What are the challenges of the supply chain in 2023 for procurement managers?

November 23th, 2023
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Faced with major societal changes, companies have to constantly adapt to remain competitive. To meet these challenges, they must make their supply chain a strategic priority. Logistics players have shown agility and resilience during the Covid-19 crisis. They must now continue on this trajectory while taking on their role in driving social and climate change. The year 2023 should also mark a turning point for the supply chain in terms of digital technology and the introduction of an HR policy focused on diversity.


What does the future hold for the supply chain by the end of 2023?

The period from 2020 to 2022 was marked by a series of events that forced companies to evolve quickly. Among them, the health crisis, geopolitical instability, and recurring natural disasters have led to significant economic changes. The pandemic resulted in temporary closures of physical retail outlets, giving a fresh impetus to e-commerce. New players had to align with industry leaders by offering shorter delivery times and a broader range of products. Thus, the entire procurement sector had to reorganise.

The repercussions of the war in Ukraine are being felt in rising prices, particularly in the energy sector. The supply chain must therefore optimise its expenditures, primarily through its procurement policy. At the same time, the climate crisis is gaining momentum and its consequences are already being felt. This unpredictability requires companies to stay on alert.

Global inflation is expected to slow down by the end of 2023 and return to its 2021 value by 2024. In Europe, this decrease would be more nuanced than in other countries like the United States. China, the world's leading exporter of goods for many years, is expected to see its inflation continue to rise in 2023. Energy costs are also strongly correlated with inflation and therefore consumer spending levels. Given these societal challenges and the climate of economic instability, supply chain decision-makers must drive rapid changes that will have a positive impact on markets and society.


Becoming a driver for social change

The events mentioned above have deeply destabilised the economy. Unlike what may have happened during previous crises, the answer can no longer come solely from states and central banks, which have already done everything in their power. It is now essential for companies to become the driving force for change in society, an evolution eagerly awaited by everyone.

Supply chain managers have the power to shape markets through their networks. The change lies in the way of selecting, managing, and supporting suppliers. Indeed, procurement and supply chain management account for a significant portion of both a company's revenue and environmental impact. The procurement manager therefore has several levers to integrate a CSR approach within customer-supplier relationships.

Here are a few examples of actions that can be implemented by relying on partnerships:

· Include clauses guaranteeing respect for individuals in tender documents;

· Take advantage of trade contracts to encourage suppliers to improve working conditions within the production system;

· Support organisations that focus their efforts on positively impacting society;

· Lead the community of partners through training and networking.


Accelerating the transition towards supply chain sustainability

The supply chain in 2023 is turning towards a second CSR pillar, which is environmental preservation. Procurement and logistics managers must continue to build their efforts to align their strategy with the company's commitments regarding environmental impact. They need to establish and monitor reliable measurement indicators.

From a global standpoint, there is still much room for improvement. The transport and logistics sectors can focus on several areas:

· The transition to low-emission transport methods;

· Pooling shipments;

· Sourcing local goods;

· Using recycled and recyclable packaging.

Changes must also come from a more efficient and sustainable procurement strategy. Sustainable procurement favours eco-friendly products, which include items from recycling channels, refurbished products, locally manufactured items, etc.

Recruiting and retaining new talent

To address the new challenges of the supply chain in 2023, companies need to enrich their teams with new colleagues. They must develop HR strategies that promote inclusion, equity, and diversity.

Among the changes that have been continuing since January 2023, one must also take into account the evolution of employee expectations. Recruitment and retention of talent are increasingly linked to the environmental and social commitment of companies.

According to a study conducted in the United States, 54% of respondents would accept less pay to work within an organisation more aligned with their values. When recruiting, companies are therefore increasingly faced with employees seeking more potential meaning in their work. These employees also wish to experience a good balance between professional and personal life.

Several levers of attraction and retention of talent should be examined:

· Flexible working conditions (remote work or flexible hours);

· Social benefits (employee savings, retirement plans, childcare services, etc.);

· Support for career development (mobility, training, mentoring, etc.).

The continuation of supply chain digitalisation in 2023

To reduce its management costs, logistics continues to optimise its processes to reduce its management costs. Digital tools play a significant role in these changes:

· Data collection helps anticipate raw material shortages and increases in orders;

· Automated inventory management, particularly through artificial intelligence, is more efficient;

· Paperless transactions reduces administrative costs.

The development of supply chain digitalisation in 2023 is a matter of competitiveness. Investments in the field are expected to grow by 16.5% over the next two years. Moreover, a supply chain focused on digitalisation is more agile and resilient when challenged by external events.

Procurement departments have a privileged position in helping the supply chain address these numerous challenges (securing supplies, CSR, digitalisation, etc.). This can be achieved through a Lean approach, by revisiting the entire value chain.

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