Since 2020, struggling supply chains have been a constant pain point for companies and consumers alike. Are things looking up this year, or should we hunker down for yet another 12 months of complications and frustrations? We'll get into the current state of most main supply chains, and what you may expect in the future.
Supply Chains in 2023: What to Expect
After a troubling few years, let’s take a quick look at what to expect in 2023 from the supply chain perspective.
Recent history
It's no secret that the COVID-19 pandemic had a very serious impact on the supply chain. From toilet paper to houses, inventory was low. According to The White House, "inventories of cars and homes are also at or near record lows, sufficient for just one month of car sales and 4.4 months of home sales, as compared to pre-pandemic levels of about two months for cars and 5.5 months for homes." It was an all-time low inventory-to-sales ratio by professional calculations.
From there, supply chain disruptions continued as a result of the pandemic, economic uncertainty and political upheaval.
What today looks like
Three years later, some companies and industries have been working to overcome the challenges that these disruptions present and correct supply chain issues. Despite this, the supply chain blockages have had long-lasting effects that will take more than a few years to resolve. With the help of structural changes, shifting strategies and digitization, businesses are seeing the light at the other end of the tunnel.
A McKinsey study reports that "many companies still lack a comprehensive picture of the risks lurking deep inside complex multitier supply networks." Some challenges are exasperated by the lack of incoming talent or employees, which can prevent companies from reaching their targets.
Looking into the future
When it comes to supply chain management, the resulting plan must be more resilient than ever. Consumers and businesses will need to lean into the advantages offered by digitalization processes. According to a McKinsey survey, more than 90% of respondents reported that leaders invested in digital supply chain technologies in 2021 and 2022 to become more efficient.
Risk management has always been important for supply chain management, but we're likely to see it take even more priority in the coming years. Companies will take a closer look at new strategies, technologies and methods of improving resilience. According to a recent Forbes article, consumers and businesses can expect:
- Less port and rail congestion.
- Tight warehouse capacity.
- Shipping rates will fall.
- Ocean blank sailings will remain high.
Do you want to learn how to prepare yourself and your finances for the future? Reach out to Vectra Bank to learn more.
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