What Is Shaping Global Supply Chain In 2023?

The world has spent years trying to make the global supply chain as efficient as possible, but during Covid, they completely collapsed. Year 2023 presents a new chance to reshape it more resiliently.

Many supply chain and logistics techniques and services have been rendered useless over the course of those years. Significant lessons regarding risk and disruption, as well as a number of macroeconomic and geopolitical issues, will lead shippers and logistics service providers (LSPs) along alternative pathways in 2023 and beyond.

One IBC^®, therefore, made the decision to conduct a research in the global supply chain and make some predictions for the future this year. In this article, let’s find out what is shaping up the global supply chain in 2023.

Global supply chain will recover in 2023

1. Reducing costs

The C-suite level was heavily influenced by the Federal Reserve Bank’s efforts to control ongoing high inflation. In 2023, cost reduction (as opposed to expansion) will be the primary concern for the majority of businesses, and as everyone works to bring expenses under control, the supply chain will come under close examination.

Shippers and LSPs will be able to benefit from the newly discovered excess market capacity as a result of the declining demand for all forms of transportation. Additionally, they will be able to switch to less expensive transportation options with little to no effect on their company’s performance.

Shippers and LSPs will look to reset their strategies and supporting technologies to take advantage of the fast changing transportation market conditions, from strategic sourcing to rate shopping and alternative mode selection. However, shippers will also be considering clients and customer service practices, which are a significant factor in shipping costs, in addition to carriers. To lower transportation expenses or boost revenue, a variety of strategies and tactics can be used.

2. Rebalancing the global supply chains

Supply chain executives are being forced to reevaluate their sourcing methods in 2023 due to a variety of reasons, including prolonged and disrupted supply chains, geopolitical unrest, and the COVID-19 pandemic’s residual effects. Despite a decline in the volume of containers imported into the United States, port congestion and delays continue.

Resilience and agility will be more stressed than cost-optimized supply solutions. High-demand/highly volatile items will continue to be moved to on- or near-shore production as businesses try to be more responsive to shifts in demand without missing out on opportunities or carrying too much inventory. Supply chain executives will adopt “friend-shoring” or further diversify their sourcing beyond certain nations and areas, to guarantee the availability of essential resources and goods for domestic consumption.

These strategies will increase the complexity of managing supply networks while improving their capacity to react to ongoing market volatility. Rapidly identifying new sourcing, production, and logistical options will be crucial because alternate capacity will be quickly used up or become expensive depending on the level of global supply chain rebalancing.

A typical supply chain operations

3. Improving home/last-mile deliveries

Due to abnormally high delivery volumes and driver shortages, the pandemic caused delivery performance in the B2C and B2B industries to decline. Descartes’ analysis of consumer perception regarding home delivery provides proof of this subpar performance. A delivery failure was reported by 73% of consumers in the three months preceding the study.

Customers’ tolerance levels have decreased with time, and they now claim both B2C and B2B enterprises for low delivery performance. Therefore, in 2023, these businesses will concentrate on the performance and capacities of both their own and third-party delivery systems.

4. Sustainable logistics

More shoppers are making their purchases because of the environmental initiatives of brands and merchants. In fact, 39% of participants in Descartes’ study on consumer attitudes toward sustainable delivery claimed to “frequently” or “always” base their purchasing choices on a company’s or a product’s environmental impact.

The sustainability of the product or packaging has always been the focus; however, customers are increasingly paying attention to more sustainable logistical solutions. In reality, the same Descartes study found that half of the consumer respondents were “quite/very interested” in ecologically friendly delivery techniques.

Sustainable logistics is a new trend in 2023

5. Digitalization of global supply chains

The development of new digital technologies as part of Industry 4.0 has made it possible to control the supply chain more effectively. When we talk about the supply chain becoming “digitalized,” we mean a modern and smart model that utilizes digital technologies like Blockchain, Machine learning, AI, IoT, etc. The ability to optimize planning, sourcing, and procurement strategies is actually enhanced by these emerging technologies.

It is important to distinguish between digitization and automation, as the former involves fundamental change that the market and the customer can see. For instance, digitization improves the customer experience by enabling customers to rate, price, and schedule shipments in seconds rather than days. LSP and carriers have numerous digitalization options that have the potential to improve many aspects of their businesses.

Although global supply chains suffered bad damage due to Covid, 2023 might be the year that they begin to recover. Connective technology, knowledge of the geopolitical environment, a focus on sustainability will all be remarkable features of the successful supply chain of 2023.