In this piece, I will lay out broad trends that will impact supply chain planning across industries and geographies, and outline key ways in which businesses can assess their preparedness to bring about greater efficiency and cost-benefits.
Here are key supply chain industry trends to watch out for:
Technology investment into supply chains will accelerate
Enterprise demand for new technology solutions to promote cross-organizational visibility is at an all-time high. With supply chain business partners demanding greater digital integration at every node in the chain new tools are being developed and tested out. And, technology adoption is now influencing business decisions. However, trends show that clients are keen on using low-code tools and off-the-shelf solutions that can be customised and configured to meet their specific needs, for better resource planning and allocation to build resilience.
As we set foot into 2023, more and more companies will focus on digitalising communication using Web 3.0 technologies like blockchain and IoT to develop the competitive advantage they need.
● Investing in technologies like Blockchain makes sense for companies who want greater transparency into the value chain across outsourcing partners, so they can reduce costly delays, material wastage, theft and circulation of substandard products.
● Integrating data flows on blockchain-driven platforms can help companies enforce smart contracts that are pre-configured to meet specific business requirements, to better evaluate their existing partnerships.
● Accessing real-time data analytics leads to better forecasting so companies can manage supply and demand, decrease operational volatility, and identify new market opportunities to fight off inflationary pressures and economic stagnation.
Cyber risk assessments will become more important
Today supply chain business networks are increasingly centralised. This leaves enterprises vulnerable to security breaches, consequently, demand for data privacy, information security is on the rise. As per a recent KPMG study, almost half of global organisations consider cyber security as an important operational challenge for their supply chains over the next 3 years. With the emergence of distributed technologies like IoT (Internet of Things) devices embedded into individual goods, fragmented complex supplier networks, cyber criminals are mounting increasingly sophisticated data breaches, and targeting vulnerabilities across operational sites.
More and more customers are adopting the power of decentralized, peer-to-peer technologies that form the foundation of Web 3.0 in response to these threats, and moving from private blockchain to a permissioned public blockchain for greater flexibility, without compromising on security. As neutral multi-enterprise business networks come into being, cyber-risk assessments for third party software vendors will become more commonplace. And, eliminating human error responsible for security lapses by embracing automation and the permanent-record keeping features offered by blockchain-powered platforms will become more popular to verify and trace information flows in real-time.
Friendshoring or Nearshoring will become more attractive
The past two years have been marked by unprecedented disruptions to the global supply chain, on account of the risks posed by the ongoing Russia-Ukraine war, rising tensions between the US and China, and more. This is prompting companies to reevaluate their dependencies and outsource functions to emerging destinations like India, for ‘nearshoring’ or ‘friendshoring.’ Nearshoring is seen as a way to strengthen trade links with like-minded and geographically close countries, to safeguard against the closure of major trade routes and escalating tensions that could threaten material supply.
In 2023, companies will evaluate lead times and the cashflow impact of potential geopolitical conflicts and focus on building alternative options for raw material and component supply, to reduce an overdependence on individual countries, and distribute risk.
Sustainability will be more than just a buzzword
In 2023, regulatory authorities, global banking institutions, venture capitalists, private equity players and customers, will all place a greater emphasis on sustainable sourcing and business practices to control Scope 3 Emissions Scope 3 emissions are classified as the fallout of activities from assets not owned or controlled by the reporting organisation, but pertaining to its value chain, which means that organisations will have to take greater cognizance of the larger impact of their business operations.
Come next year, companies are looking to reduce their greenhouse gas emissions and bring in greater accountability and traceability to functions across, HR, IT, Operations, Commerce and Finance, to track ESG (environmental, social, and governance) data real-time, measure and report it more reliably. And, 53% of organisations plan to increase their focus on sustainable sourcing, as per a KPMG report from 2022. To this end, companies are looking to embrace the power of Web 3 technologies like blockchain and IoT, which help track movement of goods from point to point, to establish provenance, distance travelled to final destination, fuel consumption, carbon emissions and more. Having access to this indelible, trustworthy record of the movement of goods can help companies during compliance, and go past ‘greenwashing’ to showcase their more fair and environmentally-friendly practices to their customer base, investors and the public at large.
In conclusion
With geopolitical instability, the worsening covid crisis in China, rising instances of data theft, and increasing pressures on companies to service customers, across omni channels and geographies, all within ever-shortening deadlines, a supply chain revolution is in the offing. Companies who embrace the power of transformational digital technologies to build a more robust, secure and transparent value chain will thrive in the long run. Web 3.0 protocols like blockchain, the coming of AI/ML predictive models and real-time tracking thanks to embedded IoT-led systems, will help reduce dependence on people and paper, and help usher in a new era of operations that are agile, shock-proof, and customer-centric. And, changing trade dynamics will lead to an exciting new year, with countries like India poised to gain a competitive advantage in a fast-evolving market, with near-shoring and automation accelerating the pace of change, in 2023.
Vaideeswaran Sethuraman is the founder and CEO Param.Netwok A multi-tier supply chain technology orchestration platform. ⦃param⦄ is built on a proprietary blockchain ledger that enables companies to have a supply chain protocol for enterprise interconnect, data exchange and trust.
