As the world grapples with a volatile business environment, supply chain leaders are increasingly focused on risk resilience. The pandemic exposed the fragility of supply chains, and companies are keen to ensure they can weather future disruptions. A recent survey by Gartner identified commercial growth, real-time supply chain execution, authentic fulfilment of ESG commitments, and flexible work experiences as the top four priorities for supply chain organisations. In this blog post, we’ll explore some of the key trends that will shape supply chain management in 2023.
Resilience and Efficiency: A Delicate Balance
In 2023, companies will need to balance resilience and efficiency. Supply chains must be more risk-resilient and sustainable without jeopardising efficiency or company profits. As Richard Howells, vice president of solution management for digital supply chain at SAP, notes, “Risk resilience is about preparing for all eventualities.”
The Management and Financing of Working Capital
To achieve this balance, companies must focus on working capital management. One solution is to use a digital supply chain financing platform, which can improve cash flow analysis and provide access to supply chain finance solutions. Such platforms offer financing options to businesses that use their supply chain as collateral, helping to address cash flow issues and reducing the need for traditional bank loans.
Supply chain finance programs also help suppliers, as they can receive payment earlier and more reliably, improving their cash flow and reducing the need for expensive short-term financing. The use of a supply chain finance digital platform can also provide companies with a better understanding of their working capital requirements and help them manage their cash flow more effectively.
Connected Data Drives Company-Wide Outcomes
Connected data is critical to achieving supply chain resilience. IDC analysts predict that by next year, 30% of shippers will dynamically align their logistics offerings with organisational strategy, achieving a two percentage point increase in OTIF (on-time, in-full) delivery across diverse transport channels. Sourcing is also undergoing changes in the name of resilience. IDC analysts predict that by 2024, 50% of companies will have implemented more balanced multi-sourcing strategies to better address risk, resulting in a 10% improvement in supply reliability.
Collaboration is Key to Sustainable Business
Environmental regulations and customer preferences for sustainable organisations are driving the need for transparency in supply chain management. Supply chain data, contextualised for the business, helps prove corporate compliance and good citizenship. In the same Gartner survey, 67% of respondents said that their organisation had defined environmental and social sustainability KPIs for supply chain leaders. According to analysts, visibility and transparency are “non-optional” for organisations claiming environmental and social impact. Companies must establish auditing procedures and extend them to suppliers and other external partners to capture the full impact of their efforts.
The profit motive is driving sustainable business. IDC researchers predict that by 2026, 45% of G2000 organisations will operationalise integrated sustainability in the supply chain and effectively report impact data, enabling a 10% reduction in waste and improving competitive advantage.
Industry-Specific Innovations
Supply chain disruptions are expected to continue in 2023, driving industry-specific innovations. Financing platforms, for example, are becoming an essential component of supply chain finance providers. Supply chain financing platforms help companies manage their working capital more efficiently by providing access to supply chain finance solutions and improving cash flow analysis. Supply chain finance companies can also help suppliers receive payment earlier and more reliably, reducing the need for expensive short-term financing.
IDC analysts predict that by 2025, task application extensions will account for one-fifth of all new supply chain technology investments in manufacturing and retail. These extensions will help companies create more customised and agile supply chain processes, allowing for greater flexibility and responsiveness to changing market conditions. Additionally, they will help organisations leverage data to drive better decision-making and improve overall supply chain performance.
Furthermore, with the rise of digital supply chain financing platforms and supply chain finance providers, working capital management and financing are becoming more streamlined and accessible. These supply chain finance solutions enable companies to improve cash flow analysis and manage their working capital more effectively while also providing benefits to their suppliers. Supply chain finance programs, offered by supply chain finance companies, provide suppliers with earlier access to payments at a lower cost, improving their own cash flow and reducing the risk of supply chain disruption.
As such, the adoption of digital supply chain financing platforms is set to increase in 2023 and beyond, as companies look for ways to better manage their working capital and improve supply chain resilience.