key driver

The survey reveals costs to be the key driver for purchasing behaviour among customers and target groups, closely followed by convenience and experience. The newly added driver of safety ranks fourth, mainly because of COVID-19, narrowly nudging sustainability into fifth place. The topic of transparency and visibility (for the customer) comes in sixth place, surprisingly lower than sustainability. It seems that the respondents regard the sustainability of a product as a more important driver than its origin. Personalization is ranked considerably lower than experience, which apparently doesn’t necessarily require a personal approach. Despite – or perhaps because of – the new European GDPR, privacy comes bottom, with just 6% ranking it as the most important driver. … … …

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This article was first published in Supply Chain Movement 38 | Q3 – 2020