From crisis management to supply chain management

posted on 8th March 2023
From crisis management to supply chain management

Data and technology will be key to overcoming the supply chain challenges of 2023 and meeting customers’ evolving expectations, says Flexport’s Mathijs Slangen, as most logistics managers move out of survival mode and are able to look forward again

The start of 2023 has been calmer in comparison to the turmoil of the last few years, which brought port strikes, demand fluctuations, equipment shortages and factory closures. As a result, the past two and a half years have been focused on damage control and crisis management. Reducing delays and agreeing a freight rate that companies and consumers can absorb, as well as acting on the most urgent supply chain issues, have taken focus away from making long-term improvements.

Conversations with customers
In 2023, based on conversations with customers, most supply chain and logistics managers have moved out of survival mode and are now able to look forward again. For example, this month saw the time taken for complete ocean voyages on the Transpacific East Bound route at their lowest since late December 2020. While I predict that typical supply chain challenges around rates and inventory management will persist in 2023, we will also likely see a desire to find more structural solutions to the most pressing bottlenecks before they strike again.

Finance executives are also putting more pressure on supply chain and logistics managers as the rise in costs has increased awareness of each and every business’s supply chain. However, considering the current economic downturn, demand has shifted considerably, and the favourable supply chain conditions are now in contrast with worsening economic ones. Therefore, convincing all stakeholders in the organisation to reform may be challenging. Still, for organisations that succeed, it is likely to create a competitive advantage, particularly as the potential of facing similar situations in 2024 and beyond must be considered.
With that in mind, what are the key supply chain trends for 2023 – and how should organisations prepare?

Increased automation and use of technology
The integration of artificial intelligence, machine learning and other technologies into supply chain operations is expected to increase in 2023, leading to greater efficiency, speed and accuracy. Not only do AI and machine learning have a role to play in automation, freeing up human workers from repetitive tasks such as data entry and warehouse stock management, it can also be used to analyse vast amounts of data to identify patterns and make predictions about future events.
In the context of supply chain management, AI in particular can be used to predict demand and forecast inventory levels, as well as optimise routes and schedules. Data analytics can be used to monitor supply chain operations in real-time, enabling companies to quickly identify and respond to any issues that arise. This can help to improve delivery times, increase efficiency, and reduce costs.
Improved visibility will be the key to optimising processes and reducing costs, and by monitoring supply chain operations in real-time, organisations will be equipped to make better decisions and respond more quickly and effectively to changing market conditions and customer demands.

Defining the role of sustainability in the supply chain
In addition to making economic gains, companies are increasingly prioritising end-to-end supply chain visibility, to better understand where their products come from and how they are being produced. As the global net-zero target looms and governments tighten the sustainability obligations for private companies, the origin of raw materials and the manufacturing processes used to produce them are becoming important to assess, to ensure that supply chains are ethical and sustainable, as well as free from human rights abuses and environmental degradation.
This year and beyond, companies will need to work together to build more sustainable supply chains. This should involve collaborating with suppliers, customers and other stakeholders to reduce waste and optimise logistics, as well as utilising data analytics, to promote sustainable practices throughout the supply chain. New technologies such as renewable energy and electric vehicles will also help to reduce supply chain impact in the long-run, and we’re likely to see investments in green logistics and transportation become even more of a priority.

Meeting evolving customer expectations
The evolving customer expectations for speed, convenience and sustainability are the driving force behind changes in supply chain practices and strategies. Companies that invest in the technologies and practices that enable them to meet these changing customer demands are likely to gain a competitive advantage, build stronger relationships with their customers and improve overall customer satisfaction.
For example, ensuring end-to-end supply chain visibility can help companies monitor the quality of their products and minimise the risk of defects and recalls. It also has the potential to reduce costs for customers by identify improving inventory management, which in turn leads to improved profitability.

How to use technology to respond to supply chain challenges
As organisations move towards recovery and plan for future events, a digital supply chain will enable organisations to better control their inventory, suppliers and labour to fulfil customer demands. This is where advancements in AI and machine learning can help, to allow for more automated, data-driven decision-making, powered by utilising dashboards, analytics and control towers.
Achieving this, however, will come down to interconnectedness and data. Data quality must be accurate, granular and consistent so that companies can take action – but to enable this, all members of an organisation must have visibility of goods and their whereabouts.
Though 2023 will hopefully see a reduction in the supply chain challenges of the past few years, there will inevitably, and always, be hurdles that will need overcoming. Therefore, the companies that invest in technology and make greater use of data in 2023 will gain a competitive advantage and stand to benefit from improved decision-making, increased efficiencies, reduced costs, and the minimisation of supply chain risks.
Mathijs Slangen is vice president for sales and marketing, Europe, at freight forwarder Flexport