We turned to Supply Chain pro Gwen Sherrod, Director of North American Distribution for the IPC to get some insights into the inflation iceberg that is distribution and logistics to understand 2023:
The global supply chain is a complex system affected by both internal and external forces. As economies shift and technology advances, the challenges that the global supply chain faces in 2023 are likely to become more intense than they have been in recent years.
As we look towards the remainder of 2023, four key areas of concern should be addressed as soon as possible: increased demand for customized offerings, threats posed by geopolitical risks such as trade wars, increasing costs related to sustainable initiatives, and the continuing impact of digital transformation on existing processes.
First and foremost, an ever-growing demand for customized products is forcing companies to rethink their supply chain strategies to ensure that customer expectations for speed and customization can be met. Inventory of high-margin items, that meet these needs must be readily available to assure strong profit margins. Companies must adopt technologies such as geolocation tracking, predictive analytics, robotics, and AI to enable shorter lead times from design to production to better meet the end users’ needs.
Second, the ongoing trade wars between various countries create a new set of challenges for those involved in the global supply chain. Tariffs can not only lead directly to higher costs but can also disrupt the flow of goods across borders. Companies must make sure they understand how tariffs will affect their business models before entering into any agreement or contract with foreign countries. Companies must remain up-to-date on changes due to regulations or political shifts as well as other potential risks such as currency fluctuation, unstable exchange rates, and border disruptions.
Thirdly, sustainability has become crucial across many industries over the last few years and this trend is only likely to continue into 2023; companies must understand how sustainable initiatives can influence their supply chains so that they can avoid potential environmental costs or reputational damage down the line. Businesses need to assess every step in their supply chain from sourcing through delivery to identify opportunities for improvement from both cost and sustainability standpoints.
Finally, digital transformation is a major force shaping operations everywhere today – companies need to be aware of technological developments for them to remain competitive within their industry now, and into the future. This includes everything from leveraging data-driven decision-making tools like blockchain or machine learning algorithms right through automation platforms or advanced analytics software designed specifically for supply chain management purposes. Having an integrated approach between physical production units and digital platforms is critical in supporting efficiency gains while simultaneously managing risk exposure associated with various sources of uncertainty within operations.
2021 and 2022 educated consumers on what a “Supply Chain” is, while free overnight delivery created a consumer expectation based on immediate gratification. To survive and prosper in the global supply chain, the old principles of “Just in Time” inventory, and “Lean Supply Chains” push the standard of inventory management. Planning strategies around global supply chains into 2023 and beyond will force businesses to stay agile enough to address them quickly while simultaneously pursuing long-term objectives rooted firmly within economic or corporate goals in mind – something which will require continuous investment into emerging technologies coupled with strategic partnerships between stakeholders across multiple industries if success at a meaningful scale is eventually to be achieved.
To be able to lead Supply Chain in 2023 you need to have a comprehensive perspective. Leaders need to embrace AI to improve their supply chain networks. The three steps listed above will reduce risk and improve performance.
Disruptions to the supply chain are likely to persist into next year. The causes of these disruptions could be conflicts in the geopolitical arena, weather-related events as well as economic downturns. These disruptions can affect access to goods and create surges in costs. Keeping a low-capacity utilization will reduce the risk to supply chains. But, businesses must make clear plans for alternative suppliers.
In order to help the status of a leader in supply chain management by 2023, companies need to develop strategies for dealing with these changes and the risks. Businesses may need to alter their payment policies, such as. They can also make use of digital tools to enhance their relationships with suppliers as well as associates, which can result in more efficient and flexible operations.
Supply chains need to be able to continue investing in resilience. Companies that are concerned about sustainability will work to make production more efficient. This will ensure that their supply chains can adapt to changes in the environment.
One strategy for addressing the risks to supply chains is to move from Just-in-Time to Just-in-Case. More granular requirements for customers require supply chains to be responsive. Business can offer greater value to their customers when they are able to build a smart supply chain.
Furthermore, businesses adopt sustainable practices in order in order to lessen their impacts on the environment. It will allow them to remain competitive in a world that is increasingly aware of the environmental issues.