Supply Chain - what does 2023 have in store for us?

Written by Danielle Nixon, Head of Four Supply Chain

I think it’s pretty safe to say that 2022 and in fact 2021 were not for the faint hearted and not a time in history we would like to repeat for many reasons.

Following on from the disaster that was COVID, we were quickly hit by the war in Ukraine, soaring inflation and the constant reminders that the consequences of climate change are in fact already here! The UK faced political turbulence, a depleted economy, a risk adverse workforce and an Autumn of discontent as workers across the Public Sector went on strike causing rising NHS and travel delays.

However, the past year also made it clear how the global community can stand together, with new commitments and pacts to protect the environment, efforts to aid those displaced by war in Ukraine and the delivery of close to two billion Covid-19 vaccine does to areas in need across the world.

It’s certainly been a challenging time across the globe and 2022 showed us that while our challenges grow more daunting by the day, we have the potential to meet them. We are however, bracing ourselves for an unavoidable global recession, which brings with it a whole host of new obstacles to overcome. For many businesses it can feel very relentless right now with no sign of light at the end of the tunnel.

How has this impacted supply chain and the way we operate on a global scale and what can we expect for the coming year?

The three largest economies – the US, China and the Euro area are “slowing sharply” according to The World Bank and this will undoubtedly impact global supply chains as companies navigate the many hurdles brought about by this change.

Mass labour shortages, ocean freight bottlenecks, increasing inflation, warehouse shortages and the resurgence of COVID-19 are all creating constant risk to your Supply Chain’s health.

• Labour Shortages – Although obvious how this affects the output of supply chain, the ripple effect created by understaffed factories and warehouses slows production down and in some cases halts it completely resulting in skewed inventory levels, longer lead times and delays for the end consumers as a result of the impact on transportation between parties

• Ocean Freight – We saw the impact of the Suez Canal blockage of 2021. More than 60,000 cargo containers stocked with goods were prevented from distributing to customers – my car included!! Whilst we hoped this was an isolated incident, it has been predicted to be a continued area of risk in 2023. Is it time to replace manual ocean freight shipping processes with software that handles the task of freight management?

• Increasing Inflation – Supply Chain is the most exposed industry and when prices go up in one area, there is a huge knock-on effect down the line. The inflation in labour teamed with rising costs and an energy crisis will continue to create significant risk to the existing supply chain. Is a Multi-source supplier base with stricter contract time periods a plan for the future?

• The ‘C’ word – whilst many businesses are almost back to normal operations and the world is now adjusted to a ‘post-pandemic’ way of working, the reality is that COVID is still very much a threat and this was demonstrated by the shut down of a country and the globe overnight. We need to learn from this and look at the utilisation of data analytics to predict areas in supply chain operations that could be impacted and the extent of that impact – how do we mitigate the risk moving forward?

I work with a lot of clients across a number of different sectors whose challenges vary accordingly. One Ecommerce business advised that China’s instability equates to rocketing prices and the inability to predict prices / lead times going into the new financial year. Meanwhile many of the manufacturing businesses I work with are struggling to secure raw materials and I’ve seen a surge in operationally focused ‘back to basics’ supply chain roles as opposed to the strategic led ones we saw several years back.

Business’s are re-evaluating their attraction strategies to counter act the labour shortages and we find ourselves again in a candidate driven market with workers dictating terms and salaries.

Interested to get your thoughts on this and learn more about how you’re planning top overcome the challenges faced in 2023?

How can we help?

Here at Four Recruitment we’re not only your recruiter but also your trusted business partner, providing valuable insight and knowledge into the employment market. You can rely on us to find top talent for your business across HR, finance, business support, supply chain and at executive level. To learn more about how we can help you, get in touch with one of our friendly consultants.