Supply Chain Stability: Are We Out of the Woods in 2023?
To say that the global supply chain has been in a tumultuous state of ongoing chaos is the understatement of the century. Looking back at where we were around this time last year, it’s hard to believe that so much progress has been achieved in this window period.
Although it had improved from the utterly disastrous 2020-2021 period, the supply chain in 2022 was still extremely unstable and it seemed like any positive progress was constantly being upended by global economic and geopolitical instabilities.
Port congestion across the United States, the ongoing Russia-Ukraine conflict, labor concerns, increasing inflation and rising supply chain costs were all straining and already fragile global supply chain.
Supply chain organizations were facing a grim third quarter of 2022. A survey by Carl Marks Advisors reported that 75% of supply chain executives stated their revenues had been negatively or very negatively impacted over the 2021-2022 year by supply chain issues, most notably rising supply chain costs their organizations had to absorb. This, in combination with rising interest rates, increasing inflation costs and a reduction in consumer confidence and spending, only compounded the overall struggles and uncertainty.
The all-important question now is: how is the supply chain performing a year later? Has it fully recovered to pre-pandemic levels in terms of cost and performance? Are we essentially “out of the woods” yet, after nearly three years of plummeting confidence and uncertainty?
Where are we now in 2023?
Fast forward almost a year later and global supply chain conditions have largely normalized, returning more closely to a pre-2020 baseline performance level. This is according to the Federal Reserve Bank of New York’s Global Supply Chain Pressure Index (GSCPI), released April 6.
According to research released, the bank stated that global supply chain pressures decreased from March to April, dropping from .28 to 1.06 standard deviations below the index’s historical average.
A “healing” supply chain is slowly causing it to shift (albeit, very slowly) from being largely a carrier’s market back to being a shipper’s market, with help from China slowly reopening as a global trading hub too. The imbalance between supply and demand is finally reaching more of an equilibrium and lead times are less volatile and unpredictable.
Recommended by LinkedIn
However, advisors caution not to be too optimistic too quickly. Recent research from PYMNTS shows that the easing of inflation hasn’t done a lot to inspire greater consumer confidence in the economy. Still wary of the pandemic and the resultant recession that teetered on our doorsteps for months on end, with rising inflation and cost of living, “deal chasing” has become the norm for many American consumers.
More than half of these self-proclaimed deal chasers state that their wages have stayed the same or fallen in the previous 12 months, reducing their overall purchasing power. Nearly 50% of grocery and retail shoppers surveyed by PYMNTS stated they’d be willing to leave their favorite brand for a cheaper competitor.
The silver lining
If there’s a single positive outcome from the upheaval of 2020-2022, it’s that the events showed the urgent necessity for greater visibility across the supply chain. The disruptions to normal freight, supply and logistics coordination lead to an enormous amount of investment in supply chain data management platforms and technologies.
As the supply chain slowly continues to stabilize, freight and supply chain organizations need to continue to prioritize data visibility across their operations, both internally and externally. Stargo, for instance, provides an all-in-one data centralization and management platform.
StarDox’s advanced BI and analytics capabilities reveal in-depth data insights, trends and flag opportunities for productivity, profitability and growth. Our platform enhances, not replaces, your in-person team, equipping them with the data and insights they need to make swift, effective decisions.
So, are we out of the woods in 2023?
In short, not just yet. The supply chain is certainly on the mend, but it’s not in the clear just yet. Further disruptions are predicted to rattle its recovery throughout 2023, fuelled by geopolitical unrest and consumer hesitancy. But, it’s at least heading in the right direction towards a complete recovery, with disruptions expected to ease in 2024 and beyond.