3 Predictions for Supply Chains in 2023

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The evolution of supply chains has accelerated in response to numerous global-scale disruptions over the past few years. Digitization has been a key driver of this evolution, it’s a key to creating high performing supply chains. Here are the three things you need to know about building better supply chains in 2023.

Agility is Critical

Supply chain disruptions are simply a part of doing business in 2023. Every supply chain professional has been dealing with difficulties caused by the pandemic for years now, in addition to other massive disruptions. The US-China trade war, large-scale natural disasters, and war in Europe have all caused problems. And this year, we got a financial crisis in the form of Silicon Valley Bank failing. The global supply chain will always be vulnerable to problems in the financial markets, and while the media has portrayed the SVB failure as a black swan event, it’s really just another disruption.

That’s why it’s so critical to create agile and resilient supply chains using strategy, proactive contingency planning, and supplier diversification.

Companies who have prepared for supply chain disruptions — whether from financial markets, geopolitics or force majeure events — are far better off than those who merely react to the problem after taking damage. While strategic proactive contingency planning and diversification have significant upfront costs, it’s time well spent that will reduce (or eliminate) delays, maintain profits, and preserve key customer relationships.

Outsourcing is the Way

To increase supplier diversification, reduce operating costs, and focus on core competencies, more companies will lean into outsourced manufacturing in 2023. Last year, Peloton began outsourcing all of its manufacturing, and while not every company will go to that extreme, I expect many more companies to outsource production in the coming year.

Increased outsourcing is an ongoing trend supported by data from the 2022 State of Manufacturing Report, which shows 48% of companies increased their outsourcing in the last year. Additionally, nearly three-quarters of survey respondents view outsourcing positively while specifying that quality, efficiency, speed, and pricing were the primary benefits.

Of course, to gain the agility and resilience that can come from outsourcing, you need to find the right manufacturing partner or partners. Best practice is to ask potential suppliers about their strategies for managing disruptions and dig into the details — you want to work with partners who have concrete, articulable plans of action.

The other, simpler option, is to work with a manufacturing network that has geographic diversification and resilience built in — ensuring that any supply chain disruption won’t be so disruptive.

Digitization Creates a Competitive Advantage

In 2023, we’re going to see a continuation of a trend from the past few years — that digitizing your operations is a key competitive differentiator. The pandemic showed us all that adopting digital manufacturing tools was no longer an option. And since we’re headed into a recession, it’s mission-critical. In this macro-economic environment, companies are searching for ways to increase efficiency and productivity, and technology can provide the gains they’re looking for.

Strategic implementation of digital technologies — whether it’s digital twin, supply chain analytics and visualization, robotics, product lifecycle management, or another technology — will be a differentiating factor for companies in 2023. And, for those who can’t (or won’t) invest in such tech, a digital manufacturing partner lets your company leverage the power of digital tools at a much lower cost. The results are streamlined workflows, and a faster, more productive team.

So, does your company have a readiness strategy for 2023? My motto is: Don’t get ready, stay ready. If you want a more agile and resilient supply chain, there’s no time like the present to start building one, and digital manufacturing is how you do it.