Disruptions in the supply chain are expected to continue into 2023. Whether it be inflationary pressure, heightened regulations, weather events, or unforeseen events, brands and retailers will need to find ways to adapt to a changing environment moving forward.
Here are some top supply chain trends that will shape the way we do business in 2023:
Due to the rising operational costs, many businesses are implementing new strategies to save costs. One of the growing trends companies are adopting in the supply chain industry is near sourcing.
Near sourcing is a strategy that involves moving business operations closer to where your end products are sold to increase the efficiency of its supply chains.
The benefits of near sourcing in the supply chain include the following:
- Shorter Supply Chain - Reduced lead time hence quicker response to customer needs.
- Greater Control - With near-sourcing, companies can visit the sites more frequently with less travel expense and more convenience. This should be your second point.
- Reduced Costs - with rising overall prices of shipping, customs, labor, and other resources
2. Supply Chain Diversification
As supply chain disruptions become all the more frequent, businesses are learning to become more resilient by diversifying their supplier base.
If you are considering supply chain diversification for your business, here are some tips to consider:
- Start by identifying potential suppliers that you can use to diversify your supply chain. Then agree on some basic criteria you can use to narrow your choices such as lead time, minimum order size, storage facilities, quality control, etc.
- Identify and evaluate supplier risk potential. This could include tariffs or trade wars, environmental factors, political turmoil, and other risk factors that could impact your supply chain.
- Transition gradually. New suppliers may not be able to ramp up as quickly as you need so it’s recommended to keep your current supplier around but at a reduced capacity. If you have a good relationship, you may even want to keep them around indefinitely.
- Use smaller contracts. Diversifying your supply chain doesn’t mean moving all of your operations to a new location. It’s best to utilize multiple suppliers to handle different aspects of your supply chain and ramp up as needed.
3. Environmental and Social Sustainability
The environmental conservation discussion has gained traction worldwide, with several governments increasing regulations to promote sustainability and reduce waste. Businesses across the supply chains are adopting environmental and social sustainable strategies due to rising customer demand and government regulations.
An environmental audit ensures your vendors are compliant with international environmental laws and standards. This type of quality control will become essential for brands that want to align with new regulations.
4. Doing More With Less
According to a recent survey conducted by Procurious, 81% of supply chain leaders are feeling pressured to “more quickly and effectively respond to challenges.” But despite the increased pressure, only 21% have seen a headcount increase and 14% have received a budget increase.
In other words, even though supply chain teams are facing increased pressure, most are having to deal with the current challenges with the same level of resources as previous years.
5. Lean Inventory Management
For the past two years, businesses have been stocking up to safeguard against unpredictable lead times. But pre 2020, it was considered standard practice to keep only what you needed on hand to save on storage and warehouse costs.
Now that the logistics are stabilizing, businesses are starting to revert back to lean inventory management systems to utilize limited warehouse space to save on storage costs.
In 2022, we saw more companies make an effort to digitize their supply chain in order to become stronger and more resilient. This trend will continue into 2023 and beyond. But it isn’t just about resiliency; digitization can have a significant impact on your bottom line, as well.
Mckinsey estimates that companies who digitize their supply chain could increase revenue growth by 2.3%. So companies who want to streamline their operations, strengthen their supply chain, and increase their margins should explore digital technologies, such as AQF online, in 2023.
Optimize Your Supply Chain in 2023
As you can see, many of these supply chain trends involve new sourcing strategies or technology upgrades. But implementing these kinds of big changes can be complicated.
As a 3rd party quality control specialist, AQF is here to help by supporting you when working with new suppliers, claiming sustainability goals, and improving product quality.
Our diverse services can assist you when optimizing your supply chain strategies, the most relevant solutions include Supplier Qualification Audit when verifying new suppliers, Quality Inspection when checking quality of the finished items ,and Environmental Audit when it comes to sustainability claims. Contact us or sign up for AQF Online to learn more about our services and optimize your supply chain today.