2022 Realities vs 2023 Predictions

2022 Realities vs 2023 Predictions

by John Lash, Group Vice President, Product Marketing, E2open

2022 was, undoubtedly, another tough year with many disruptions happening outside the four walls of enterprise – extreme weather, natural disasters blocking access to resources, port or border congestion delaying transit, panic buying artificially inflating demand, suppliers going out of business. Added to this, we had shortage of parts and labour, war, political unrest, global economic, business and consumer uncertainty, rising inflation, escalating costs, open commerce and trade issues – the list goes on. If you survived the obstacles over the last three years, you could overcome anything.

In the year ahead, business leaders will be taking the skills and knowledge acquired over the last three years and embedding them into everyday practice. It’s about being prepared to weather the storms through resilience, agility, adaptability, efficiency, security, data proficiency, insightfulness, and environmental sustainability – all essential to driving growth and success in the future.

Extreme weather and natural disasters will continue

Over the past few years, natural disasters, floods, wildfires, and other severe storms have increased in severity and frequency, and they will continue to occur. With significant supply chain challenges arising in the aftermath of such events more companies will be planning to mitigate supply chain risks in the wake of a storm.

Before, during, and after a disaster, there are delays due to delayed or cancelled flights, halted vessel traffic, and closed container terminals and roads. Truck capacity shortages occur as carriers shift resources to provide recovery support to affected areas. The tight capacity and shipping downtime can increase rates and severely disrupt freight flow for months.

As it takes time for shipping to reset back to ordinary capacity levels and flows, this change impacts rates, and can also influence other supply chain decisions where transportation rates and on-time performance play a major role. Determining where to produce goods, place new distribution centres, or service direct-to-consumer shipments can be difficult.

Prepare, Minimise Impact, and Mitigate Costs

While many transportation leaders would say the greatest challenge following extreme weather events is the impact on short-term rates and budgets, the potential impact on production facilities and warehouses can be just as significant. Shippers are wise to proactively assess this risk and determine whether changes are necessary to protect their goods.

The challenge for shippers and carriers alike is visibility. Logistics teams simply don’t have the resources or time to keep up with constantly changing weather patterns and how they will impact their supply chains. To successfully manage the impact, automated alerts inform those who can act, like modern GPS directional systems that alert drivers to traffic delays along a route. With a single shipment route, this is easy enough, but what about thousands, even millions of shipments?

More companies are looking to an automated system for helping to identify weather events that may impact a client’s transportation network and usual shipment lanes. One system — developed by E2open — uses forecast data combined with mapping processes to identify any shipment passing through known or forecasted severe weather. The system can identify which shipments will be impacted, and contingency planning can begin according to the severity of that impact. This methodology and the technology behind it – predictive and prescriptive analytics – are being leveraged in other areas of the supply chain where the value of this level of visibility is recognised.

Tech and Networks Will Help to Reduce Supply Chain Friction

Quickly executing a plan of action when a natural disaster happens is critical. Being part of a strong ecosystem with proven technology lends speed, efficiency, and flexibility to help minimise the impact of a weather event. Global Trade and Logistics applications, for instance, provide access to an extensive worldwide network of trading partners; offer real-time location visibility into every shipment across all modes and regions; analyse business impacts of transport delays on downstream operations; proactively recommend corrective actions; enable seamless execution for any changes in shipment bookings; get the best rate every time by automatically comparing freight costs to industry benchmarks; and forecasts future transportation needs to secure capacity with preferred carriers.

Weathering the Trade Policy Storm

Protectionist trade policies are also causing companies to shift their country sourcing practices, and there is no reason to believe that we will see geopolitical posturing along the trade front fade soon. The issues of labour and transportation costs, along with capacity, will beleaguer everyone.

The new normal in global trade policy is a stormy environment that is highly unpredictable. Supply chain managers need to put in place proactive measures to keep supply chains safe or become a casualty. To help keep things moving and visible, companies are modifying their investments in automation and technology.

Global, Up-to-Date Trade Knowledge Will Be Essential

Almost every major economy is building a “trade wall” along its borders. Concerns about the appropriate balance of trading between nations, consumer and environmental safety, protection against terrorism and, of course, revenue generation are at the root of these trade walls. Trade policies all around the globe are in flux. Tariff discourse is evolving into policy changes, non-tariff actions are increasing, and the number of new trade agreements has risen to record levels. In this fluid environment, it is challenging to pinpoint trends and assess how trade policy shifts might impact your business and products. When new policies are implemented, shippers rush to reconfigure their supply chains both physically and financially by finding new suppliers, alternative production sources and lower-risk markets for selling their goods.

Following the U.S.-China trade war, the world is scrambling to make trade moves that will insulate them against uncertainties. This trade volatility and disruption affects every company and every industry — and often not for the better. Global trade volatility carries a hefty price tag. It drives up the cost of raw materials, manufacturing, transportation, duties, and tariffs, and ultimately increases the prices paid by consumers.

Complying with global trade regulations can be very challenging. Keeping up with continuous changes in regulations, product classifications and restricted party lists – which can all impact landed costs – requires ongoing effort. At the same time, penalties for non-compliance are increasing rapidly.

Access to a global, comprehensive, and accurate database of regulations and business rules helps companies stay compliant, reduce trade risks and lower product costs. Companies should look for systems that efficiently consolidates compliance data across multiple countries, territories, and jurisdictions and one that provides access to restricted party lists to achieve instant, automatic trade compliance, increase visibility, and improve margins while reducing delays at the border.

Emissions Tracking: Know Your Footprint

Emissions factor heavily into the environmental, social, and governance (ESG) metrics investors care about, but carbon taxes are also on the minds of many executives. Corporate investors are looking for more transparency as they evaluate companies, and ESG factors—specifically carbon emissions—are being addressed by regulators too.

For most companies, disclosing emissions from in-house operations (Scope 1) and emissions from the generation of energy to power in-house operations (Scope 2) tend to be straightforward to measure and report. This is because there’s not much of a visibility gap to what happens within the four walls of the organisation. Scope 3 is where the real challenge lies because, by definition, this category covers all other emissions driven by end-to-end operations, including those in the extended value chain.
For most companies, transportation-related emissions are a good place to start when tackling Scope 3. For one thing, the quantities—such as how many tons and how far they will travel—are typically known.

When you have visibility of emission footprints of transport scenarios before companies’ book freight, you can do more than just report historical emissions after the fact. We can actively work to reduce our environmental footprint by weighing the carbon impact alongside the cost and timeline of the options available. This helps companies make more sustainable moves across modes and regions to drive down the overall carbon footprint, reduce ESG risks, and better meet net-zero carbon commitments. Reducing emissions now without impacting service levels will also provide an advantage down the road compared to competitors that take a wait-and-see approach.

Having a holistic, end-to-end view of the supply chain provided by an end-to-end platform will become increasingly crucial in the years ahead. This can be achieved through collaboration with all partners via a connected platform; optimising freight spend through collaboration with logistics partners and bringing emissions into the optimisation equation with cost and service.

2023 will be the year to shore-up innovative, intuitive, intelligent solutions

Adapting plans and execution with agility to weather storms and navigate disruptions in the year ahead will demand near real-time access to data and connectivity to all the interdependent entities. It’s about enabling your company to know immediately about challenges and act collaboratively with your partners to address them.

2023 will be the year of reinforcing strong systems, processes, and tech that will shelter your company from uncertainty, help you grow into new regions, expand your customer base, and operate sustainably. It’s about being equipped with the right teams, the right insights, the right strategy, and smart technology to give you the edge, keeping you and your customers moving in a stormy environment.