Effective supply chain planning will ensure your business remains agile, responsive, and profitable. Netstock experts share top insights to consider in 2023.
Supply chain disruptions are inevitable. Fast forward to 2023 and we’re in for another interesting year – can you outplan the unpredictable? Our experts weigh in on their top supply chain predictions for 2023.
Technology will continue to drive supply chain visibility, agility and, resilience. While many of the existing disruptions experienced will continue into 2023, visibility into demand buying habits, supplier constraints, and labor volatility is critical to ensure a competitive advantage.
“The most successful businesses in 2023 will display the best discipline in finance and inventory. Work hard on your demand planning. Set the best inventory stocking policies, and make sure you use data to do your ordering. In the past, too little or too much inventory always hurt. Now, it could be fatal,” says Barry Kukkuk, President and Co-founder of Netstock.
#1 The continuing threat of a global recession
Many economists predict a gloomy global recession for 2023, and with interest rate hikes, and inflationary pressures, many businesses will feel the impact. Consumers will likely decrease their overall spending and focus on purchasing lower-priced products or brands.
Higher interest rates have made it more expensive to finance inventory and financial needs through bank facilities. A relatively inexpensive way to fund your business is to look at the working capital tied up in inventory in your warehouse. Freeing up that capital can get your business the working capital needed to outgrow your competitors and build a more resilient business.
“The combination of rapid cost increases and risk of reduced consumer consumption from a global recession, create conditions that require greater attention to inventory management and demand planning,” says Paul Allerhand, CFO.
Tip: Adopting a strategy of increasing inventory to hedge against future cost increases may backfire if expected demand does not materialize, so it is now, more than ever, critical to carefully and frequently monitor changes in the supply and demand for goods.
#2 Going green is the way forward
Environmental and social sustainability has gained much attention since the COVID-19 pandemic. As a result, businesses prioritize sustainable products in the manufacturing, industrial, logistics, retail, and supply chain industries.
“One of the easiest ways to be more sustainable and lower your carbon footprint is to be involved in fewer shipments,” continues Barry.
Tip: Proper inventory planning should result in less fire-fighting and more rational planning. Fewer emergency shipments will automatically reduce your carbon footprint. Plan your containerization better by adding high-performing, profitable items to your containers. This will result in an improved carbon footprint without facing excess inventory and less sustainable warehouses. Focus on sustainable practices which make sense to your business and create a positive and environmentally-friendly environment.
#3 Normalizing lead times
Forecasting and extended lead times remain a challenge. Although longer lead times have yet to improve or return to pre-2020 levels, the combination means that planning and shorter buying cycles are more important than ever this year.
“Don’t forget to pay special attention to your lead times. The recent supply chain disruptions significantly impacted lead times, so ensure they are set correctly and appropriately for what’s happening in the market, ” states Gail Haggerty, Director of Onboarding.
Tip: Regularly review your lead times, forecast variance reports, and supplier purchase orders. In Australia, for example, suppliers are shipping purchase orders earlier than usual. The shipping congestion disappeared almost overnight, causing a liquidity crunch across industries for customers.
Answer the following:
- Is your plan for 2023 realistic?
- Does your demand planning and forecasting strategy look reasonable to you?
- Is further intervention required?
Contact Netstock to enhance your supply chain planning.
#4 Cybersecurity and data protection should be a top priority
Humans will continue to pose a big threat to supply chains as phishing and other forms of social engineering become more sophisticated and increasingly difficult for people to recognize as malicious. This leads to successful Ransomware attacks, compromised devices, stolen credentials, and malware, providing attackers with a foothold into more valuable resources in the supply chain to which the individual has access. Businesses need to focus on the ongoing education of their employees and not rely on annual security training as a checkbox exercise.
“Our ISO 27001 certification requires that we not only implement security controls to address risk but that we continuously monitor and measure how well our controls are performing so we can identify and implement corrective actions and improvements, increasing the likelihood that our security controls will achieve the objectives of confidentiality, integrity, and availability of our customer’s information. In addition, through surveillance audits, our independent auditors will confirm that we are maintaining and improving our security controls, which provides ongoing assurance to our customers that we are committed to protecting their information,” says Yolande Sowden, IT Security and Risk Manager.
Tip: Supply chain attacks will continue to ramp up, making it critical for businesses to perform due diligence on their suppliers when appointing them and at least annually thereafter. Businesses must demonstrate to customers that they have implemented security controls, which are maintained and measured, and, more importantly, evaluated by an independent third party to provide assurance to their customers. This requires audited security controls and penetration testing of their systems to identify possible weaknesses and vulnerabilities that attackers may exploit.
#5 Focus on integrated business planning efforts
Unexpected changes in consumer and industrial demand and supply are likely to continue into 2023.
“The age of outsourcing is gradually transitioning into times where vertical integration and local sourcing will continue to increase. Compared to 2022, businesses will continue to place a higher value on agility to reduce supply risk versus making decisions purely on cost,” states Bill Tonetti, EVP of Integrated Business Planning.
Tip: Businesses that can identify changes and adjust plans rapidly will continue to outperform others. Preparedness for alternative scenarios will also be critical. Businesses with the strength to hold inventories will benefit from increased sales and fewer costly disruptions.
Learn more about our Integrated Business Planning offering.
#6 Align your departments and ensure effective communication
Don’t manage your inventory in siloes! Align your sales, operations, marketing, and finance teams to ensure effective marketing and sales efforts.
We have seen numerous businesses adapt to global supply chain disruptions using our inventory forecasting capabilities and “what if” analysis to slice and dice their inventory information to gain insights and plan with more precision and ease.
Jefferson Barr, CMO, says, “Sales and marketing teams can work in partnership with procurement and demand planning teams to develop these types of strategic investments to outmaneuver the competition and capture market share on the fringes of supply chain instability.”
Businesses should remain agile and adapt their supply chain strategies and processes to meet changing customer demand. Quickly responding to change to unlock operating cash and increase visibility across your supply chain.
“The most important thing businesses can do today is future-proofing their business. Many businesses are trapped in legacy ways that create many vulnerabilities for their business.” – Eric Chicoine, VP of Global Sales.