Ever-evolving trends, disruptions and demands will continue to challenge the supply chain throughout 2023. Climate change is affecting logistics, operations and resources, as well as influencing customer preferences for sustainability. Despite globalisation, geo-political uncertainty is impacting access to goods and resulting in a shifting focus on resilience and localisation. The rising cost of living and fuel and demand for higher wages mean that efficiency cannot be compromised. Responsiveness, agility and technology adoption will be key for businesses to maintain a competitive edge and manage unexpected threats, as well as opportunities.
Let’s explore five supply chain trends likely to shape the logistics landscape in 2023.
- Collaborative automation to tackle sustained labour shortage
- Visibility and traceability to stay competitive and agile
- Green logistics
- Circular supply chain
- Middle mile optimisation
Labour shortage in warehousing, transport and logistics continues to jeopardise supply chain performance. This shortfall is due to a shrinking talent pool as older workers retire and new entrants dwindle: in Europe there will be 95 million fewer working-age people in 2050 than in 2015 1. Integration of automated technologies can help recruit and retain workers, maximise workforce capability and optimise productivity, workflows and warehouse space. Rather than replacing people, evolving technologies like autonomous mobile robots (AMRs) augment human efforts and enable workers to fulfil more rewarding value-added and productive tasks. The key will be to mix and match technologies to optimise existing processes. For example, AMR systems combined with pick-to-light technology can boost order picking performance from < 100 units per hour using traditional methods, to up to 600 picks per hour, producing an ROI within 12 months2.
As networks have increased in complexity, visibility has become a critical element of supply chain efficiency. However, despite this imperative, more than half of companies still lack end-to-end visibility . Eradicating siloes and blind spots, the benefits of visibility3 are extensive, including stakeholder collaboration, dispute mitigation, real-time communications/updates, and the agility and insight to make better decisions quickly. With the continued rise in ecommerce, inventory intelligence is also crucial for omni-channel excellence and to avoid lost sales. This hinges on real-time visibility enabled by data capture of events as goods move through the supply chain. Visibility enhanced by data collaboration allows retailers, logistics providers and manufacturers to retrospectively analyse supply chain events – essential for perfect traceability and track & trace. This is a growing priority, as customers and regulatory bodies are seeking product provenance, integrity, efficient recall management and compliance (such as the Falsified Medicines Directive and Tobacco Products Directive).
Several factors are driving green logistics. These include sustainability/ESG targets, customer loyalty and the need for climate-smart supply chain strategies to secure supplies and resources. Waste is a major issue for the environment and retailers, with figures showing that food waste accounts for around 8% of global greenhouse emissions. Across the UK supply chain alone, 4.2m tonnes of food are lost or wasted, with 1.5m tonnes wasted in manufacturing4. More than half of online shoppers say they are concerned that the rise of ecommerce is a problem for the environment and 52% claim to choose to purchase from one online store over another if the environmental impact of its delivery is lower5 . To improve their green credentials and save costs, warehouses will require energy management systems to reduce electricity consumption (and/or use renewable electricity), offset carbon emissions and reduce waste generally, including fuel management and efficient loading. Vehicle tracking and an increase in electric and hybrid fleet vehicles are also predicted trends. Smarter supply chains enabled by better control and visibility will help organisations meet the EU’s target to halve food waste by 2030, and it is estimated that every £1 invested in reducing food waste generates an average return of £146. Greater shipping accuracy and final mile efficiency can also have a big impact in waste reduction.
According to the Circularity Gap Report7 , only 8.6% of the world economy is circular, and more than 90% of resources extracted and consumed don’t return to production cycles. However, there is an urgent need for a circular economy, stemming from changing consumer expectations, global disruption and environmental concerns. With supply chains responsible for four-fifths of greenhouse gas emissions8 , transitioning from linearity to circularity is critical. The UN has outlined Sustainable Development Goals for global supply chains to be achieved by 2030, pressurising companies to start ‘closing the loop’, saving costs and the planet. The European Commission proposes that products sold in the EU comply with standards on circularity, meaning they are durable, can be reused, repaired and recycled, and contain recycled material. Efficient reverse logistics and returns management will be instrumental in increasing product life cycles and facilitating reselling, remanufacturing or recycling strategies.
The middle mile typically refers to operations involved in transporting goods from one facility to another, before being picked and dispatched to final delivery. Emerging as a critical enabler for supply chain optimisation and resilience, efforts should be focused here in 2023. As the middle mile encompasses many logistics execution processes, the right technology investment can dramatically drive down costs whilst improving fulfilment performance. Fast growth of the 3PL industry to execute some of the middle mile activities means that the supply chain is becoming even more complex with multiple players. Therefore, capturing, unifying and sharing data from first to last mile to enable visibility has never been so vital.
The right technology investment can dramatically drive down costs whilst improving fulfilment performance.
Despite continual supply chain disruption and unpredictability, 2023 will also present opportunities to recuperate and innovate. However, rising costs will squeeze margins, accelerating the pressing need for efficiency. Trends such as labour shortages are impacting the multi-tiered supply chain, along with environmental concerns and targets. Fulfilment excellence, accountability and a competitive edge can only be achieved through resilience and agility. With sustainability becoming the norm rather than the exception, digital transformation and end-to-end visibility will help businesses manage waste and operate more transparently and efficiently.