Supply chain trends for 2023
-Charlie Wood, CEO, Wiise
The pandemic has seen unprecedented disruption to businesses, particularly those in manufacturing, warehousing, and logistics over the past couple of years. From the shutdowns of ports to geopolitical instability, material and talent shortages to fluctuating demand, the pandemic has simply put supply chains to the test.
The disruption is far from over. As KPMG observes, threats and challenges include cross-border trade issues, heightened cyber-crime, material access turmoil, and scope 3 emissions scrutiny. Amid these headwinds, four key trends have begun to emerge that will influence how Australian manufacturers and distributors will evolve their businesses in 2023 and beyond.
1. The rise of real time insights
Despite ‘digital transformation’ being a business buzzword for many years, the warehousing and logistics sector has lagged significantly behind other industries when it comes to tech adoption. Even in 2022, some organisations still use paper-based record-keeping inventory, which is extremely inefficient and inaccurate.
Manual processes and decades-old legacy systems mean that some companies simply don’t have a clear overview of the stock they have in their warehouse, posing a serious business risk, particularly in times of economic downturn.
Manufacturing, warehousing, and logistics businesses need a single source of truth that will enable them to be efficient and cost-effective in terms of stock control and customer commitments, such as investing in an enterprise resource planning (ERP) solution that streamlines business operations.
Visibility and provenance in fulfilment have become vital for partners and end consumers who want to know the origin of a product and its components, where it is in the shipping process, and when it’s due to arrive.
According to research from CommBank, 74% of Australian manufacturers planned to increase investment in digital technology over the next 12 months. Real-time insights that provide businesses with a clear overview of their inventory are imperative to improving efficiencies expect to see a significant uptick in adopting solutions that deliver clarity, precision, and real-time insights in 2023.
2. Warehouse mobility and improved staff experiences
Implementing technologies that enable real time data is only part of the puzzle – ensuring all staff have access to those insights is the only way to truly drive efficiencies. One of the biggest disruptions we expect to see across warehousing processes in 2023 is the advancement of the tools for people on the floor.
A wave of innovation is coming for manufacturers and distributors with warehouse mobility apps that can be installed on any phone or device to transform fulfilment completely.
Warehouse staff will be able to see exactly what items have been invoiced, know precisely where they are, scan and assemble orders, and notify customers that it has been shipped. Traditionally, only major players like Amazon have had access to these kinds of technologies, but the development of apps that can be loaded onto any device will mean even the smallest businesses can provide staff with real-time access to inventory with a click.
This will streamline processes and make employees’ lives easier and, ultimately, their jobs more enjoyable.
3. Building resilience in a downturn
With many predicting a slowdown in 2023, it could be yet another challenging year for many businesses. However, we know that companies who invest in their business during a downturn are those that come out stronger in the recovery phase. In the same way COVID-19 transformed the office, we foresee a similar transformation in the warehousing and logistics space this year as companies look to drive efficiencies through adopting new technologies.
Companies that implement disruptive new tools will be more flexible and better positioned to weather any storms 2023 throws our way. Once they have a clear overview of their systems, capital, and customer preferences, businesses will be more easily able to pivot and adjust in the face of changing market conditions.
If businesses are unable to access specific inventory due to supply chain issues or no longer have the capital required to serve a particular market, building a more agile business model will allow them to adjust their strategies as required and create a more efficient business that can capitalise on the next phase of growth.
4. Mergers and acquisitions (M&A)
The current economic uncertainty and recessions in different markets will likely see higher levels of acquisition and consolidation in many industries. Overall, Australian M&A spiked last year, with US$103.5 billion worth of deals announced in the first half of 2022, a 25.4% increase compared to the first half of 2021 reported by Refinitiv.
Private equity firms are in the market to buy businesses right now, and we expect this to ramp up in 2023 as the economy tightens and valuations continue to contract. The cost of capital is high, and businesses that don’t have a clear overview of stock will struggle to demonstrate an accurate valuation of the company.
Those businesses that can provide real-time clarity around their financial position will command a premium, which means having the right ERP solutions to back up every metric of their business.
Despite ongoing supply chain issues and the economic turmoil, 2023 has the potential to be a very positive year of growth for many manufacturers and distributors. But taking advantage of opportunities will require investment in tools and technologies.