For the past three years, the supply chain industry has been making headlines as major disruptions sent shockwaves through American life and the global economy. The pandemic instigated numerous issues for a supply chain that was already struggling to remain resilient.
As the first month of 2023 passes us by, is the outlook for the coming year better than it has been for the previous three? While many of the factors that led to disruptions have begun to ease, the supply chain will continue to face new and recurring challenges.
Consumer goods and production materials both faced shortages in the past three years. The price of pallets also rose significantly in response to labor and lumber costs, as Millwood’s director of procurement and sales support, Doug Gaier, discussed in 2021. Manufacturing materials like steel also faced significant shortages that affected numerous products and businesses globally.
The lumber market remained volatile in 2022, with prices dropping significantly by the end of the year; so far in 2023, the price of lumber is up at least 14% with experts predicting it to continue to to rise as demand grows ahead of home-building season, which could affect the price of pallets and increase shipping costs.
COVID restrictions, the labor market and material shortages have begun to ease, but their effects continue to ripple through the supply chain. New challenges have also arisen in that time, including economic uncertainty, inflation, war overseas and labor strikes across the globe, all of which affect the supply chain industry. According to a recent survey conducted by Coupa Software, 50% of supply chain professionals surveyed experienced three or more significant supply chain events in 2022, indicating that disruptions have become the new normal for many.
In the same survey, 40% of supply chain leaders indicated that building healthy supplier relationships is a top priority going into 2023. Additionally, sustainability and resilience were top-of-mind, as they have been for the past several years. Sustainability presents the opportunity to save on costs in both the long- and short-term.
Building resilience will also shift focus from cost-cutting to reliability and efficiency, which will leave businesses better prepared for possible future disruptions. Technological advancements such as automation and AI are also helping companies along the supply chain increase efficiency.
The overall outlook for the supply chain in 2023 remains fragile, but according to industry leaders, it is slowly improving and returning to pre-pandemic trajectories.