Supply chains have gained greater visibility over the last few years as the key to ensuring the smooth continuation of operations and the timely delivery of products and services for both businesses and consumers. Supply chain now has more influence among senior leaders. Yet with this recognition as a strategic function comes more scrutiny. Supply chain managers will need to think strategically to ensure that they address obstacles and select priorities that retain and enhance their standing.
In late 2022, APQC conducted its annual supply chain management priorities and trends research. Each year, this research includes asks supply chain professionals representing a diverse set of roles, industries, and geographic locations to indicate their organizations’ challenges and priorities for the coming year. The latest research results show that many organizations’ supply chains are stabilizing, reflecting a broader trend in the field.
The human element is having a larger influence on supply chains as businesses feel the squeeze of staffing shortages. Organizations can address obstacles tied to communication and collaboration by addressing hiring, retention, and employee development.
TOP 4 ANTICIPATED TRENDS IN 2023
APQC gathered insights about the top trends, innovations, and developments anticipated to have a significant impact on supply chains over the next three years. The top four are:
- big data and advanced analytics;
- global trade and tariff uncertainties;
- sustainability/environmental, social, and governance (ESG) factors; and
- digitization of the supply chain.
It is important to note that in comparison to 2022, a greater percentage of supply chain organizations expect significant impacts this year, and the sheer number of identified impacts has also increased. This further underscores the notion that to survive and thrive in the coming year, organizations must focus on building resiliency and flexibility into the activities that support their supply chains.
BIGGEST OBSTACLES TO SUCCESS
Supply chain professionals in APQC’s research identified their top barriers to improvement.
- Staffing shortages
- Lack of collaboration across functions and externally
- Regulations/requirements make change difficult
- Communication challenges
Compared with results from the prior year’s survey, limited workforce engagement no longer appears in this year’s list of top obstacles. Instead, it has been replaced by staffing shortages. This may indicate that the dissatisfaction organizations observed among employees last year has since translated into departures. If this is the case, it mirrors the larger workforce challenges observed across industries.
Another factor contributing to labor shortages is an aging workforce that is retiring. As long-time supply chain employees depart, organizations face the loss of institutional knowledge that can help newer employees avoid quality, safety, and productivity issues. Organizations can preempt this by using proven approaches like knowledge management to capture information from tenured employees and then transfer it to those newer to their roles.
FOCUS AREAS AND PRIORITIES IN 2023
The top four focus areas have been consistent for 2022 and 2023:
Supply chain planning: Demand planning and forecasting is the top supply chain planning priority for the second year in a row. Organizations are also seeking to improve collaboration and communication.
Sourcing and procurement: The top procurement priority for both 2022 and 2023 has remained supplier relationship management. Improving key supplier relationships increased in importance, in part due to the increased scrutiny on sustainability and demand for transparency along the supply chain.
Innovation: Improving collaboration is the top innovation priority for 2023–a significant jump from the 4th place that it held in 2022. When it comes to actionable strategies, organizations intend to adopt a structured approach to innovation.
Logistics: Inventory management is the top priority in 2023, as it was for 2022. Companies plan to focus on optimizing inventory as their top strategy for this year. The shortage of components and products during the pandemic has made inventory optimization a key aspect of supply chain continuity.
KEY INSIGHT FOR 2023: FOCUS ON PEOPLE
Although technology has been the focus of supply chains for years and remains essential for operations, in the end the success of supply chains relies on people who are enabled by technology. Building relationships across internal functions and with key suppliers is essential to create stability and address uncertainty. Further, the outputs of predictive technology such as artificial intelligence and cognitive computing must still be considered by staff. Technology coupled with human insights and decision making drives the success of supply chains.
Organizations must take the supply chain talent challenges seriously. Filling roles, retaining talent, and helping existing employees develop new skills are essential steps in addressing some of the other obstacles organizations anticipate facing this year. The right staff with the right skills in the right roles can make possible the process improvement, relationship building, and communications clarity organizations need to meet their supply chain goals in 2023.
LEARN MORE
Read the full white paper for more in-depth information and analysis. For the complete survey results, see the 2023 Supply Chain Priorities and Challenges Survey Report.
For further guidance and industry-specific insights, see APQC’s 2023 Supply Chain Priorities and Challenges collection.
To continue the conversation, follow Marisa on Twitter at @MB_APQC, or connect with her on LinkedIn.