DISRUPTIONS to supply chain operations are set to stay in 2023, whether they are existing or new geopolitical conflicts, inflationary pressures and the recessionary environment, climate change weather events, or other issues yet to emerge. They can all impact access to goods and how they flow to their final destination, create port holdups, reduce container and ocean freight availability, and surge prices, among other concerns.
In 2023, amid these disruptions, there will likely be some key supply chain trends to manage. Managing your organization’s response to these can be a critical opportunity in the year ahead.
The retail industry in the Philippines also had its fair share of challenges from the disruptions in supply chain operations. The trade tensions between major global economies resulted in trade barriers, import restrictions and regulatory measures, increasing the expenses associated with importing goods and materials for the retail sector in the country.
Furthermore, extreme weather events like typhoons, floods and droughts can cause disruptions in supply chains. These events damage infrastructure, disrupt transportation systems and cause delays in product deliveries, resulting in higher costs for retailers and reduced product availability for consumers.
Here are some of the supply chain trends to watch for:
Nations are skeptical about cooperation. Geopolitical tensions have seen nations turn inward and become skeptical about cooperation and interdependence. When it comes to the supply chain, this caution is fair, as if tensions escalate, essential materials may be inaccessible, or major trade routes could be shut down. Therefore, governments and industry leaders are exploring domestic self-sufficiency in material supply and manufacturing. Short of this, they are looking to build ‘friend shoring’ relationships―trade links with like-minded and most likely geographically close countries (‘nearshoring’) where the supply of goods will likely be more secure.
Cybercriminals are ramping up. In 2023, cybercriminals will likely be even more sophisticated when it comes to infiltrating supply chains to damage or steal from businesses. The supply chain can offer vulnerabilities that provide external parties with a pathway to get into your systems, particularly via your supplier network. Criminals could also hack in through basic warehouse equipment such as a barcode reader or via Internet of Things devices applied within your manufacturing and other operational sites. Cyber risk will likely be compounded if you rethink your supplier networks and make changes to “friendshore” and/or “nearshore” or invest in new technologies.
Material access is in turmoil. In the year ahead, a second wave of unplanned supply chain risks will likely be realized. Organizations may experience limited access to critical inputs for manufacturing, or even spare parts and critical maintenance items. In an aligned challenge, key commodity prices and availability may fluctuate―whether that be fuel/diesel, construction items like timber, steel and resin, or plastic for packaging. Building resilient supply chains to combat future disruptions and adapt to new changes quickly will be key to help navigate these risks.
Manufacturing footprint is changing shape. While accessing critical materials in 2023 may be challenging, so too will be manufacturing for many of the same reasons including the rapid rise in energy costs and price surge of key inputs. Therefore, global corporations with manufacturing operations will be re-evaluating their manufacturing footprint. Friendshoring and nearshoring will again be considered, however, there may be deeper thinking around whether manufacturing needs to be—and can be—done entirely onshore. This shift can’t happen overnight, but wheels will be put in motion.
Retail and distribution supply chains are morphing. While getting goods into the hands of consumers in 2023 might appear easier than in earlier COVID-19 times, it will likely not be simple or inexpensive. There may be more consumption mechanisms and channels than ever, and costs are not showing any signs of letting up, partially due to the close link to the complex manufacturing challenge, but also to the difficulty in getting goods into the hands of a more-demanding-than-ever consumer. The prevalence of last-mile delivery challenges, coupled with reliance on suppliers that are often experiencing difficulties also, means global and local retailers may need to review their inventory distribution network and create a seamless experience around a unified commerce approach.
Technology investment is accelerating. Over the past year, investing in a cloud-based digital transformation strategy was a key trend, and in 2023 this trend is likely to accelerate as organizations seize technology as a strategy to mitigate their growing concerns around inflationary pressures and economic stagnation. While technology transformation often focused on the back office and better customer engagement, supply chain and operational capabilities will be front and center in 2023. Importantly, there will likely be a greater investment to uplift supply chain planning maturity, and automation of warehouse and operational tasks, as well as in gathering better end-to-end supply chain analytics to create enhanced visibility.
Supporting this trend is a move from some major technology suppliers towards holistic supply chain platforms. Rather than offering supply chain capabilities as discrete add-on systems, they are bringing them all together in one platform, aiming to provide a seamless user experience.
The excerpt was taken from https://kpmg.com/xx/en/home/insights/2022/12/the-supply-chain-trends-shaking-up-2023.html.
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This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity. The views and opinions expressed herein are those of the author and do not necessarily represent the BusinessMirror, KPMG International or KPMG in the Philippines. Email ph-kpmgmla@kpmg.com.