In many ways, supply chains have gotten back on track following a brutal few years. However, numerous interconnected, highly complex problems are still challenging networks across the globe — and will certainly continue into 2023 and beyond.
A new report by German software giant SAP found that more than half of surveyed corporations see no end to the turbulence in sight. Furthermore, nearly half predict the issues will last until at least summer 2023, if not through the end of next year. The most pressing challenges include global political unrest, insufficient availability of raw materials and components, fuel and energy costs, changes in regulation and compliance, rising interest rates, and a general lack of contingency plans across the industry. Having all of this to contend with, 52% of companies report they require major supply chain transformation, with another 39% needing at least some improvement.
At first, this may sound perplexing. After all, supply chain has been a business discipline for quite some time and has extended its presence in the C-suite in recent years. Not to mention the fact that the concept has definitely made its way to the forefront of public lexicon. But the recent past has also been a time of intense disruption: first with COVID-19 quarantines and the domino effect they caused; then fuel shortages and inflation increasing the cost of doing business. These hurdles changed opinions and approaches to operating in a global market. Some companies considered reshoring and nearshoring to move operations closer to home, reduce the number of opportunities for interruption and cut transportation costs.
Amid all of the uncertainty, many businesses are shifting from just-in-time to just-in-case models. This involves carrying more buffer inventory and a greater focus on risk management to increase resilience. At the same time, these methods increase costs, which is less-than-welcome during times of high inflation. Largely, consumers are bearing the burden and therefore must prioritize saving money wherever possible, which means foregoing luxuries and opting for less-expensive alternatives. In response, many companies are seeking ways to reduce costs and boost efficiency across the board. Other approaches include reaping financial benefits from sustainability efforts and investing in technology to automate and advance operations. But there’s still a long way to go.
Your partner in supply chain improvement
We at ASCM are passionate about helping you harness the power of supply chain education to achieve organizational transformation, industry-leading innovation and leadership excellence. We offer a variety of customizable corporate training and education options, as well as standards, tools and benchmarks that enable supply chain organizations to identify areas of weaknesses, implement measurable process improvements and optimize operations. See the results for yourself in customer case studies highlighting numerous real-world success stories. Then, contact us to discover how ASCM can do the same for your organization.