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5 Supply Chain Trends You Could Be Missing Out On

By: Ben Baldwin

March 9, 2023

5 Supply Chain Trends You Could Be Missing Out On

Are there supply chain trends and solutions you’re missing out on?

Despite our best hopes and dreams, it appears that the supply chain challenges of the past few years are here to stay for 2023. However, challenges often bring with them opportunities for improvement and innovation.

And the modern supply chain is in dire need of adopting intelligent solutions. Only 6% of businesses have full visibility of their supply chain while 46% of small businesses don’t even track their inventory.

This statistic and others point to an incredible opportunity for modern manufacturers. With new and advanced technologies that enable businesses to strengthen their supply chains, companies are poised to experience significant growth in the next year. But only if they can take advantage of the right supply chain trends and tools.

The Current Global Supply Chain

Before we delve into the supply chain trends of 2023, it would be helpful to understand what the current supply chain looks like and discuss how’d we get here.

The current global supply is currently marked by 4 major factors.

The Looming Recession: As it stands, there are concerns circulating and evidence of an already occurring recession (often recessions are only officially recognized retroactively). And a key contributor to this potential recession is the supply chain. Less spending equals less production which means fewer parts/materials. Company supply chains seem to be buckling under the events of the past two years, prompting some to exit the market as Bindiya Vakil, supply chain thought leader and Chief Executive Officer of Resilinc notes.

“In the last two years, we’ve seen a record number of companies exiting the market. Either they weren’t performing well, their supply chains weren’t keeping up, they didn’t have the parts, or they were struggling to meet growth targets.”

Bindiya Vakil, Chief Executive Officer of Resilinc

Challenged Access to Materials: A key difficulty that the industry has been facing and will continue to face through 2023 is an inability to acquire needed parts and materials. Or, at least there’s been some difficulty getting the parts and materials in time to maintain their schedule. With this challenge, manufacturers have needed to reformulate some of their products and processes, searching for new parts/materials that can be used as substitutions. Reformulation can be a headache, to say the least, if not using dedicated technologies like work instruction software.

Risk of Extreme Climate Events: In 2022, the U.S. alone experienced 18 weather/climate disaster events that exceeded 1 billion dollars in damages. Between the years 1980 and 2022, the annual average of climate events for the U.S. is 7.9. However, if calculating the most recent 5 years, between 2018 to 2022, this number increases to 17.8 - an increase of 225%. With droughts, wildfires, floods, and severe storms, extreme weather events have been disrupting how companies build and move products.

skills gap

Labor Shortages/Skills Gaps: A huge factor that affects the supply chain is the labor shortages and the skills gap experienced over the past decade. There are simply not enough workers currently within the industry. Adding to this, many workforces do not feel they possess the required skills for the evolving industrial environment, leaving the industry without the drivers of production: people. If the global workforce is unable to maintain skilled labor, then the supply chain will undoubtedly slow down to this new reduced capacity. To curb labor shortages and the skills gap, companies will need to invest in new technologies that empower their workers and increase their capabilities.

5 Supply Chain Trends To Take Advantage of in 2023

Despite the challenges the global supply chain and many modern manufacturers are experiencing, there are a few gleaming supply chain trends at the end of the tunnel that show promise to alleviate the above issues.

Supply Chain Trend #1. Customer-Centric Supply Chain

Just as lean manufacturing looks at value from the perspective of the customer, company supply chains are beginning to do likewise. While manufacturing and logistics are comprised of various companies extracting materials, assembling products, and delivering goods, the supply chain always points to one group in particular: the customer.

Customers are the ones that drive the market, produce shifts in demand, and place the need for a supply chain in the first place.

Because an order begins and ends with the customer, companies are re-focusing their supply chains to be more customer-centric.

So what is a customer-centric supply chain?

The customer-centric supply chain, as the name suggests, is a supply chain that focuses on the customers' journey from ordering the product to receiving delivery. Under this idea, manufacturers focus on the ability to quickly shift their strategies to meet customer demand alongside maintaining operational efficiency.

In previous years, consistently adapting to the ever-shifting market would have been near impossible, but with new advancements in the digital supply chain, analytics, AI, and IoT devices, companies can now track and monitor their supply chains like never before.

Supply Chain Trend #2. Data Sourced from the Supply Chain

While digital methods have been around since the beginning of the 3rd industrial revolution, Industry 4.0 & 5.0 are consistently bringing intelligent technologies to the forefront and changing how the industry shares information and data.

Supply chains that have undergone digital transformation have access to vast amounts of real-time data, enabling companies to gain complete transparency throughout their operation and logistical networks. The data is then analyzed by people and AI systems to intelligently forecast future demand and aid with inventory planning.

skills gap

Digital supply chain technologies work by tracking inventory in real time through tools like GPS trackers, RFID (radio frequency identification) tags, and IoT devices. While the hardware may not be a particularly new technology in 2023, the software that manages the supply chain is becoming increasingly intelligent, empowering companies to accomplish the following goals.

