10 Supply Chain Management Trends for 2023

Numerous factors will influence supply chain management trends in 2023, from new technologies to the economy to world events. Below are the key issues we believe will be important to global supply chain management in the coming months.

Trend #1 Companies will move from reactive to proactive action

Most supply chain management professionals have spent the last two years weathering one supply chain crisis after another. Decisions have been made out of necessity, based on what was available or affordable. As the pressure on the supply chain eases and companies continue their return to normality, they will also change their approach from reactive to proactive.

We expect to see more supply chain managers re-evaluating their overall supply chain strategies and potential new business models. With some leeway, they will be able to ask questions about what works and what doesn't, from manufacturing and transportation to warehousing and distribution.

Our tip: Remember to think long-term. During the pandemic, companies had to learn to adapt quickly and flexible supply chains became a key business advantage. But now that the industry is somewhat more back in balance, the trick is not to overreact when things change. In 2023, try not to panic too quickly and keep long-term goals and trends in mind when making decisions.

Trend #2 Providers will lower their prices and improve their service

One of the most promising trends for 2023: a continuing downward trend in transportation costs.

At the height of the pandemic, consumer spending on goods soared in some cases and carrier capacity declined. As a result, carriers raised prices for both ocean and overland transportation, and service levels deteriorated as labor shortages and lockdowns led to transportation backlogs. Shippers had almost no choice but to put up with delays and other problems.

As demand has flattened, capacity has increased and backlogs have been reduced, this trend has reversed and we expect the balance in the industry to improve further in 2023. However, in addition to lower overall freight costs, customer service will also improve as carriers will have to fight for orders and customer loyalty again.

Trend #3 A return to lean warehouse management - to a certain extent

Another trend that has been triggered by the supply chain disruption is stockpiling. Before 2020, companies generally emphasized lean inventory management and only kept what they needed in stock. But this strategy backfired during the pandemic, when companies had to make do without products for weeks, months or even longer. To avoid supply chain disruptions and bottlenecks, companies began to stockpile and invest in warehousing and inventory management. As the logistics industry stabilizes, this trend is likely to reverse. Our tip: We recommend that supply chain managers take a middle ground: They should keep slightly more inventory on hand than before the pandemic, just in case supply chain issues arise again.

To avoid supply chain disruptions and bottlenecks, many companies began to increase their stocks to an extreme level and invest in warehousing and inventory management

Trend #4 Reshoring and nearshoring will be a top priority for manufacturers

While some companies increased their inventories, others took a different approach to counter the pressure on the supply chain caused by the pandemic. Many companies have relocated their production - from Asia to the United States, Mexico or another nearby country. This practice can have both advantages and disadvantages: Manufacturing in the United States and Mexico is often more expensive than in Asia, but lead times are much faster. Reshoring or nearshoring supply chain components can also circumvent potential problems due to shortages and backorders. It can be assumed that more companies will engage in reshoring and nearshoring in the coming year.

Trend #5 Visibility, data and digitalization will continue to reign supreme

Of the many trends in supply chain technology that we are observing, this one is likely to be the most enduring.

Visibility is the ability of supply chain managers to track products throughout the supply chain process, from the procurement of raw materials to transportation, manufacturing and distribution. And for good reason: supply chain data and visibility can have a positive impact on almost every aspect of a business, such as meeting customer needs and improving financial results.

The best data visibility software solutions also integrate multiple management systems, such as warehouse management systems and enterprise resource planning tools. These integrations can eliminate manual processes (and the potential for human error), increasing efficiency and accuracy. Technologies that prioritize data and visibility will be in high demand in 2023, as the integration of strategic technologies can enable supply chain managers to optimize supply chains from start to finish.

Trend #6 Geopolitics will continue to influence supply chains

Of course, geopolitics has had an impact on supply chains for centuries. But in recent months, international politics and current events have moved to the forefront of supply chain conversations.

The Russian-Ukrainian war has the potential to disrupt supply chains around the globe for as long as it lasts. In the meantime, changes in trade relations between China and the United States could drastically alter the American import landscape.

Trend #7 Advanced technologies such as drones, robots and artificial intelligence will overtake other technologies

If you've looked at the homepage of Supply Chain Dive, Freight Waves, Supply Chain Management Review or any other leading industry portal this year, you'd probably expect things like autonomous trucks, drone deliveries and warehouse robots to be on the verge of launch. And for a few companies, they may be. But in reality, this type of technology still has a long way to go before it reaches the mainstream.

Small parcels containing books, medicines or food are particularly suitable for drone delivery.

Swiss Post is also testing the commercial use of drones for parcel delivery in remote areas.

Trend #8 Companies will focus on cyber security - or suffer the consequences

As in other industries, cyber security in supply chain management is a growing problem. According to a report, attacks on supply chain software increased by more than 300 % in 2021 compared to the previous year. Cyberattacks on supply chains range from taking data hostage for financial gain to stealing confidential customer information.

If they have not already done so, companies in 2023 will need to assess their digital supply chains for risks and prepare for and protect themselves against potential attacks.

Trend #9 Returns management will be of central importance for e-commerce brands

As the e-commerce sector continues to grow, so will returns management. Companies with high return rates will continue to look for ways to automate their processes and reduce return costs, whether it's by charging for return shipping, limiting return timeframes or working with multiple carriers to get the best price. The processing of returned goods will also be an issue, as items will need to be forwarded to different locations depending on their destination. It can be assumed that in 2023 more companies will be looking for strategically located distribution centers to receive and process returns.

Trend #10 Consumers' demands: increasingly include sustainability and circular supply chains

Another major trend that is expected to continue and intensify until 2023 is sustainability. Changing customer demands and stricter government regulations will continue to push companies towards more environmentally friendly solutions next year. Companies will continue to look for and implement sustainable measures, from sourcing sustainable raw materials to assessing greenhouse gas emissions in transportation. One notable example is circular supply chains, where manufacturers refurbish discarded products and then return or sell them to consumers. Whether they realize it or not, consumers will buy more recycled and refurbished products in the coming years.

Conclusion

The status quo must be constantly questioned and any trends in the supply chain must be recognized in good time. It is important for you as a company to observe these changes in the coming year and prepare for them. After all, the transformation of a changed supply chain or its processes takes time to implement. Only those who deal with the trends quickly and in good time will not miss the boat.

How are things looking for you? Are the topics of reshoring and nearshoring, cyber security or digitalization and networking of the supply chain already on the agenda? How are you aligning yourself with these trends?