The road ahead

From the December 2022 print edition

If there’s one thing that supply chain professionals can count on, it’s uncertainty and disruption.

As many places exit the COVID-19 pandemic’s emergency stage, and inflation and economic uncertainty put pressure on businesses and consumers, it makes sense to ask what the New Year has in store for supply chains. Supply Professional asked several industry experts what to expect in 2023.

With volatility still ranking high among concerns, the Association for Supply Chain Management (ASCM) has seen ‘resilience’ move up three spots from last year on its annual Top 10 Trends in Supply Chain report, says ASCM’s executive VP, Peter Bolstorff. Resilience – and dealing with supply chain risk – now ranks number-three on the top trends in 2022. That’s behind ‘big data and analytics’ at number one, and the second-place issue, ‘digital supply chain.’

Several of the other trends in the report focus on technology advancements. AI and machine learning comes in at number four, robotics at number five, and data security and cybersecurity at six. Circular and sustainable supply chains is in the number seven spot, while essential goods supply chains are number eight. Smart logistics and IoT is number nine, followed by logistics vulnerability at number 10.

Overall, according to the trends report, the theme for this year has been supply chain digitization. And while that’s the overall pattern, Bolstorff says that ASCM’s corporate community has been picking and choosing what technologies they need to improve supply chain operations, rather than simply buying every technology option available.

“They’re not doing one trend at a time and investing all their money in each trend,” he says. “They’re looking at their supply chain from a standards point of view, figuring out, ‘what is it that
I need to run my supply chain?’ and then pinpointing where they want to add digital capabilities.”

Managing risk
Risk mitigation and supply assurance have been major themes within supply chain over the past few years and that trend is likely to continue into 2023, says Jennifer Strawn of Rand Technology, a semiconductor distributor. But it’s now more challenging to plan for them. Organizations are dealing with the balancing act of utilizing surplus inventory from deliveries on orders placed a year or more ago, Strawn notes. Yet many still can’t get certain essential components.

Incorporating data analytics can help to deal with lingering uncertainty into 2023, Strawn says. That includes their own data and that of their supply partners. The best use of technology involves helping organizations to identify and understand trends and patterns, which in turn aids in better planning.
As well, organizations may have to pick and choose which products to focus on, with some products taking priority. Some industries will move faster than others going into the New Year.

“I was at dinner with a large charging station company for electric vehicles,” Strawn says. “They’re full force. They have to be moving forward because of what’s expected coming down the pipeline. It’s going to be about selecting the products that will be the drivers and creating the economies for our future.”

As well, although things appear to be improving, Strawn stresses remaining vigilant. Keep planning as if next year will be full of challenges and constraints.

“Don’t think that everything is OK and go back to what you think what might have been before,” Strawn says. “It’s really just having conversations with your suppliers, with your partners, and just keep moving forward in that direction.”

Globally, markets have been experiencing a boomerang effect, says Reza Bafandeh, CEO of Darwynn Ltd., a Canadian e-commerce company. Steamship lines saw a lot of constraints over the past few years, with container prices exceptionally high. There was also a lot of constraints within shipping rails. This led to many companies experiencing stockouts, issues with fill rates, and difficulties getting the right inventory. Some companies overbought. Several large retailers therefore have too much stock. As a ripple effect, storage space became scarcer. This helped to fuel rising costs in many areas.

“What happened during the pandemic was something that had never occurred,” Bafandeh says. “Companies didn’t know how to deal with it. Suddenly, organizations in North America and Europe needed to find new ways of sourcing and reducing their reliance on foreign goods. At the same time, supply dropped significantly. We had significant constraints in the waterways, and I think we’re starting to see that come back into normal effect. But a lot of organizations saw their vulnerability as a result of the pandemic.”

Accurate and timely information can help supply chains deal with uncertainty, Bafandeh says. “Until now, I think it’s been a hidden gem, he notes. “Most people haven’t seen the true value of timeliness and an accurate level of information from the supply side of the business.”

The rise of digital technology enabling supply chain visibility will be one of the themes going into 2023, says Oleg Kamenetsky, senior product marketing manager at wireless technology company, Qualcomm. The pandemic exposed underlying shortcomings within supply chains regarding visibility and communication. Using digitization to improve that visibility and planning, reduce bottlenecks while boosting supply chain resiliency will be a theme into the New Year. Staffing shortages and deploying the right talent will also remain challenging, he noted.

Any digital solution requires meaningful data, Kamenetsky says. But what sort of solution to use depends on the situation, he notes. While technology like AI can prove useful, that technology is constantly evolving to enable new uses.

“It really depends on the use case,” he says. “We can, for example, create a visibility solution that can work across a number of use cases, but we need to know what we’re solving for. Are the issues that we’re having, gaps of high value in transit goods? Is it yard management in an open-air warehouse environment, for example?”

“There isn’t a one-size-fits-all solution so talk to a provider that has expertise in the space,” Kamenetsky continues. “There’s so much nuance that goes on behind the scenes that end users might not even be aware of. It gets increasingly more complex once you’re combining any kind of positioning capabilities, any kind of connectivity capabilities. And then, how do you make sense of that data? There are a lot of things that need to be considered.”

Of course, supply chain disruptions have always existed, says Ron Leibman, a partner at McCarter & English LLP, who leads the transportation, logistics and supply management practice. The pandemic and the Russian invasion of Ukraine have simply highlighted that disruption. Those issues, along with the future of Taiwan, the global rise of protectionism, and ESG issues, will continue to be trends going into 2023, Leibman notes.

“Remain flexible and follow the practices that the COVID crisis highlighted – supply chain resiliency and redundancy – not just paying lip service but looking to kill the cost-only model once and for all,” he advises.

Ocean lines will look to use blank sailings as a means of stabilizing the rate market so take advantage of the current environment as much as possible, Leibman says. Secure warehouse space as far in advance as you can and be willing to pay market rates, particularly for refrigerated goods on a guaranteed-space basis, given the current space crunch.

Leibman also sees a continued drop in trucking rates due to reduced freight levels and the resulting overcapacity. “There is also the fast evolution on the autonomous side that could affect smaller companies unable to integrate this or other new technologies,” he says.