  • Create a digital thread of interwoven systems to give data greater accuracy and power.
  • Unify information across cloud technologies to facilitate greater visibility and collaboration with users.
  • Track inventory usage in real-time through work instruction software and integration with your ERP and/or inventory management software.
  • Use the automated data, smart forms, and rule engines to create an automated inventory flow.
  • Automatically inform team members and suppliers if inventory drops below or exceeds optimal levels.
  • Use AI and machine learning to discover valuable solutions and improvements that fit the needs of your specific supply chain.

The AI supply chain market should see further growth in the next decade. In 2021, the AI supply chain market was worth USD 5.6 million globally and is expected to reach USD 20.1 million by 2028. That is a CAGR of 20.5% over the forecasted 7 years. The digital supply chain is the future of logistics and a key supply chain trend that will continue to grow through the next decade.

pro tip

Pro Tip: Transform your business into one cohesive network by integrating VKS with your other key business platforms. Monitor and share information efficiently through real-time communication between your ERP, BI software, MES, LMS, and more.

Supply Chain Trend #3. Increase in Near-shoring

Prior to 2020, the industry was driven by the availability of cheap labor overseas. Despite the long lead times and higher transportation expenses, companies were able to compensate with the low cost of labor. But this system depended on a less volatile supply chain, which we do not have today.

To adjust to the current supply chain, businesses are now looking at geographically closer sources for their parts and materials.

Even if it's cheaper to produce parts overseas, if the shipment is held up for months or doesn’t arrive at all, then the cost savings become a liability.

To introduce stability, some companies are giving up their outsourcing activities in favor of dependable transportation and supply chain autonomy with near-shoring. In this case, production is moved closer to the target market or returned to the producers' native country, cutting out the need for lengthy and less reliable shipments at sea.

The US government is also taking action to bring production back to its home territory with the CHIPs and Science Act in August of 2022. With East Asia producing close to 75% of semiconductors worldwide, this act is expected to boost domestic investment and balance the global playing field by providing incentives for companies to produce semiconductors within the U.S.

pro tip

Pro Tip: Companies with facilities all over the world can instantly share digital work instructions regardless of any language barrier. Thanks to our instant translation feature, instructions can be created in one facility and then translated into over 25 other languages.

Supply Chain Trend #4. Intelligent Supply Chain Diversification (Ecosystem)

While near-shoring is on the rise, companies are also progressively increasing the diversification of their supply chains. By sourcing parts and materials from various sources, companies are able to integrate protective redundancies that provide a steady and reliable source of supply.

However, this supply chain trend comes with a certain measure of risk.

Multiple suppliers can often bring added complexity to the supply chain. If there is a specific method that you need your suppliers to follow, how do you ensure that each one is following those procedures? Not to mention quality can differ from supplier to supplier, making it increasingly difficult to maintain standards and intelligently control your supply chain.

VKS ecosystem

But technological advancements and digital work instructions are proving to be the answer to intelligently controlling your diversified supply chain in 2023.

Our work instruction platform and the VKS Ecosystem enable you to instantly communicate and share work instructions, material lists, and detailed processes with all suppliers instantly. With this method and technology, you can effectively standardize quality and results across your entire supply chain.

Beyond standardization, the VKS Ecosystem enables you to monitor your suppliers’ progress and quality in real time. As your suppliers assemble your parts/materials, they are capturing data with every step through automated actions and >interactive smart forms, giving you greater control, visibility, and insight into the supply chain.

Supply Chain Trend #5. Advanced Reformulation Strategies

With the current supply chain challenges facing us in 2023, a key supply chain trend is to develop product reformulation strategies in the hopes of adding another level of agility to the system.

What is a reformulation strategy?

In the event that a company cannot receive its required components, the company will need to reformulate the product with new parts/materials as well as new assembly methods.

VKS guidebook

It goes without saying that reformulation is a whole lot easier when there is a plan in place and the necessary tools to accomplish it. Manufacturers that do not create reformulation strategies are missing out on a smart and inexpensive way to introduce agility into their supply chains.

“If you fail to plan, you plan to fail.” - Benjamin Franklin

One tool enabling companies to conquer reformulation is digital work instruction software. Whether you need to change/update a process or inform users of part substitutions, digital guidebooks enable you to maintain standardization in any circumstance.

If workstations are out of one specific part, such as a commonly used fastener, create an alert to inform users of an approved substitution or direct them to where they can find more supply. When changing or improving a process, instantly update all related instructions with one click. If a change is made, place interactive alerts that require users to confirm they understand the process changes that have been made before proceeding. Easily ensure that all users have the most up-to-date instructions at all times.

Smart Supply Chain Solutions Are a Necessity

To achieve growth over the coming year, modern manufacturers must focus on 3 crucial supply chain qualities.

Visual work instructions start now

Resilience, Agility, & Visibility

Strengthening these 3 qualities will be integral in achieving control and stability in the coming decade.

As we saw earlier from supply chain thought leader Bindiya Vakil, companies that failed to keep a strong supply chain were forced to leave the market. However, if using the right methods and tools, companies can create strong supply chain practices that leave them prepared for any challenge, agile to new opportunities, and perceptive to fluctuations and change.

If you would like to know more about how work instruction software can help bolster your supply chain, book a demo with one of our industry experts today.