The COVID-19 pandemic brought the importance of a resilient supply chain to the forefront. With delays in the supply chain and inventory woes wreaking havoc on businesses over the past several years, the 2023 supply chain outlook was somewhat guarded, and being prepared for disruption has been a critical focus throughout this year.
So, are supply chain issues getting better? How are companies adapting to the “new normal” of constant disruption and uncertainty? The first step to building a more resilient supply chain is being aware of the ongoing global supply chain trends that are likely to remain in the spotlight for the coming months.
Here, we’ll discuss some current supply chain issues we’ve seen in 2023, and how companies are adapting to them.
1. Shortages that impact manufacturing
Many US-based companies have adopted reshoring or nearshoring strategies this year, looking to obtain materials and/or hire workers in the US or neighboring countries. With more businesses relying on domestic resources, however, material and skills shortages are becoming more common, as there aren’t always enough suppliers and job candidates to go around.
Other companies are sticking with the offshoring strategy while still looking to reduce their reliance on China. The main challenge on that front is identifying countries with sufficient skilled labor, materials, and infrastructure; a supply chain can’t operate without easy access to ports, airports, railways, and roads. As natural disasters increase in both frequency and intensity, that access becomes even more challenging to maintain.
To prepare for inventory issues associated with these challenges, many companies are shifting from “just-in-time” to “just-in-case,” holding extra inventory to account for potential delays. Thanks to evolving technology, real-time analytics and increasingly accurate supply chain forecasting can also help companies anticipate and address manufacturing issues.
2. Climate change
Another issue we’ve seen in the headlines of supply chain disruption news is climate change. The natural disasters and extreme weather associated with climate change are taking their toll on the shipping industry, leading to disrupted routes, delays, and billions of dollars in losses.
More and more regulations are being put in place to encourage emission reductions across the board. For example, the Trans-Pacific Green Shipping Corridor aims to reduce emissions associated with container shipping.
Additionally, with nearshoring and reshoring on the rise, more freight is being moved over shorter distances. This means that investment in green modes of land transportation (e.g. electric and hydrogen-powered vehicles) is more important than ever.
Aside from investing in greener supply chain technology, diversifying supply chains as much as possible will provide alternative options for materials and shipping routes when one particular region is impacted by climate-related disasters.
3. Geopolitical tensions
The Ukraine war, escalating Israeli-Palestinian conflict, and other geopolitical tensions can increase the cost of energy and disrupt the movement of goods through key shipping corridors and ports. Depending on how things develop over the coming months, materials may become even more inaccessible and trade routes may be shut down.
Some US-based companies that rely on materials or transportation routes in the affected regions may benefit from reshoring and nearshoring to reduce risk. And, as with climate change risk, diversifying can help limit the impacts of unexpected shortages, restrictions, and route disruptions.
4. Increasing cyberattacks
Cybersecurity threats are on the rise, and it’s apparent that bad actors are becoming more sophisticated in their methods for infiltrating supply chains. When it comes to supply chain cybersecurity, it’s not a matter of if an attack will happen — it’s a matter of when.
On the technology side, vulnerabilities range from insecure integrations/APIs to outdated IoT equipment and barcode readers. However, human error is often the largest cybersecurity risk — a report from WEF found that nearly 95% of all successful cyberattacks are linked to human error.
To mitigate that risk, it’s vital to prioritize employee training on safe cybersecurity practices, like using strong passwords, learning how to identify phishing attempts, and staying aware of new and emerging attack strategies. It’s also important to perform routine assessments of not just your own organization’s cybersecurity, but that of your vendors and partners as well, to uncover and address vulnerabilities before they become an issue.
Preparing for disruption
In the shipping industry, disruption is constant. In 2023, manufacturing hurdles, climate change, geopolitical tension, and cyberattacks have been top-of-mind in terms of risk — and these challenges will likely continue into the new year. With the right partners, however, you can create the resilience you need to keep your business on track, despite any future supply chain issues.
For 35+ years, GlobeCon has been a trusted transportation and logistics partner, seamlessly moving products through the ports of Los Angeles and Long Beach. Ready to build a more resilient supply chain?