Over three years removed from the start of the COVID-19 pandemic, many businesses have expected that supply chain disruptions would have lessened. But turmoil throughout the market continues for a variety of reasons.
According to Resilinc, a technology company using AI solutions to map and track global supply chain events, there were 8,197 supply chain disruptions in the first half of 2023, a 3% increase from the prior year. Here are some of the most prevalent supply chain complexities still plaguing businesses in 2023 and some solutions to address them.
1. Economic Instability
While inflation in the United States seems to have leveled off from record numbers over the past several years, economic instability is still impacting the domestic supply chain. For example, the 2023 project GDP stands at a modest 1.4%, which is a sign of cooler conditions compared to initial forecasts.
While logistics have rebounded to an extent, there are still underlying sources of instability. Supply chains are still struggling to manage the “China problem” by finding ways to deal with potential disruptions. Many businesses have chosen to diversify by partnering with suppliers in other countries. Still, more are taking advantage of domestic economic incentives to bring manufacturing back to the U.S. These are available through the Inflation Reduction Act, the CHIPS and Science Act, and the Build Back Better Infrastructure Act.
2. Labor Shortages
One of the most significant supply chain disruptions that remain a problem in 2023 relates to labor, including layoffs, strikes, labor protests, and more. According to the U.S. Chamber of Commerce, the manufacturing industry lost roughly 1.4 million jobs at the start of the pandemic. And it has struggled since to fill those vacancies. As of March 2023, there were 693,000 open manufacturing jobs.
One of the best ways manufacturers and logistics providers can address ongoing labor shortages is by leveraging technology solutions. Automation, like robots and cobots, can either replace or supplement human labor. In many instances, automated solutions can take over repetitive and hazardous tasks, leaving other jobs for human workers.
3. Poor Visibility
The COVID-19 pandemic revealed a serious flaw in the global and domestic supply chain — a lack of visibility. Namely, no one knew where materials and products were in the system, which impacted business decisions and the customer experience. This situation has improved dramatically over the past several years thanks to some specific technology solutions. But these only work for the businesses that have chosen to implement them.
The best way to improve supply chain visibility is by implementing RFID tags combined with a robust materials management program, such as a warehouse management system (WMS) or transportation management system. When supply chain partners connect these systems, it allows for real-time tracking of raw materials, inventory, and fulfilled orders. This data can even be shared with customers to improve overall satisfaction.
4. Materials Shortages and Demand Fluctuation
The pandemic created a drastic shift in consumer behavior preferences and behavior. Specifically, people began purchasing more items online and doing so less frequently as they “stocked up” on necessary items. This caused many companies to experience inventory shortages as they also ramped up production to compensate for demand.
It’s unclear how much of this behavior will continue into the future. But businesses can take some of the guesswork out of this equation by leveraging various Artificial Intelligence (AI) solutions. AI can deliver use data to help create an enhanced sales and operations plan (S&OP), which is a cross-functional strategic plan that considers your capacity and capabilities.
5. Sustainability Concerns
Both consumers and many governments are placing a higher priority on sustainability. This means supply chain partners must pay closer attention to how their processes impact the environment, directly and indirectly. Failure to do this could result in a loss of business and steep fines if operations don’t adhere to changing regulations.
Building more visibility into the supply chain is an excellent start because this provides vital information about where goods move and the organizations involved. Businesses can also choose more environmentally-friendly packaging and bring more manufacturing closer to home to reduce overall emissions.
Cybercriminals are becoming even more sophisticated in 2023 when it comes to stealing from businesses and consumers and infiltrating supply chains. Hackers can access networks through basic warehouse equipment like IoT devices and barcode readers. As businesses invest in new technology, there will be additional vulnerabilities.
Supply chain partners can mitigate these risks by forming stronger relationships with partners to ensure robust protection. Artificial intelligence and machine learning can help keep systems safe and secure. Since many cybersecurity risks are due to human error, more automation in the supply chain can actually make these processes more secure.
7. Extreme Weather Events
The COVID-19 pandemic was a wake-up call for many businesses to the fact that a single major event could result in long-term supply chain disruptions. It could be another healthcare crisis or a natural disaster that leads to your business’s inability to meet its obligations.
Extreme weather events like hurricanes, fires, and floods are happening more frequently. This requires that supply chain partners manage this risk by taking a more strategic approach to inventory planning, manufacturing, and logistics. When a disruption occurs, having total supply chain visibility and open lines of communication among partners will be more critical than ever.
All businesses, big and small, must contend with the supply chain. Many have resolved to make strategic changes over the past several years to ward off continued disruptions. Fortunately, innovative solutions are allowing businesses to relocate more operations closer to home and inject more visibility into the existing supply chain.