Dispatch from the Director: Supply Chain in 2023

In with the new,…

2022’s supply chain issues are drifting into 2023 and the data does not signal optimism in the short term.

The Association of Equipment Manufacturers disclosed in a recent survey (December 2022), that a remarkable 98% of all respondents in the industrial space are still experiencing chronic supply chain issues. Disappointing still, almost 60% of this same respondent pool, of over 175 companies, stated that their supply chains are getting worse.

Most manufacturers are still experiencing labor constraints, rising operational costs, supply inflation, and lagging logistics. The survey points out some startling statistics.

• Average lead time has jumped from 2.4 months in 2019 to 7 months by the 4th quarter of 2022.
• Production throughout has fallen on average by 12 percent due to labor and supply constraints.
• Adding suppliers, a traditional mitigation approach, is often futile as many manufacturers are already in completely sold-out positions for all of 2023. 

Couple these issues with the statistic reported from the Conference Board that that 60% of all CEOs believe a recession is likely to occur by the 4th quarter of 2023 and it is hard to paint a rosy picture. 

However, the axiom that there is opportunity in chaos might be apt for how to think of our collective challenges in 2023. Leaders are indicating that they fully intend to rebuild their supply chains for a new reality.  They plan to place emphasis on shorter supply lines, different inventory strategies, a significant shift in forward planning and, reducing product mix to those elements of their portfolio that are most sustainable.

We also hear from our own contacts at the Institute that leadership development is a top priority as well. Advanced logistics and supply chain management is a science.  It takes expertise to manage complex transportation and supply chain challenges. 

Strong leadership is built through strong development. Please consider coming to the Institute for one of our advanced degrees or sponsoring a high potential employee through the program. 

Good luck to all of us in 2023..