Posted On September 19, 2022

The 2020s so far have been a fascinating, challenging and historic era for supply chains around the globe—and while almost all factors point to 2023 being somewhat more “normal,” the industry continues to evolve and grow. Our team of experts shared their predictions for what supply chain managers will be focused on in 2023.

2022: A year of recovery from supply chain disruptions

Of course, many of our predictions for 2023 are the result of events and supply chain trends in 2022. Throughout much of the year, supply chains worked to find balance after two years of chaos caused by the Covid-19 pandemic. Meanwhile, inflation and diesel prices also supported moderation, as consumer spending decreased. Carrier capacity slowly grew, as gas prices offset any other rate decreases.

After drastically increasing prices in 2020 and 2021, carriers started re-approaching shippers with new, lower bids. Suddenly, shippers found themselves with at least some power at the negotiation table after years of having none.

So, what does all this mean for your supply chain in 2023?

What supply chain professionals can expect in 2023

Numerous factors will influence supply chain management trends in 2023, from technology and economics to world events. Here’s what we expect to be hot topics for the global supply chain industry in the coming months.

Businesses will shift from reactive to proactive—and from survival mode to growth mode.

Most supply chain management professionals have spent the last two years trying to survive one supply chain crisis curveball after another. Decisions were made out of necessity, based on what was available or affordable. As supply chain pressures ease and companies continue their return to normal, they’ll also shift their approach from reactive to proactive.

We expect more supply chain managers to reevaluate overall supply chain strategies and potential new business models. With room to breathe, they’ll be able to ask questions about what’s working and what’s not, from manufacturing and transportation to storage and distribution.

Our advice: remember to play the long game. Companies had to learn how to quickly pivot during the pandemic, and agile supply chains became a major advantage in business. But now that the industry is rebalancing, the trick will be in not overreacting when things change. In 2023, try not to hit the panic button too quickly, and keep long-term goals and trends in mind when making decisions.

Carriers will lower rates and improve service.

One of the most promising trends for 2023: a continued downward trend in carrier rates.

At the height of the pandemic, consumer spending on goods skyrocketed and carrier capacity diminished. As a result, carriers hiked up rates for both sea and land transportation, and service levels worsened as labor shortages and lockdowns caused transportation backlogs. Shippers had almost no choice but to deal with delays and other issues.

As demand has leveled off, capacity has increased and backlogs have subsided, this trend has started reversing—and we expect the industry will continue to rebalance in 2023. Of course, some accessorial fees for things like overlength and overdimensional freight will likely stick around for a while. But in addition to lower overall freight costs, you’ll likely also see improving customer service as carriers once again have to compete for business and customer loyalty.

A return to lean inventory management—somewhat.

Another trend supply chain disruptions brought: stocking up. Before 2020, companies typically prioritized lean inventory management, keeping only what they needed on hand. But that supply chain strategy backfired during the pandemic, when companies went without product for weeks, months or even longer. To avoid supply chain disruption and shortages, companies began stocking inventory and investing in warehousing and storage.

As the logistics industry stabilizes, this trend will likely reverse. We suggest supply chain managers take a middle-of-the-road approach: keeping a bit more inventory on hand than pre-pandemic in case any supply chain issues pop up again.

For manufacturers, reshoring and nearshoring will be a top priority.

While some companies increased inventories, others took a different approach to address supply chain pressures caused by the pandemic. Many of our clients have reshored or nearshored their manufacturing—relocating the process from Asia to the United States, Mexico or another nearby country. This practice can come with both benefits and drawbacks; manufacturing in the United States and Mexico is often more expensive than in Asia, but transit times are much faster. Reshoring or nearshoring supply chain components can also bypass any potential issues caused by shortages and backlogs. We expect to see more companies reshore and nearshore in the year ahead.

Visibility, data and digitization will continue to reign.

Of the many supply chain technology trends we see, this one will probably be the longest-lasting.

Visibility describes the ability for supply chain managers to track goods and shipments throughout the supply chain process, from sourcing raw materials and transportation to manufacturing and distribution. And for good reason: supply chain data and visibility can benefit almost every aspect of a business, including meeting customer demands and improving the bottom line.

The best software solutions for visibility also integrate multiple management systems, like warehouse management systems and enterprise resource planning tools. These integrations can remove manual processes (and the potential for human error) to increase efficiency and accuracy. Technology that prioritizes data and visibility will be incredibly sought-after in 2023, since incorporating strategic technologies can enable supply chain managers to optimize supply chains from end to end.

Digitization is also increasingly common, as carriers and even government agencies are beginning to require electronic documents. As a historically paper-heavy industry, these industry trends will push companies to prioritize going digital.

Geopolitics will continue to influence supply chains.

Of course, geopolitics have impacted supply chains for centuries. But in recent months, international politics and current events have come to the forefront of the supply chain conversation.

The Russo-Ukrainian War will have the potential to upend supply chains around the globe for as long as it continues. Meanwhile, any changes in the trade relationship between China and the United States could drastically transform the American imports landscape.

Advanced tech, like drones, robots and AI, will launch—for the big dogs.

If you’ve looked at the homepage Supply Chain Dive, Freight Waves, Supply Chain Management Review or any other leading industry thought leadership outlet this year, you’d probably expect things like autonomous trucks, drone delivery and warehouse robotics to be right around the corner. And for a select few companies, they might be. But in reality, this sort of technology still has a way to go before hitting the mainstream.

Businesses will focus on cybersecurity—or pay the consequences.

Just like other industries, cybersecurity is a growing concern in supply chain management. According to one report, software supply chain attacks in 2021 grew by more than 300% compared to the year before. Cyber-attacks on supply chains run the gamut from holding data hostage for financial gain to stealing confidential customer information.

If they haven’t already, companies in 2023 need to assess their digital supply chains for risk and prepare for and protect themselves from potential attacks.

For e-commerce brands, zone skipping and returns management will be key.

As the e-commerce space continues to grow, returns management will, too. Companies with high return rates will continue to look for ways to automate processes and decrease returns costs, whether that means charging for return shipping, limiting return windows or partnering with multiple carrier options to ensure they pay the best price. Processing returned merchandise will also be a concern, as items might need to be routed to various locations depending on where they’ll end up. In 2023, we expect to see more companies look for strategically located distribution centers to receive and process returns.

Zone skipping, or bundling many small parcel shipments for the longest leg of transit before separating the shipments for the final, shorter leg, will also grow in popularity in 2023. One of the latest supply chain trends, zones kipping is currently underutilized, especially in the parcel space. But as shippers learn about the benefits, we expect to see

For companies looking to use zone skipping in their supply chain or improve their returns management process, partnering with third-party logistics providers is usually the best bet.

Consumer demands will increasingly include sustainability and circular supply chains.

One more big trend we expect to continue and grow in 2023 will be sustainability. Changing consumer demands and stricter government regulations will continue to push companies toward greener practices in 2023. Businesses will continue to search for and adopt sustainable efforts, from sourcing sustainable raw materials to evaluating greenhouse gas emissions in transportation. One notable example will be circular supply chains, where manufacturers refurbish discarded products to then return or sell back to consumers. Whether they realize it or not, consumers will be purchasing more recycled and refurbished goods in the coming years.

Many of the upcoming trends in supply chain management center around big changes, from new manufacturing sources to better technology. But implementing changes in your supply chain can be tricky—and you’ll want to make sure your company can get a solid return on investment.

Flat World’s team of experts help companies reduce costs and increase efficiencies with better supply chain practices. We can help you assess your current processes and find opportunities throughout the supply chain. Contact us to get started.