2023 Supply Chain Predictions: Resiliency, Sustainability And Visibility Set New Expectations
“Making predictions are hard, especially when they are about the future.” That quote, or similar ones have been attributed to numerous people including Niels Bohr, Sam Goldwyn, Robert Storm Petersen, and Yogi Berra. So, to make some forward looking predictions this year, I decided to reach out to some of my friends in the industry to get their point of views. A few common themes emerged.
Risk Resiliency is top of mind
When it comes to supply chains, risk can appear in many forms. From a pandemic that highlighted the supply risks in our stretched global networks, to cyber security breaches across our systems, and the current challenges that inflation brings to our business, the need for a risk resilient supply chain is clear to everybody.
This was highlighted by Martin Driscoll from Capgemini.
“Unfortunately, crisis appears to be part of the new normal – affecting not just day-to-day operations but also causing us all to reconsider our Supply Chain Risk Management Strategies,” he said.
Vadhi Narasimhamurti from Deloitte believes the pandemic has taught us the need to create supply chain resiliency and manage global supply risk.
“Building a resilient supply chain is an ongoing process, and we expect organizations to create long-term supply chain resiliency to counter the increasing complexity and hyper-connectedness of today’s global business environment,” he said.
“I think both ‘agility’ and ‘resiliency’ will continue to be major topics as companies have only touched the surface of the capabilities they need,” said Michel Roger from Accenture. “Almost 90% of the executives we surveyed told us their organizations are planning direct investment in onshoring or nearshoring manufacturing. Several clients are following a China + 1 policy. However, the Geo-political climate will also continue to impact the supply chain as companies look to de-risk by looking at alternative sourcing.”
And this is changing the way we think about how to manage risk-resiliency as noted by Sarah Barnes-Humphrey, Founder of Let’s Talk Supply Chain.
“Supply chains will be re-evaluated for where organizations want to spend their ‘risk dollars’, will it be in offshore manufacturing? Will it be in how much inventory or SKU’s you carry?,” she asked.
Sarah also believes cybersecurity is one of the biggest risks to supply chain sighting a Gartner prediction that by 2025, 35% of organizations worldwide will have experienced attacks on their software supply chains, a three-fold increase from 2021.
Jimmy Dickinson from NTT DATA believes a diversified enterprise across channels, products, geographies, and solutions has a greater likelihood of mitigating risk during the 2023 economic transition.
“While all parts of an organization are exposed to macro-economic risks, having an assortment of business models increases the ability to pivot as needed,” he said.
You can’t have a sustainable business without a sustainable supply chain
If you look at most companies’ goals or mission statements, they center around sustainability. And our global supply chains sit right in the middle as a major contributor to the climate crisis and offers ample opportunities to meet the climate targets.
As Jeff Briner from PwC explains, “Supply Chain organizations and their capabilities will be front and center with regard to most company’s sustainability efforts. Right or wrong, the burdens and efforts related to producing the data needed for sustainability reporting, decision making, and assurance will initially fall mostly onto Supply Chain organizations.”
Justin Goldston, Professor of Supply Chain Management at Pennsylvania State University elaborates: “As organizations increasingly adopt sustainability initiatives, the role of the supply chain in these efforts becomes more important. The supply chain is often responsible for a significant portion of an organization’s environmental impact, and as such, can be a key area for reducing that impact.”
This was put into perspective by Sarah Barnes-Humphrey, who believes supply chains should be the driver of these conversations within any organization as they produced more than 80% of the greenhouse gas emissions and more than 90% of the impact on air, land, water, biodiversity, and geological resources.
“Using raw materials that have a relatively favorable environmental footprint, powering the company’s operations with green energy sources, and favoring suppliers that emphasize renewables are of utmost importance,” she said.
Michel Roger from Accenture confirms: “Given that over 60% of carbon emissions are generated by supply chains, the need to rethink where we manufacture and how we transport goods to consumption locations has to be at the center of driving a more sustainable future”.
Supply Chain Visibility: If you can’t track it, you can’t measure it
To be more risk-resilient and sustainable you must start with knowing the current situation. How can you predict and respond to supply chain events if you do not have the visibility? How do you meet sustainability initiatives if you don’t know where emissions and waste are in your supply chain, or where slave labor and inequality is occurring across your business network if you can’t track it?
“There remain many opportunities to improve the “line of sight” (transparency) and speed of information flowing through connected Supply Chain ecosystems and extended business networks,” said Martin Driscoll of Capgemini.
“It is the data that is the problem,” said Michel Roger from Accenture. “I’ve seen several large, global companies still struggling with visibility internally and externally” he continued.
Vadhi Narasimhamurti from Deloitte elaborates: “Organizations continuously face the challenge of better leveraging the data they have to make informed decisions. While the volume and nature of data available to organizations has exploded in the recent years, the ability to translate that into meaningful, actionable, and real time insights is still lacking, both within the 4 walls of the enterprise and across the broader end-to-end value chain”.
Brandon Evans from NTT DATA narrates: “Harnessing the amount of data we generate both personally and organizationally has become more problematic than ever – and it doesn’t appear to be slowing down. Setting a strategy to accumulate and centralize that data for analysis continues to be a major trend, but we see many companies beginning to examine their organizations by using, analyzing, predicting and sharing that data for business improvements, opportunity spotting, and benchmarking”.
Expectations are rising for supply chain executives
We are coming to a situation where the saying “be careful what you wish for” is true of supply chain executives who have long demanded a “seat at the table” of a company’s boardroom.
“One of the main themes in global business in 2023 will be expectations. For example, the long sought-after supply chain visibility is here in so many ways; and board rooms now expect their business leaders to do something with it” said Scott Luton, the Founder and CEO of Supply Chain Now.
As the adage goes, “Supply Chain Leadership is not for the faint of heart”.
To learn more about why supply chain professionals now rate resilience as their top priority – and what they plan to do about it, check out a recent study Revisiting Supply Chain Resilience .