Supply chain disruptions, labor shortages, inflation, high interest rates and geopolitical crises were just some of the issues that manufacturers and distributors had to deal with in 2023. In response, many companies worked harder to improve their resilience and drive the risk out of their supply chains. Others instituted cost-cutting measures, solidified their supply chain partnerships and leveraged the power of new technology applications.
As 2023 winds down and the new year comes into view, here are five year-end supply chain management tips that companies can use to begin preparing for what’s coming next:
1) Get out of “reactive” mode. If you’re still waiting for things to happen to your supply chain instead of getting out in front of those challenges, it’s time for a different mindset. “To achieve stability, supply chains must be robust and responsive, able to adjust quickly and meet consumer needs and demands in times of uncertainty,” CBIZ, Inc., recommends. “Embracing best practices is essential for addressing these challenges effectively, boosting efficiency, cutting costs and ensuring the smooth operation of all supply chain activities.”
2) Assess your risks. Use regular and formal risk assessment and mitigation strategies to manage disruptions, including natural disasters, geopolitical issues, cyber risks and vendor risks. “Fraud and vendor risks are increasing in uncertain times, so enterprise risks need close examination and stricter vetting of vendors and suppliers is required,” CBIZ says. Some supply chain risk management strategies to consider using include more multi-sourcing, nearshoring production, building up inventory stores and frequent “stress testing” to ferret out vulnerabilities. “The best way to look for vulnerabilities—some might be hidden deep within the supply chain—is to conduct thorough, repeated stress tests,” Enterprise Talk recommends.
3) Weave sustainability into your decision-making. Procurement and supply chain leaders are well-positioned to help advance their organizations environmental, social and governance (ESG) goals, and this isn’t going to change in the new year. In fact, the slew of new governmental regulations in the U.S. and Europe will make ESG an even more important consideration in the coming years. “…only procurement has the capabilities to ensure that their organization not only performs well but is more socially and environmentally responsible,” Oliver Wyman, LLC, points out. “This is because procurement alone has the most comprehensive overview of corporate ecosystems, including internal structures, suppliers, assets, and customers.”
4) Invest in technology that helps you work better, smarter and faster. There are many different types of supply chain management (SCM) applications, each of which addresses different aspects of your network. Some of the options include transportation management systems (TMS), warehouse management systems (WMS) and yard management systems (YMS). “Supply chain management software can help your organization take better control of its product pipeline,” US News & World Reportpoints out. “From the planning phase to actual execution, supply chain management software should offer an end-to-end solution that avoids a fragmented work experience across many different software platforms.”
5) Focus on resilience. In “3 Strategies for Supply Chain Resilience,” Epicor’s Frank Heenan discusses how supply chain disruptions can cost an organization 45% of its annual profits over the course of a decade. He says the foundation for a resilient supply chain is advanced digital technology. “The best supply chain management solutions make every link in the chain completely transparent in real time, so that businesses can account for every element that affects their operations,” Heenan writes. “This level of clarity is possible because modern supply chain solutions connect your systems, taking information out of silos and into a centralized location. When a supplier experiences a supply chain disruption, your system flexes to account for the change in information, enabling your decision-making process.”