Will 2022 Supply Chain trends like Resiliency, Sustainability and Collaboration, will continue and what new themes will emerge in 2023? The list below reflects the insights and intel of many annual recaps and predictions to help break down what to expect.
The last several years have had more than their share of surprises, some of which will remain in place:
- Economic Volatility – Recent inflation calculations and the ongoing concerns of a recession are leading to 2023 economic volatility. There is a universal desire to bounce back to normal. Governments have eased pandemic-related restrictions to support economic improvements but these are not expected to achieve any solid stability due to other ongoing factors.
- Labor Interests – Personnel shortages, illness, and staff burnout issues will continue through next year. Individual employees continue to grapple with higher cost of living and ongoing campaigns for increased wages, better work/life balance, and optimal return-to-office policies.
- Geo-political & Climate Change Related Disruptions – The specific 2022 headlines of bomb cyclones, freak waves, civil protests, and ongoing wars may not be exactly the same, but most expect weather related disasters and political unrest to be an active and ongoing aspect of 2023. Extreme weather related to climate change will continue to contribute an element of familiar surprise. Also, there do not appear to be any near-term peace options in the Ukraine, Ethiopia, Afghanistan, Israel, or Haiti to call out some of the areas impacted by war in 2022.
- Resiliency & Agility Required – The need for supply chain resiliency and agility will continue. This will require creativity and collaboration with suppliers to navigate some of the 2022 trends that will continue and some of the new or increasing ones called out below.
So the world will not snap back to 2019 pre-pandemic levels of global commerce and growth. The familiar yet unpredictable aspects of the trends carrying over from 2022 require strong leadership. Supply chains, suppliers, and buyers will need agility and resiliency to achieve through ongoing uncertainty and volatility. A recent McKinsey survey reported less than half of the companies interviewed claimed to understand Tier 1 supplier location and the top risks their Tier 1 suppliers faced. Deeper Tier 1 supplier understanding is an excellent place to start. Improve supplier awareness and collaboration to meet the ongoing challenges 2023 is expected to bring.
On the Rise
Some long-standing trends are anticipated to increase in 2023. While existing processes may be in place to handle prior levels, 2023 may require a recalibration of current practices or at least monitoring and simulation of how anticipated increases will impact the organization.
- Cyber Threats – 2023 is expected to bring an increase in data risks and cyber-criminal activity. It is important to take additional security measures now to raise employee awareness and put in place system, data, and human policies and protections.
- Technology Investments – Next year will bring a reinvigorated spend in technology as businesses look to optimize new workforce arrangements and drive efficiency. Remote work has brought to light where investments are most needed.
- Sustainability Scrutiny – Investors, customers, and regulators are pressuring for increased environmental sustainability. “39% of respondents in Descartes’ survey on consumer sentiment around sustainable delivery said they “regularly” or “always” make purchasing decisions based on the company’s or product’s environmental impact.” This includes Scope 3 emissions as defined by the proposed US SEC regulations for publicly traded companies. In January 2023, the Germany Supply Chain Due Diligence Act goes into effect, so all businesses need to monitor supply chains for environment degradation across their entire supply chain.
- Government Oversite – Around the globe, an increased number of government regulations will go into place or be defined in 2023. Along the lines of the Germany Supply Chain Due Diligence Act and the proposed US SEC Emissions Tracking, each country and region will be following suit and working to expand government policy, awareness, and fines for infractions.
It is best to consider how these increased trends will impact the organization and present opportunities or threats. The beginning of the year is an excellent time to consider roles and responsibilities. Take time to confirm that these increasing supply chain issues are assigned and reviewed at a regular interval. This proactive monitoring can then detect any 2023 fluctuation and take the required response.
Shiny New & Emerging
The start of 2023 introduces some emerging trends that it’s best to become familiar with and start tracking now.
- “N-Tier Problem” – The same McKinsey survey referenced earlier in this article also found that only 2% of companies surveyed had visibility to their suppliers in the third tier and beyond. Organizations need to expand their scrutiny to build a more resilient and agile supply chain. Invest in the correct tools and digitize processes early in 2023. This will help free up resources to support building a deeper N-Tier supplier understanding. This will require alignment, collaboration, and cooperation with Tier 1, Tier 2, and Tier 3 suppliers.
- ESG Compliance – In January 2023, the Germany Supply Chain Due Diligence Act goes into effect. Businesses will need to monitor their complete supply chain for human rights violations and environmental impacts. Instead of focusing on a single aspect of ESG, emerging regulation will enforce a holistic approach to supply chain management. Newer regulations also have more significant penalties and confirmed means of enforcement. Individual countries and economic regions are expanding on what the sited German Act puts in place Jan 1.
- Oversupply – One of the more closely watched 2023 emerging trends is consumer demand. As demand softens, an oversupply of goods results in volatile price drops. The ING Trade Outlook 2023 states “There are simply not enough silver linings to keep global goods trade robustly flowing.” An oversupply can result in benefits like reduced shipping costs and access to discounted goods as consumer demand ebbs. These changes in demand can, also, obviously represent a threat to sales and projected profits. Track this trend to help minimize the threat of a soft market and increase the opportunity for organizational advantage.
- Value Ecosystem – Research into anticipated trends will also uncover key terms that are likely to become common references in 2023. One such term is Value Ecosystem. This concept brings together the broad ESG related regulation and scrutiny with the need for n-tier supply chain transparency. Simon Geale, the EVP of Proxima, coined the phrase, “We must understand our relationship with customers, suppliers, stakeholders, competitors, shareholders, employees, regulators, etc. – our ‘value ecosystem’.” This term recognizes the interconnectedness of the complete supply chain. There is a need to operate within the context of the overall ecosystem of each supply chain player.
While 2023 is sure to have an ample store of surprises, improved supply chain collaboration, alignment, and transparency are critical to prepare the unknown unknowns. It is best to start the year with initiatives that support digitization of manual supplier processes, creations of dashboards and reports for proper monitoring and required disclosures, and alignment with suppliers through consistent RFx, performance scorecards, and open communication lines. Happy new year – may it bring cooperation and success for us all.
- KPMG – https://home.kpmg/xx/en/home/insights/2022/12/the-supply-chain-trends-shaking-up-2023.html
- Supply Chain Brain – https://www.supplychainbrain.com/blogs/1-think-tank/post/36171-six-top-supply-chain-and-logistics-trends-for-2023
- Proxima 2023 CPO Report – https://www.proximagroup.com/resource/2023-cpo-report-whats-next-for-procurement/
- Fast Company – https://www.fastcompany.com/90799235/6-trends-global-supply-chain-2023
- Procurement Magazine – https://procurementmag.com/procurement-strategy/procurement-2023-whats-next-the-proxima-report
- Forbes – https://www.forbes.com/sites/stevebanker/2022/11/02/top-supply-chain-trends-heading-into-2023/?sh=1a9dfa0655e2