As we look further ahead into this new year, it’s only natural to pause and think about the current moment, where we’ve been, and where we’re going.
The global supply chain continues to face a lot of uncertainty. To say that the past few years have been difficult for supply chain professionals is a major understatement. Since early 2020, the supply chain has experienced large-scale disruptions that many likely did not expect to see in their lifetimes. But as much as we would love to see a return to normalcy and stability in the supply chain, there are still plenty of challenges to navigate in 2023.
Labor Shortages
The Great Resignation was one of the most buzzed-about topics in recent years, and it has significantly impacted the supply chain. It has been reported that, of the 47.4 million people who voluntarily left their jobs in 2021, about 11 million of those worked in the logistics, transportation, retail and wholesale trades. This led to trucking companies with idle vehicles because of a lack of drivers and companies trying to keep up with demand with fewer people on staff. How long this shortage will last remains unknown, but it will remain an issue in 2023.
Finding ways to use technology more effectively so that it can be leveraged to its full advantage can give you a lot of power in this situation. Integration and automation solutions help drive connectivity and enable you to do more with fewer people.
It’s also natural to look at offshore solutions. If you’re rethinking your supply chain and considering moving operations offshore, Bristlecone’s digital consulting services can help make sure the process is carried out effectively.
Rising Costs
Rising costs are another issue with no end in sight. With labor in such high demand, many companies are upping their salaries and adding extra perks like signing and retention bonuses to attract new employees. However, labor shortages are just one factor contributing to costs increasing across the board. Soaring fuel prices and materials costs have also been major driving forces behind the rising costs people have been experiencing around the world. One report from the summer of 2022 showed transportation costs had risen by 22%.
On top of the rising labor and transportation costs, import fees and inflation are further compounding the problem. Inflation leaves supply chain professionals in a challenging position. It drives up production costs, which forces companies to increase the price of products. According to a Gallup survey, 24% of the consumers who responded plan to reduce spending and only purchase essentials due to inflation. Companies must be up-to-date on consumer trends and demand, particularly as prices increase, so as to avoid excess inventory.
Getting on top of inflation means approaching it with end-to-end visibility to see where issues can be controlled or mitigated. Where can you substitute technology for labor? Can you get better pricing through alternate suppliers? Are you proactively communicating the need to raise prices to your customers? Have you performed a risk assessment? Risk assessments can help uncover ways to keep costs down and increase visibility throughout the supply chain.
Geopolitical Unrest
Since early 2022, the war in Ukraine has led to widespread supply chain disruptions worldwide, contributing to higher costs, creating material shortages and forcing companies to explore options to move operations away from eastern Europe. Not only has the situation in Ukraine continued into the new year, but there’s also the endless possibility that unrest could develop elsewhere in the world and cause further disruptions.
Trying to effectively reconfigure your supply chain to work around certain geographic regions physically can be a very delicate process. Partnering with a digital consultant who can help plan your labor shifts and anticipate unrest is important.
Weather and Climate Disruptions
Weather-related delays will always be a wildcard that supply chain professionals need to work around to the best of their ability. We’ve seen severe weather-related issues cause bottlenecks in the supply chain. Most notably, droughts recently caused water levels in the Mississippi, the Rhine and the Yangtze rivers to drop low enough that freight traffic could not move through at their regular cadence.
Weather events can be difficult to plan for, but we have AI solutions like Sense.ai that can help detect and alert you to potential weather-related risks.
At the same time, we understand the role supply chains play in climate change and the critical links between supply chain and sustainability. We can work with you to align your supply chain and sustainability strategies using solutions like Climate75 and E360.
- Climate75 offers a single platform built on SAP S/4HANA Cloud to measure, monitor and report all the operational environmental data and boost your company’s sustainability ambitions, with an accelerated deployment time of just 15 weeks.
- E360 brings discipline to sustainability programs and enables sustainability as a value driver to growth, risk management and capital returns by providing a holistic view of parameters concerning climate action, social responsibility and the circular economy.
Whatever your greatest supply chain challenge in 2023, we can help you tackle it. Let’s start by having a conversation about it.
