As we approach the end of the year, it is always worth reviewing the top trends that will be impacting supply chains for the coming year and beyond.
But before we continue with this “tradition” it´s only fair to review how accurate were our predictions for the year 2022.
Not surprisingly the headwinds have continued this year, following from a year 2021 that was considered by many as one of the most challenging in history, aggravated by the COVID pandemic and the continued challenges brought by the acceleration of e-commerce, Brexit or the disruptions in transport.
You can find the post with the predictions for 2022 here.
Overall, and considering the new and more severe challenges that we have faced in 2022, it´s interesting to see that some of the trends we identified last year, became a reality.
Supply Chain issues continued in 2022 and were aggravated by the Ukraine-Russia war, a turn of events that no one was predicting last year.
While logistic prices were up in 2021 driven by shortages on raw materials and transportation, this trend has continued as predicted and has impacted other areas of the Supply Chain even further with inflation skyrocketing and energy prices at an all-time high.
Finally, rightly so, sustainability has been at the forefront of Supply Chains and businesses and has gained prominence as a key indicator for decision making.
Experience should have thought us that a lot can happen in a heartbeat, therefore predicting what 2023 has for us is like a game of roulette, but here we go!
1- Inflation and the risk of recession: Preliminary data in Europe shows inflation running at 10.7% for October; this is the highest ever monthly reading since the euro zone’s formation and something we should expect to continue to a higher or lesser extent in 2023.
Raw materials, transport, energy will all be more expensive than in past years and this will continue impacting Supply Chains and pushing for more efficient and streamlined operations.
2- Globalisation in no more the panacea for business development: With the recent geopolitical challenges we are facing, the focus will be on “localization” VS “globalization” and we shall see assets being transferred from high risk, and generally low cost, areas to more stable and trustworthy locations that are also closer to the end customers.
Investment on fixed assets will be under scrutiny and decisions will not only be made on the basis of lower costs.
3- Sustainability is here to stay: Governments are increasing their demands for companies to prove that they operate ethical businesses and this is becoming not just a “nice to have” and a sign of a company´s values, but a license to operate with significant fines if companies were to fail to comply.
All in all, while predicting what 2023 will bring is an almost impossible exercise, there are certain trends that are likely to gain prominance and we are ready for whatever the future brings!
Artificial
intelligence has been a "buzz word" over the last few years and a lot
has been said about how this new technology will have thousands of applications
in fields as diverse as medicine, Supply Chain or engineering and will revolutionise
the way we work.
However,
it´s never been overly clear what is AI, but also, what is not.
The below video, explains all you need to know about AI, some of it´s applications and what we can expect from this technology.
Different post today, where we will look into 10 of
the most surprising statistics related to the field of Supply Chain.
A clear sign of how much Supply Chain has been in the spotlight
over the last few months/years and how much more is to come.
- Only
22% of companies have a proactive supply chain network. Proactive supply chain
management means that the end-user is always able to address shifts in supply
or demand before they become critical.
- Only 6% of companies report full
visibility on their supply chain.
- 70% of companies believe that supply
chains play a key role in enhancing the overall customer experience.
- Data analysis (44%), IoT (39%), and
Cloud Computing (39%) are the top tech priorities for supply chain
professionals.
- Cyberattacks on supply chain software are predicted
to increase by 4 times in 2022 as compared to 2021 and it´s already the
number one cause of U.S. supply chain disruptions.
Source: 17 Stunning Supply
Chain Statistics [2022]: Facts, Figures, And Trends – Zippia
Demurrage is a fine to the buyer which is enforced by a freight provider if they do not take their goods away from a port or terminal. Often ports and terminals allow importers to store goods or containers for a number of ‘free’ days, after which charges are applied.
As
an example, let’s say a container is being shipped from a supplier in China to
a port in Amsterdam. The port normally allows 7 free days of storage, after
which they will start charging.
Detention on the other
hand is a charge that can be enforced by a transport provider for not returning
an empty container to a container yard or port after an agreed time.
As an example, if the
buyer of goods takes a container to their factory for 14 days to unpack, and
the shipping port allows just 10 days to return the box, then the shipping line
will be charged ‘detention’ for 4 days.
The main difference
between demurrage fees and detention fees is that demurrage fees are charged
when a container is still full and under the control of the shipping line whereas
detention charges, on the other hand, occur when the buyer holds on to a
container outside the port beyond the specified free time given by the shipping
line.
In very simple terms,
demurrage charges relate to full containers while detention charges apply to
empty containers.
Is the future of ecommerce in drone deliveries?
It´s been two years now since the strain and pressure on Supply Chains has been on the spot light.
Starting with the COVID 19 pandemic and the acceleration of e-commerce, followed by the likes of Brexit, the blockage of the Suez canal and the transport shortages to name a few, to the most recent events with the war between Russia and Ukraine.
