Supply Chain predictions in 2023

 

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!