20 Apr 5 Supply Chain Trends to Watch in 2023
As we move into 2023, it is evident that modern supply chain management is facing grave challenges which may need time and a new approach to overcome. We are still in a massive global recession sparked by the impending war and the European gas supply crisis.
In a 2022 report, the Organisation for Economic Co-operation and Development (OECD) had exposed several red flags around the secure supply of industrial raw material. Some of these flags are related to the general non-availability or accessibility of raw material due to barriers in the current geopolitical scene. The report further highlights cracks in the modern supply chain due to sanctions, limited bilateral engagements, and above all supplier dependency from only a handful of countries.
However, KPMG has reported that all the uncertainties that have arisen in the last one year might actually help drive innovation for future supply chain models. KPMG also suggests that although these uncertainties won’t recede anytime soon, the approach to optimise supply chains will be the key. There will be newer trends to make the future supply chains robust, agile and highly visible.
This blog will argue and analyse some key trends that will impact supply chain management in 2023:
- Connected Supply Chain
- Supply Chain Automation
- AI in Supply Chain
- Supply Chain Resilience
- Circular Supply Chain and Sustainability
Connected Supply Chain
Since 2020, customer demand has been dynamic and often unpredictable. At the very beginning of the pandemic, the scarcity of essential items due to lockdowns, did put the brakes on the supply chains. However, the work from home way of life and a mindset scarred by “panic buying” led to a sudden surge in demand that continued till the end of 2020. This demand also exposed cracks in supply chains like poor supply & demand planning/forecasting, zero visibility and no automation as anxious customers often had to wait longer for their products to be delivered. Besides, the closure of brick-and-mortal retail stores meant, the customers were completely dependent on the online retail format which meant more personalization, greater visibility and simplified after sales and returns.
This World Economic Forum whitepaper published during the pandemic recommended the need of a globally-connected supply chain system with real time visibility, traceability and interoperability to satisfy this dynamic and unpredictable demand even in the long term.
Thus, supply chains can no longer operate in siloes driven by manual processes. Visibility and traceability of supply and demand side data is the key to connecting a supply chain. Availability of demand data from current orders to help future demand patterns and supply data captured from in-transit orders, receipts, inventory, etc. can be the ideal starting point to create supply chain visibility.
A classic example is InspireXT’s deployment of our Connected Supply Chain solution using Oracle Fusion Cloud at a leading diamond jewellery manufacturing company to create omnichannel visibility of product information for helping customers purchase their favorite products with faster order fulfilment.
Supply Chain Automation
Right from robots managing warehouse shipments, autonomous vehicles, and AI driven document processing, automation will be the biggest amongst all trends to watch in 2023.
Deloitte has predicted strong growth in adoption of ‘Autonomous Robots’ to work alongside workers in future warehouses. The major application will be in handling hazardous tasks which have put human lives at risk, especially environments which could be inaccessible to humans like transportation of nuclear fission products, chemicals, high emission metals, etc. Many of these autonomous robots are generally devices which are in recent times equipped with AI and problem solving to handle various types of products in the warehouse ranging from fragile glassware, TVs to furniture.
AI in Supply Chain
A SupplyTech Insights report in 2020, questioned the adaptability of supply chains to evolving technologies and highlighted the importance of Conversational AI in supply chain management. The reports unearths the application of AI driven Chatbot interfaces that can make repetitive jobs easier with automation. So, will chatbots replace humans? The answer is definitely NO. Conversational AI intends to introduce an additional interface to simplify the human-to-human or human-to-machine interaction and help complete the task. In other words, a Conversational AI in supply chain can implement an additional workflow to automate and help create a greater user experience.
We at InspireXT gauged this trend at the right time with our timely acquisition in the Conversation AI space to power automation and AI driven workflows in supply chain processes. Our Connected Conversations is an easy-to-use chat flow development platform that can be used across different supply chain applications like order tracking, customer support, employee engagement and also incident management.
How this helps Supply Chain management?
Users can answer a sequence of static questions and automatically find information like order status, batch, price, with recommendations of next steps for a seamless application journey. This helps eliminate redundant manual tasks which can stall user experience and cause delays in information retrieval. It also brings visibility and traceability of order related information either on supply side or demand side due to the real time access to data. The resultant benefit is the improvement in supply chain productivity due to Human & AI interactions that leads to smooth workflows and faster task completions.
Supply Chain Resilience
Natural disasters, adverse weather conditions, and rising sea levels can often test the resiliency of a supply chain. Besides, trade barriers and sanctions from political conflicts and wars have threatened the dependency on specific suppliers for raw materials. The question is – Are supply chains conditioned to predict disruptions and resume operations with counter measures like business continuity after a tragic event?
For instance, the automotive industry is often reliant on diverse global suppliers for their processor chips and raw materials. With the current global socio-economic factors, auto OEM makers will be urged to shift their focus to newer regions for suppliers or explore near shoring.
Using technology to achieve supply chain resilience will continue to be a top investment priority for companies in 2023. To counter the supply and demand fluctuations in 2020, Oracle immediately introduced automated and predictive demand planning. With this approach, Machine Learning could be used to predict disruptions and help key stakeholders respond faster. Besides, ramping up after-service and field support has also been widely looked upon to fix last mile breakdowns and product returns.
Circular Supply Chains for Sustainability
Our planet is currently on the brink of severe threat from rapid industrialisation and urbanisation. Industries like manufacturing, mining and energy which need natural resources have left a huge environmental impact. However, the resultant supply chains cause even wider damage as cancelled and returned defective products are mainly dumped as industrial waste leading to catastrophic landfills. Non-biodegradable waste from electronics and computer hardware can create a toxic ecosystem affecting vegetation, animals and humans.
The exact scale of damage can be found in this McKinsey report as it uncovers how global supply chains contribute to nearly 80% of current greenhouse gas emissions and impact over 90% impact of the overall environment factors like quality of air, water, biodiversity, and natural resources.
The main reason is linear supply chains where cancellations or returns of defective products are directly considered as wastage after the end of their lifecycle, which is post-delivery to customers. Many companies continue to dump such defective products and invest in remanufacturing and shipping a new product (for every defective product), contributing to dangerous ecosystems as mentioned above.
With a circular supply chain, reverse logistics can be reimagined with data driven returns and cancellations of defective products. For example, even if the product is found defective upon delivery, the access to data across the supply chain can be used by retail and manufacturing companies to better plan the recycling and reuse of all or most of the product’s components for remanufacturing and reduce the overall wastage. Also, data captured from customer feedback like reasons for rejection can help industries like apparel and clothing to sell the returned products at cheaper rates in secondary markets. Hence, the circular nature of the supply chains leads can help eliminate wastage.
To summarise, supply chains are not an independent function and by now it has been proven that centralizing them is a mammoth task which is only possible by creating an ecosystem of automation, AI, cloud-based technologies and data driven analytics.
In addition, the commitment and investments towards sustainable practices and resilience will continue in the coming years.
To bind all these trends together, there is a need for transformative supply chain providers who can help supply chains evolve over a periodic time frame.
InspireXT, as one of Europe’s top 10 supply chain providers, has a team of supply chain enthusiasts and technology evangelists who come with strong expertise in cloud-based technologies. Besides, as an Oracle cloud partner, InspireXT can create supply chain visibility using data as the single source of truth for all stakeholders across supply planning, distribution and order delivery. Our Connected Supply Chain solution is currently disrupting supply chain models across Retail, Manufacturing and Pharma industries.
For more information, contact us on https://inspirext.com/contact-inspirext/