Supply chain & logistics – A future view

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Businesses are facing unprecedented and extraordinary change from disruptions due to innovation, new technologies and evolving customer expectations in today’s world. Supply chains are being broken apart and customized to reduce costs and meet evolving customer needs. Logistics structures must shift to more specialized solutions tailored to different customer segments, modes of transportation, and distribution networks. 

The modern supply chain is a complicated network of organizations, systems and resources that needs data-driven and logical arrangements to bring products to the consumer. A stable and efficient supply chain is essential for a thriving world, but events during and after COVID-19 have revealed its vulnerabilities. 

The supply chain was stressed by long queues created by a sudden surge in demand and material movement in 2021. Businesses started resolving this by stockpiling and inflation dampened demand, which made consumers more sensitive to and concerned about costs. Revenues may be positive in some quarters and negative in others in 2023. However, people will remain cautious of rising prices regardless of how they fluctuate.  

Close monitoring of supply chain trends will require organizations to analyze, predict and resolve issues before they arise. Here are a few of those trends that bear watching. 

• Companies have moved from the “just-in-time” to the “just-in-case” inventory management model and this has caused inventory levels to catapult, locking up significant working capital. Sensitivity to costs in 2023 will lead to inventory optimization to reduce expenses associated with backorders, overstocking, stockouts and wastages while delivering products efficiently.  
• Businesses have expanded their vendor base to diversify risk. Vendor consolidation will occur to facilitate higher purchasing power, better prices, lower freight and fewer transactional costs.  
• Current and historical spending reviews will be used to uncover inefficiencies and improve visibility of entire expenditures. Companies will enforce contract compliance and streamline the entire system.  
• Logistics is critical to achieving a reduction of any expense incurred in warehousing, transportation, labor and equipment by increasing efficiency and timely delivery through real-time information and full operational transparency. 

Overall, supply chain prospects appear to be positive in 2023, although still not as strong as prior to the pandemic. Congestion in the shipping industry is becoming more manageable now, and recovery seems to be moving at a faster pace. There is hope there will be a return to normalcy sometime in 2023. The world of supply chains will be recovering, but it will require businesses to adapt to the changing scenario, and strengthen their supply chains.  

Continuous evolution seems to be the model today. Supply chain executives must know and accept that the practices of the 20th century will not work when facing technology and digital disruptors, changes in the workforce or the transformation of operating models. 

So, what will it take to be an efficient and stable 21st century supply chain amidst all the changes?  

Future-ready supply chains are customer-centric, can operate in the ever-changing digital world with agility and do so profitably in order to be a revenue driver for the business. The future success for supply chain depends upon being strategic and anticipatory.  

The terms logistics and supply chain management are sometimes used interchangeably. There are some opinions about the difference between the two terms that state supply chain management is the “new” logistics. 

Logistics is the process of planning and executing the efficient transportation and storage of goods from the point of origin to the point of consumption. The goal of logistics is to meet customer requirements in a timely, cost-effective manner. 

What is the future view of supply chain and logistics? 

First and foremost – Business as usual is not an option!  

Most supply chain managers expect problems to continue at least through 2024. More than half of logistics managers surveyed by CNBC do not expect the supply chain to return to normal until 2024 or after. The dismal outlook comes after almost three years of global supply chain disruptions and accompanying problems.  

The biggest limitation for supply chains is no longer technologies and what they can do, but rather the imagination of the people who leverage the power and potential of them. Enterprises around the world are facing a perfect storm of change and therefore, it is crucial for supply chain leaders to transform business models, organizational structures and operations to thrive today and in the future.  

The trucking industry is facing potential regulations to limit overtime for truck drivers in legislation to be introduced in April 2024. If passed, these regulations could greatly reduce the ability to transport goods. 

Many supply chains may shift from global flows of goods and services to national, regional, and local networks of buyers and suppliers by 2025. 

The vision for the supply chain in 2030 is a seamless end-to-end supply chain, with visibility into planning and execution at all levels. This vision will require product innovation and customer centric requirements related to the logistical activities prior to production from companies that use a long tail business strategy, all the way through to customer fulfillment. 

The longer-term vision by 2040 includes logistics companies absorbing many manufacturers of basic goods and end-of-life value chain links relating to reuse, recycling and regeneration. This will make their impact on the consumer goods market essential, while simultaneously offering the most desirable and sustainable circular model with reliability and resilience. 

Supply chains around the world will continue to be caught between politics, economics and ecology in the future. A burning question is:  Will there be more regionalization and/or nearshoring in the future? 

Closing Thoughts 

“If we want better global supply chains, there are lots of other things that have to be made better first. We need to be better with equitably including small businesses into global logistics. We need to be better with upcycling, and feedback loops. We need to be better with implementing Blockchain technology. We need to be better with material ecology and designing products for longevity. And so much more.” 
― Hendrith Vanlon Smith Jr, CEO of Mayflower-Plymouth 

Glenn Ebersole is a registered professional engineer and the Director of Business Development at JL Architects, a nationally licensed commercial architecture firm based in West Chester. He can be contacted by [email protected] or 717-575-8572.