2022 saw many challenges for businesses in the logistics and supply chain industry. Due to external factors such as the Russia-Ukraine war and inflation, supply chain companies had to make some challenging sacrifices. Although certain areas of supply chain management are starting to see brighter days, other areas will require more attention. Here are some challenges and trends that are expected this year.
Projected Supply Chain Struggles for 2023
1.Sourcing various components for production
The supply chain industry is facing inconsistencies in supply levels for different components needed for production. Inflation is causing plastic shortages since plastic is made of petroleum, and when gas prices went up, plastic became a hard material to get your hands on. Although gas prices are starting to decline steadily, production companies still need to find reliable suppliers.
It is expected that the industry will face numerous challenges regarding materials sourcing for the first half of 2023 before things get easier. One thing is for sure, no manufacturer wants to sacrifice quality over quantity, so the hunt to find the necessary materials for production will be a persistent one.
2.Reduced availability of raw materials in the United States
The ongoing war has made it more difficult to secure certain raw materials that the U.S. greatly depends on Russia for. These materials include mineral fuels, iron and steel, platinum, fertilizers, and cement. This means more time will be needed to find alternatives, disrupting thousands of manufacturing businesses.
3.Lack of drivers
Everyone knows that the US has been struggling with a lack of drivers for a while now. Although 2022 saw a slight improvement in recruiting more drivers, there is still a long way to go. Raising driver salaries is helping, however, this is not so easy to do at a time of financial crisis, and so the challenge remains on the table.
Trends that are Already Addressing These Struggles
1.Better planning with Cloud software
There are endless options out there when it comes to inventory management systems, transportation management systems, or any other supply chain software. A good solution should allow shippers, brokers, and other logistics workers to better forecast future demand and identify patterns that aid critical decision-making.
It is crucial for companies to better manage inventory and gain visibility to avoid under or oversupply, a common issue that occurs especially during peak season. Data analytics should be easily accessible to navigate during times of financial crisis.
2.Moving to a ‘just in case’ mindset, from a ‘just in time’ mindset
Speaking of over and undersupply, it is a good practice for organizations to keep more inventory on stock as they can to avoid emergencies that can harm the reputation of their brand. There are a few downsides to this though, as stocking up on inventory costs more and with inflation, there will naturally be less buyers. Companies must contemplate if their business model is suitable for this strategy, or if it will do more harm than good.
3.Finding cheaper alternatives to be able to price goods lower
With difficulties in finding the right materials needed for production and securing raw materials that were once easy to get, supply chain companies will turn to cheaper alternatives that provide the same quality. This will also help with being able to price their products lower so that they can better meet customer demands, while still being able to gain decent profit margins.
Zara Raza is a Digital Marketing Specialist at Turvo Inc. She graduated from University of California – Irvine in 2019 and has written several blogs on topics such as technology and supply chain management.
