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Seven Supply Chain Trends and Responses for 2023

Views: 31     Author: Site Editor     Publish Time: 2022-12-26      Origin: Site

Supply Chain Trends


More uncertainty in global supply chain management will carry over into 2023, whether from existing or new geopolitical conflicts, inflationary pressures and recessionary environments, climate change weather events or other issues that have yet to emerge. By 2023, there will be a number of key supply chain trends that need to be managed in order to take advantage of strategic opportunities in the crisis.


We will first need:

- Capability: proven supply chain planning capabilities, always one step ahead and ready to respond to supply chain risks and opportunities


- Agility: Ensure that your supply chain is responsive and agile to manage the unexpected and deal with these threats and disruptions in an appropriate, efficient and profitable manner


- End-to-end proactive visibility: Having "control tower" visibility on key real-time metrics; being able to manipulate your supply chain beyond your own business boundaries; and establishing real-time collaboration with your supply chain partner ecosystem is critical - all of this is done using digital capabilities. This is done using digital capabilities. The ultimate goal is to enhance collaboration across the supply chain ecosystem.


With these three fundamentals in place, we have the opportunity to turn the challenges of 2023 into a competitive advantage.


Here are seven supply chain trends and responses:


Trend 1:  Countries are Skeptical of Collaboration

Geopolitical tensions are causing countries to become inward-looking and skeptical of cooperation and interdependence. This caution is justified when it comes to supply chains, such as when tensions escalate and essential materials may not be available or major trade routes may be shut down.


As a result, governments and industry leaders are exploring domestic self-sufficiency in materials supply and manufacturing. Beyond that, they are seeking to establish "friend support" relationships - trade links with like-minded countries that are most likely to be geographically close ("near shore"), where countries/regions where commodity supplies are likely to be more secure.


Response:

- Simulate scenarios to understand the impact geopolitical tensions will have on your supply chain.


- Consider how to use allied outsourcing or nearshore outsourcing to create a more secure supply network.


- Be aware of what happens if you are unable to access critical materials or components.


Do you need to reformulate products? What does this mean for regulatory and/or customer approval? Are there cost implications for sourcing from new suppliers or markets? Recognize the impact of allied outsourcing or nearshore outsourcing on your lead times and speed to market. Can you become more responsive, agile and reduce working capital?



Trend 2: Rampant Cybercrime

In 2023, cybercriminals may become more sophisticated in infiltrating supply chains to disrupt or steal from businesses. The supply chain may provide vulnerabilities that offer outside parties access to your systems, particularly through your supplier network. Criminals can also break in through basic warehouse equipment such as barcode readers or through Internet of Things (IoT) devices applied to your manufacturing and other operational sites. Cyber risk can be exacerbated if you rethink your supplier network, change allies/nearshore, or invest in new technologies.


Response:

- Recognize that your cybersecurity strategy often stops at the boundaries of your own enterprise. Therefore, identify the strategies you and your partners must develop to mitigate cyber risk in your supply chain. How can you help ensure that these strategies are robust and provide adequate risk management for your third-party contracts?


- Ensure that new third parties entering the supply chain ecosystem undergo a comprehensive cyber risk assessment.


- Consider funding and implementing artificial intelligence (AI) or machine learning (ML) as part of the standard entry process for new suppliers to identify threats such as spam and phishing emails.


- Human error is a key cybersecurity risk. A recent report by the World Economic Forum highlighted that nearly 95% of successful cyber attacks are related to human factors/errors. Define policies to leverage technology and automation to help mitigate this risk.


- Use IoT devices (storing data, managing inventory, tracking shipments) to perform cyber assessments of all functions/activities in the supply chain, especially devices that provide direct access to sensitive information and/or gateways that provide access to broader systems.



Trend 3: Access to Materials in Turmoil

In the coming year, a second wave of unplanned supply chain risks may emerge. Organizations may have difficulty accessing manufacturing critical inputs, even spare parts and critical maintenance items. In a consistent challenge, key commodity prices and availability may fluctuate - whether it's construction items such as fuel/diesel, lumber, steel and resins, or plastics for packaging. Building resilient supply chains that can cope with future disruptions and adapt quickly to new changes will be key to helping address these risks.


Response:

- Protect your core products and reduce risk by eliminating the critical time spent managing low-demand items.


- Address redundancy in your supply chain by moving from "just-in-time" to "just-in-case," keeping extra inventory for critical items, keeping capacity utilization low, and working with multiple suppliers. Don't just say you'll find alternative suppliers in the chaos, but have a clear plan for those suppliers and how any changes will affect your costs and operations.


- Use real-time data analytics to improve the accuracy of demand fluctuation forecasts/forecasts and stream these insights into your sales and operations execution framework.


- Use technologies such as blockchain to improve product transparency, prevent counterfeit products, reduce discrepancies, and automate workflows through smart contracts.


- With two-thirds of global business leaders highlighting the need to improve the visibility of their supply chains to maintain operational stability into the future, prioritize your supply chain resiliency to achieve true end-to-end visibility and transparency across transportation, node and link supply models.



