The Ferrari Consulting and Research Group through its affiliate the Supply Chain Matters blog shares select individual prediction snapshots that are included in our annual 2023 predictions for industry and global supply chains research advisory.
The Ferrari Consulting and Research Group has annually published a series of supply chain management focused predictions since its inception in 2008. They are produced to advise our clients, sponsors and the broad global supply chain management community as to what to anticipate in the coming year.
Our research advisory report for 2023 begins with a review of the themes of our prior three years of predictions and the derived learning for the supply chain management community. That includes an overview of our themes for 2023 which were shared in a previous two-part series published on Supply Chain Matters. We further include our ten specific predictions for the coming year addressing areas of business, process, people, technology and other key areas.
Our complete detailed research advisory report will be made available on a complimentary basis in the Research Center menu that will appear on the top panel of our two web sites on January 20.
Our prior postings in this multi-part series included the following:
Part One highlighted our first prediction, that supply chain management teams should anticipate a considerable amount on uncertainty and that a significant challenge will be to avoid complacency in strategies and actions.
Part Two of this series, provided highlights our third prediction, that supply chain management teams will continue to exercise more direct control of direct materials sourcing, and these efforts will be a prominent element of business strategy for CSCO’s and CPO’s this year.
Part Three of this series shared our fourth prediction that was focused on different priorities for supply chain talent, skills retention and employee retention strategies with different priorities in 2023.
Part Four of this series shared our fifth prediction focused on global wide transportation, logistics and brokerage services facing a challenging 2023 with significant consequences.
In this final snapshot update, we share highlights of our sixth and seventh predictions which address our view of investments in data rationalization and data standards, and ongoing supply chain digital transformation. We are grouping both of these predictions in this update, because of the fundamental dependency of both to each other.
2023 Prediction Six: Manufacturers and Retailers and Their Supply Chain Management Teams Will Not be Able to Effectively Address Multi-tiered End-to-End Supply Chain Visibility Without More Seriously Influencing and Tackling Data Rationalization and Common Data Standards.
We predict that businesses and their supply chain management teams will not be able to effectively address their enhanced visibility to multiple-tiered supply network risks without more effectively strategizing a multi-tiered end-to-end data and information rationalization strategy and framework.
The effort is threefold:
More advanced AI/ML enabled technology tools that can more readily identify and manage internal data description and data flow discrepancies on a more-timely basis as well as provide an eventual, ongoing, self-managing data rationalization capability. The goal here is to remove the drudgery of data management.
Active support of open standards based industry focused B2B Cloud platforms that provide the means and the utility for collaborative sharing of either digital or physical focused data streams related to domestic and international supply chain movements.
Introduction and existence of broader and more extensive supply chain focused B2B platforms and the consequent market dynamics for making these platforms of timely value for customers. The common theme has been Cloud-based platforms that provide an overall control layer over existing supply chain planning and execution software applications along with inherent advanced analytics supported decision-making utilizing platform resident data lakes.
Our research advisory will provide added depth to the above areas.
2023 Prediction Seven: Businesses Will Continue to Invest in Supply Chain Digital Transformation and Technology Enablement, But in a More Prioritized Focus
The reasons for this are also fundamentally threefold.
First, cybersecurity defenses and business response actions will unquestionably be a top priority for CIO’s and their IT budgeting resources in 2023. This includes increased scrutiny on the termed “software supply chain” namely how applications software is virtually upgraded and enhanced without adequate security measures. With the scope and frequency of such attacks increasing, this remains an obvious C-Suite and board room priority in essential business continuity investment needs. Such measures invariably affect extended supply chain supplier, technology partner and trading partner relationships where dependencies on the safe exchange of data and the sometimes direct access to internal systems becomes a vulnerability. Data and information security will take on added scrutiny and that will potentially impact some supply chain systems in the coming year.
Second, C-Suite executives have now come to better understand how investing in augmented capabilities within the specific areas of supply chain planning and customer fulfillment execution or in more timely awareness to product demand or supply network changes and risks, should be considered. Surveys conducted among supply chain management participants at various levels in 2022 have reinforced a belief that transformation and/or automation of processes is a continuing need to overcome these periods of frequent disruption and business pivots. A further revelation over the past two years has been an awareness that for some business and their supply chain management teams, digital transformation is not so much a sole technology led investment, but rather a process, data and technology realignment and change effort.
