Supply chain teams around the globe have worked tirelessly to reassess and evolve the way they operate in the wake of significant disruptions. Performing a careful balancing act, these teams must navigate an increasingly complex business environment plagued by disruptions that continue to destabilize markets and add pressure to supply chains. These uncertain times have served to highlight the importance of agility and resilience, and to demonstrate that change and disruption will continue to accelerate. Supply chain leaders have been urged to act to get ahead of the challenges and accelerate digital transformation efforts to mitigate disruptions, maximize opportunity and reduce risk.
This isn’t the first time, nor the last that supply chain teams will face significant hurdles. The key is how we apply the lessons learned and emerge stronger to move forward. With this in mind, we took a look at four themes we see gaining momentum in 2023.
1. Focus on tightening the link between supply chain and finance
As global financial conditions tighten and cost concerns mount, we are seeing a renewed focus on cash flow and margins, which has increased the pressure on supply chains to work closely and be more strategically aligned with finance. Organizations are seeking to tighten the link between supply chain and financial planning to make better and more confident decisions to drive greater value.
Recent supply chain disruptions led to businesses stocking up to avoid shortages, leading to excess inventory across many industries. As supply catches up, companies are trying to strike a balance between cost efficiency and lean inventory management. This has led to weighty decisions to address excess and/or unproductive inventory, while balancing opportunity and risk amid challenges and constraints. In today’s unpredictable environment, businesses need to be able to model end-to-end scenarios that accurately predict the total cash flow impact for these decisions.
Strengthening the alignment between supply chain and finance helps organizations to harness visibility and assess what-if scenarios, to understand the impact of their decisions to the bottom line and maximize opportunities.
One of our customers, a leading national distributor of professional audio-visual and lighting equipment, has leveraged supply chain planning software to unify all stakeholders and enable constant and consistent communication between finance and supply chain teams. They found that, for instance, some suppliers couldn’t deliver, and often couldn’t project when they would be able to deliver. On top of that, many semiconductors used in its video products increased in price by five hundred percent or greater. Strong collaboration on a single platform kept finance aligned to these changes to quickly see the impact across the operation. This tightened cross-functional collaboration has delivered a range of benefits for the company, including clearer supply chain visibility, data-driven decision making, margin optimization through demand shaping and scenario planning, and proactive initiatives to close supply-demand gaps faster.
2. Increasing network visibility beyond the four walls
Improving end-to-end visibility across the supply chain has been a prominent trend that will continue to take priority throughout 2023. Today, there is a greater focus on leveraging near real-time data to foster end-to-end visibility which allows for more operational control, providing insights for better decisions to optimize supply chain performance during times of uncertainty.
In 2023 we will see more companies accelerate their transition from a focus on digital visualizations at a functional level, to implementing visibility that expands across the multienterprise supply chain to connect data across the entire network. This means businesses are taking steps to increase end-to-end enterprise visibility, to get information from beyond the organization to involve their suppliers and their suppliers’ providers, and to connect data, operations and decisions across the wider ecosystem – with an aim to turn this data into actionable insights for better business outcomes. The deeper levels of visibility mean companies can sense forthcoming change quicker, understand the impact of a decision across the broader ecosystem, and harmonize and orchestrate their supply chain while adding flexibility to plan and continuously adapt amid changes and disruption.
3. Finding balance between resiliency and efficiency
Continuous disruptions have exposed weaknesses in supply chains, transforming once small cracks into significant chasms. This has placed resiliency in the spotlight as a necessary goal in supply chain management. Just-in-time and cost-optimized supply chains that dominated prior to 2020 had to reconsider their approach to navigate a new era of unpredictability with increased resiliency. But as we come to terms with the fact that uncertainty is here to stay, supply chain professionals are re-evaluating priorities, and realizing the importance to strike the balance between efficiency and resiliency.
Supply chain resiliency is the ability to adapt to structural changes by modifying supply chain strategies, products and technologies. As businesses continue to take measures to build more resilient supply chains, we see a trending step towards refocusing on operations and finding ways to establish a robust yet cost-effective supply chain strategy.
To navigate through whatever challenges come next, organizations must strive to establish a culture of continuous improvement – building resilient supply chains that encompass efficiency to meet business goals and customer expectations. It is critical supply chains involve the ability to quickly adjust and respond to disruptions, while preserving efficiencies to maximize opportunities and add value.
4. Supply chain sustainability efforts will continue to accelerate, powered by technology
More and more companies have been responding to pressures from customers, investors and government regulations to demonstrate transparency and environmental responsibility in the ways they operate. For supply chains, it means the focus on more sustainable practices and operations is growing stronger every year, especially from a business perspective – when sustainable operations are linked to the optimization of resources and cost savings.
Each day, more and more businesses have the capabilities to effectively measure the carbon footprint of their goods and services, and they are embracing sustainability efforts to minimize the environmental and societal impact from their products’ journey, from raw materials to production, storage, delivery, and transportation. These metrics will continue to drive sustainability improvements across the supply chain to optimize the use of resources required to produce and transport goods while reducing waste.
As companies continue to look for ways to operate more sustainably, supply chain planning systems will remain a valuable resource for increasing visibility and tracking to help businesses meet sustainability goals. Moving forward, we see more companies turning to multiple what-if scenarios and simulations to find the optimal balance between sustainability and margin growth to production schedules and deliveries. Additionally, machine learning will accelerate the use of more data from shipments throughout the process, from sourcing raw materials and transportation to manufacturing and distribution, to facilitate measurable steps to lower emissions, cut back on waste, and support circular economy strategies.