Trend 4: Changing Manufacturing Footprint Landscape

While access to critical materials may be challenging in 2023, manufacturing will also face challenges for many of the same reasons, including rapidly rising energy costs and soaring prices for key inputs. As a result, global companies with manufacturing operations will reassess their manufacturing footprint. However, there may be deeper thinking about whether manufacturing needs to - and can - be done entirely onshore. This shift is unlikely to happen overnight, but the wheels will be set in motion.


Another factor for 2023 may be the increased impact of online retail on product manufacturing. Often, online platforms want to differentiate their products, whether it's the size of the product, minor ingredient variations, or even the style of packaging. This means organizations will be looking for manufacturers who can offer more customization. Similarly, in the life sciences, precision medicine will be increasingly accepted by regulators, healthcare practitioners and patients. So instead of making millions of units of each vaccine/drug and shipping those products around the globe, companies may look to produce a specific product for each patient. This manufacturing transformation will significantly change the future of the manufacturing footprint and the way the supply chain operates. A key question, therefore, is whether companies should create new supply chains or simply move production to other markets where they have existing capacity.


Response:

- Consider the future of your manufacturing locations and how any changes will help make your products more competitive .


- How can you access resources from multiple suppliers/manufacturers in different countries to help protect your business from the uncertainty of key manufacturing markets?


- Explore opportunities to contract with global organizations to manufacture on your behalf, or if manufacturing should become part of your core DNA and be done in-country over the next few years.


- Find out if the future of mass manufacturing is right for your business, or if you need to consider a custom manufacturing approach?



Trend 5: Retail and Distribution Supply Chains are Changing

While getting goods into the hands of consumers in 2023 may be easier than it was in the early days of New Coronary Pneumonia, it may be neither easy nor cheap. There are likely to be more consumer mechanisms and channels than ever before, and costs show no sign of falling, partly because of close ties to complex manufacturing challenges, but also because of the difficulty of getting goods into the hands of more demanding consumers than ever before.


The prevalence of last-mile delivery challenges, coupled with a reliance on suppliers who often encounter difficulties, means that global and local retailers may need to review their inventory distribution networks and create a seamless experience around a unified business approach.


Response:

- Consider the future of your distribution and micro fulfillment center locations.


- Enhance and advance your e-commerce and omnichannel into a truly unified commerce process and technology.


- Review sourcing and supplier strategies to reduce risk.


- Leverage AI and ML to achieve control tower visibility in a predictive environment.



Trend 6: Accelerating Technology Investments

Investing in cloud-based digital transformation strategies has been a key trend over the past year and is likely to accelerate in 2023 as organizations embrace technology as a strategy to mitigate growing concerns about inflationary pressures and economic stagnation. While technology transformation is typically focused on the back office and better customer engagement, supply chain and operational capabilities will take center stage in 2023.


Importantly, there is likely to be more investment to improve the maturity of supply chain planning, automation of warehouse and operational tasks, and the collection of better end-to-end supply chain analytics to improve visibility. Supporting this trend is a shift by some major technology providers to holistic supply chain platforms. Rather than offering supply chain functions as standalone add-on systems, they are integrating them into a platform designed to provide a seamless user experience.


Response:

- Prioritize technology investments in supply chain planning capabilities and end-to-end visibility enabled by real-time analytics, as these can help you maintain operational stability.


- Fast track your data management strategy and capabilities, and elevate your team to leverage technology capabilities for insight-driven decision making.


- Consider how you can invest in automation to replace redundant manual supply chain activities, increase productivity, and prevent margin squeezes and cost increases. There are opportunities to streamline very manual activities such as global trade documentation, free trade agreement (FTA) compliance, trade tax calculations, reconciliation and settlement, and reporting.


     

Trend 7: Review Scope 3 Carbon Emissions   

Supply chain sustainability strategies have long been an integral part of achieving corporate ESG initiatives. 2023 will likely see a focus on Scope 3 emissions controls required by regulators and other key stakeholders such as customers and the financial community. You may be expected to make smart decisions to reduce these emissions, and "greenwashing" will not pass muster.


Adding to the pressure may be a shift in investor activity toward organizations that can demonstrate their lower Scope 3 emissions. Global banking institutions, private equity and venture capitalists want to see their portfolios aligned with sustainable organizations.


Response

- Achieve your ESG strategy by aligning goals for each function in your business, including finance, HR, IT, operations and commercial. Ensure internal collaboration and coordination with each function that accesses and tracks the same ESG data.


- Capture real-time operational data across the supply chain to measure and report on ESG matters.


- Establish end-to-end visibility into your supply chain to see where your goods are going, the organizations that are moving them, and their sustainability credentials. With this insight, proactive decisions can be made about partners to reduce your Scope 3 carbon emissions.


The supply chain of 2023 is most definitely more uncertain, and these supply chain trends above will be key to controlling future growth in 2023. As we have seen, having the ability to plan well and be flexible by improving end-to-end visibility into the supply chain will be key to reducing areas of risk and vulnerability, as well as taking advantage of other opportunities that are difficult to translate into revenue. By proactively capitalizing on these trends, we can be empowered to set ourselves up for another successful year.

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