Director: Corporate-911
One of the major challenges caused by the Covid-19 Pandemic was the Global supply Chain Crisis. Not only was the retail industry impacted, but the manufacturing sector also took a major knock as did Eskom’s ability to repair some of its power stations as the lead time for parts became longer and longer. Very few industries are immune from the challenges posed by this crisis.
Over the years, we have found ways to address this and to cope with the worst effects of the crisis. But we are still looking forward to returning towards normality where the crisis doesn’t exist. SAPICS, the Professional Body for Supply Chain Management in Southern Africa, does not believe that this will take place in 2023.
A potent mix
The Engineering News article points out that war, raw materials shortages, rising energy costs and extreme weather conditions are just some of the factors that will disrupt global supply chains in 2023.
“In South Africa, the electricity crisis will continue to challenge businesses across all sectors. The negative impact on energy-intensive and irrigation dependent agricultural industries in particular will resonate through the entire supply chain – from the farm to consumers, who will have to pay more and have fewer competitive options available on supermarket shelves,” SAPICS President MJ Schoemaker told Engineering News.
“This year, businesses must strive for optimized execution, risk reduction, and enhanced agility and responsiveness in their supply chains. It will also be critical to identify new ways to gain a real competitive advantage,” she stresses.
Photo By: Mika Baumeister via Unsplash
Latest supply chain trends
The latest supply chain trends report compiled by the US-based Association for Supply Chain Management (ASCM), unpacked the latest supply chain trends that businesses must leverage in 2023 to achieve these goals. The report ranked big data and analytics as the most important topics in supply chain in 2023. They enable organisations to mitigate disruption through greater visibility, synchronised planning and execution, data-driven decision- making, predictability and supply chain agility. The implementation of predictive and prescriptive analytics — as well as advances in big data, algorithms and robotics — will have wide-reaching effects in 2023, the report found.
Digital supply chains were ranked second in ASCM’s key trends in 2023. “Leading organisations will be advanced in their adoption of digital supply chain capabilities. If not, they will be left behind by agile, more proficient competitors,” cautions Schoemaker.
The article adds that supply chain risk and resilience will be prioritised by successful organisations in 2023. The diversification of suppliers, production capabilities and transportation processes will be some of their key strategies, according to ASCM’s trends report. Forward-thinking organisations will also explore alternative materials and non-traditional partnerships, while many supply chains will become more compact and localised. Resilient supply chain design will also be critical to mitigating adverse events faster than the competition, providing excellent customer service, and generating value and market share.
Artificial intelligence
The Engineering News article points out that, in 2023, artificial intelligence and machine learning will have a much greater impact on supply chains because processing huge datasets in real time demands these capabilities. Using smart logistics solutions, based on the internet of things and next-generation robotics, will be a focal point of supply chain design.
The ASCM report foresees more supply chain transformation via intelligent robotics in 2023. “Labour shortages, supply disruptions and demand surges are compelling organisations to tap into robotics. Driven by rapid technological advancements and greater affordability, both mobile and stationary robots will assist workers with warehousing, transportation and last-mile delivery tasks. Safer, more efficient warehouses, with fewer people in them, will drive down costs. Although the initial capital investment will be high, the cost savings are primed to be dramatic.”
The article adds that, according to Schoemaker, there is certainly a robotics trend in South Africa, but she says that loadshedding may put a spanner in the works unless the businesses have their own energy source. “In South Africa, finding the balance between efficiency and employment is also difficult,” she adds. “Many companies are cross skilling their staff to be more diverse and therefore are able to place them in other roles.”
Data security and cybersecurity are also hot topics that will impact supply chains this year. The more digital supply chains become, the more vulnerable their global networks are to cyberattacks. “This interconnectedness means supply chain partners can inadvertently expose each other and their customers to privacy breaches, identity theft and worse,” ASCM’s report noted. More organisations will invest in redundancy, firewalls, advanced anti-hacking technologies and employee training in 2023.
Sustainable supply chains
The article points out that circular and sustainable supply chains will be on the agenda of all organisations aiming to future-proof their businesses. “There is growing recognition that the traditional linear business model of take, make and waste must change. It has ecological as well as economic disadvantages, making raw material more expensive and increasing the likelihood of shortages and volatility,” Schoemaker told Engineering News.
Continuous logistics disruptions in 2023 will drive the need for constant master data maintenance, as well as refined logistics parameters and inventory levels. “Logistics organisations must create the conditions necessary for a seamless interaction among multiple transportation networks and their digital replicas,” ASCM’s report recommended. It also found that many of them will be rethinking the physical connections among warehouses, highways, ports, waterways and air transportation.
Looking at the situation in South Africa, Schoemaker told Engineering News that transportation in the country is mainly road freight due to the deteriorating rail infrastructure. She says that issues at the ports – whether strikes or failing machinery – are challenges for the trucking industry as well as for businesses. “Alternative routes may become a necessity and improved security for the truck. Due to the fact that loadshedding is constantly being adapted to different levels, it is very difficult to plan when freight is needed, which will also impact cost as well as the efficiency of supply chains.
“While supply chain challenges will continue in 2023, we can expect to reap the benefits of lessons learnt in recent years,” Shoemaker contends. “The pandemic and other disruptions highlighted the importance of supply chains for everyone. Supply chain management is better understood today. It is an increasingly attractive and sought after profession. There is more emphasis on supply chain qualifications and continuous skills development. As the Professional Body for Supply Chain Management, SAPICS will continue its drive to professionalise supply chain management. By professionally designating individuals, SAPICS aims to increase supply chain management competence, knowledge and skills, and industry professionals will have prescribed values and ethics to uphold. This will enable the profession to rise to the challenges of the continuing Great Supply Chain Disruption,” she concludes.
Photo By: Scott Graham via Unsplash
My thoughts
The article highlights the really big supply chain issues for the really big players in manufacturing, retail and logistics.
The real challenge is to translate these opportunities into you own supply chain with the limited access to resources that you have. How can these trends be used to enhance your own demand management processes. What will customers want, when will they want it and what are they prepared to pay for it. The fundamentals of your own business model.
This then translates into the supply chain and the manufacturing process optimisation including alternative suppliers.
Understanding these trends will improve your competitiveness and profitability.
Robin Nicholson is the Director of Corporate-911 and is a Senior Business Rescue Practitioner.