It´s safe to say that not even the most through business continuity plan would have covered all of these, and as a result, Supply Chains have suffered the most to keep up with the new market dynamics.
The documentary below, showcases to the profane eye, the challenges of the current supply and logistics flows and it´s a reminder of the complexity of the Supply Chains in a world where globalisation has been the predominant model over the last two decades.
An estimated 90% of world trade is handled through maritime shipping,
and as trade volumes continue to increase, the world’s busiest ports continue
to grow.
Only five of the top 20 ports in the world are now located outside
of East Asia, and only three European ports made the cut.
It´s
not a surprise that China continues playing a critical role in the global
supply chain, and as a result, over the past decade, China has emerged as the
heavyweight champion of world shipping.
In 2006 only three of the top 10 busiest ports were in China, nowadays,
seven out of the 10 busiest ports are located in China, and an estimated
two-thirds of container traffic now passes through Chinese ports or ports that
have received Chinese investment.
It´s no secret that Amazon is one of the most relevant companies ever created in the last century and it´s also no surprise that Supply Chain is at the core of what they do.
Amazon is by definition, the company that has scaled operations to levels we never saw before, and its Supply Chain have reached the status of almost being unbeatable.
The one project that has put Amazon´s Supply Chain capabilities on the spot once more is their latest endeavour to start using drones to manage their deliveries in the very near future.
These automated machines that are not limited by traffic or other mundane constraints that traditional delivery methods face, can once more demonstrate that Supply Chain can be a competitive advantage for those companies willing to invest the time and resources on developing these capabilities.
It won´t be new news if I say that Supply Chain challenges are not new, but it´s fair to say, in recent times they have become more real than ever and seem to have shaken up the way we have been looking at them in the past.
It´s rare the day we don´t see in the media news about new or existing disruption driven by the current Supply Chain challenges, and if whether you work directly in the field of Supply Chain or not, you surely would have been impacted one way or another, whether it was by out of stocks, delays on getting your parcels or prices skyrocketing to levels we have never seen before.
The good news is, that for these challenges, there are potential solutions. The caveat is, that they require a level of trust, transparency and openness that most companies and governments are probably not ready to achieve.
Having said that, in the video you can find in the link below, trade expert Dustin Burke explains how companies can keep up with the existing challenges and what will might take to address and improve some of them to create a more resilient and efficient Supply Chain tomorrow.
Enjoy!
TED Talk: How to fix broken Supply Chains
It´s no secret that Supply Chain has become one of the most heard words in 2021. If nothing else, we have spent pretty much the entire year battling Supply Chain disruptions, and this is likely to continue in this new year.
From a sudden increase in cyberattacks during the first quarter of the year to port congestions and labour shortages, we have faced unprecedented challenges in the Supply Chain arena in 2021.
But it´s fair to say that with challenges there were also opportunities for organizations to learn, adapt to unexpected circumstances and develop new ways of working.
As we start a new year, here are four trends that we might see more of in 2022.
1 - Supply Chain issues are here to stay
The current landscape is not going to fix itself in the early days of 2022, and it´s very likely that it will take months for all of the issues that in 2021 caused a perfect storm to start fading away.
Global shortages of plastic and paper as well as labour will continue impacting Supply Chains, this will mean continued order delay and supply shortages.
2 - Automation to compensate the labour shortage
Linked to the first point, in 2022, labour shortages are expected to continue, in order to close the gap, business leaders will need to continue heavily investing in automation technology to perform certain tasks for which labour is in scarce.
Aditionally we will see further development in new technologies like AI to carry out more complex tasks.
3 - Increased logistics costs
2020 and 2021 saw the explosion of logistics costs after many years of efficiencies and cost reductions. As online shopping, inflation and energy cost continue to drive prices higher, we can expect cost to contiue increasing in the near future.
Transport and raw meterials, will drive the increase due to the existing shortages as well as a rise in demand that has been exceding existing supply for the best part of 2021.
4 - Big focus on sustainability
Consumer growing efforts to be more environmentally responsible has been and will continue pushing companies and specifically Supply Chains to cause less harm to the environment.
Companies are expected to implement more eco-friendly Supply Chain processes and transportation will likely migrate to more environmentally friendly alternatives to reduce greenhouse gas emissions.
On the same topic, in 2022 we will likely see an acceleration to shift to circular Supply Chains where manufacturers will reuse and refurbish discarded products for resale, moving away from the traditional linear Supply Chain.
Stricter goverment regulations on recycling and waste disposal will also push for this trend to accelerate in 2022 and business with sustainable practices will get the approval not only from the goverment but also from consumers.
All in all 2022 will see a continuation of some of the challenges faced in prior years, however business have had the chance to develop new ways to mitigate these challenges and are becoming more and more efficient in managing the current complex landscape.
This year that just started will for sure be full of challenges but will also be a year full of opportunities.