All of above stated, projects with well understood needs and deemed shorter time-to-value will become preferable. Likely candidate projects are:
- Ability of the business and of the supply chain to quickly pivot to business changes including added supply network resiliency and agility.
- Cost saving and efficiency gains derived from automation actions.
- More prescriptive and predictive capabilities in business and supply chain decision-making.
Further, as we outlined in Prediction Six, businesses need to prioritize efforts directed at data rationalization and harmonization before being able to effectively address multi-tiered supply chain visibility and more timely decision-making. Thus, digital transformation efforts are likely to be phased in nature and prioritized to specific process, data or change management needs.
Third, persistent higher interest rates along with uncertain economic conditions in 2023 will motivate businesses to shy away from larger, multi-year digital transformation investments that require capital outlays. During such times, CIO’s will undertake an analysis of overall use of existing applications, influence the suspension of software applications with little or limited user adoption or high maintenance costs, and advocate for focusing on a limited set of overall technology providers.
Other Factors- Control Layer Approaches
In times of high uncertainty, senior executives will continue to shy away from larger scale rip and replace strategies involving existing supply chain and operations focused software capabilities. The newer control layer approaches that are positioned to extract and augment key analytics and insight information from existing applications are likely to be attractive alternatives in 2023. Technology providers that incorporate quick time-to-value and attractive subscription pricing methods tied to overall benefits will have that advantage.
There are indications for a revisiting of industry specific focused B2B Cloud platforms as a means to address persistent industry wide inefficiencies, align common industry data and information exchange methods and electronic workflows, along with interactions among the industry’s customers, suppliers and extended supply chain partners. Obvious industry opportunities are in healthcare products and services delivery, consumer products and B2B or B2B2C online commerce, automotive and high tech contract manufacturing industry sectors.
Increased Efficiencies Via Process Automation
Added technology adoption related to workforce automation specifically addressing increased efficiencies and the freeing up of workers from repetitive or mundane tasks in order to be refocused into more organizational value-added insight or process support roles will continue to be attractive to businesses in 2023.
In warehouse operations, production and customer fulfillment process areas, rather than larger scope whole facility automation, an emphasis on modular, more flexible and agile automation will continue to be attractive for businesses. Leased robots will continue to be an attractive option in this area, especially for supporting peak seasonal volumes. There is added evidence that investing in automation can help in the recruitment of more tech-savvy workers that are willing to interact and enhance such automation and that can be deployed in other focused process areas.
In supply chain, production planning and operations coordination process needs, select use of automation in flagging and resolving exceptions and synchronizing decision-making will garner added interest, as will the automated identification and tracking of supply chain emissions and decarbonization in planning and resource deployment decisions. We anticipate that artificial intelligence and machine learning enabled decision intelligence automation will garner added attraction in the coming year.
Overall Supply Chain Technology Segment
We concur with prominent experienced venture capitalists such that 2023 will usher in a “year of sobriety at low tide”, one that includes longer diligence and more realistic valuations of supply chain focused technology start-ups, fewer funding rounds and more evidence of sustained profitability. Economic downturn can delay funding rounds as well as the ability to take on added risks by private investors. Venture capitalists will likely come under added pressure to step-up the governance, oversight and market integrity of the technology companies that are funded and influenced.
We further predict a continued active cycle of either merger, acquisition or privatization actions to address increased market share, customer acquisition or specific industry penetration and influence. We would not be surprised with a few blockbuster deals being announced during the coming year, along with some highflyer start-ups running into headwinds in customer adoption.
This concludes our multi-part highlights of individual 2023 Predictions for Industry and Global Supply Chains.
Our next update will be notification of the availability of our full Ferrari Consulting and Research Group Advisory report that will feature all ten of our predictions for the coming year. This report will be available for downloading in our Research Center on a complimentary basis.
We will further be recording a podcast regarding our predictions and their implications in the coming year. Further, we have received a number of specific predictions from clients and blog readers, which will be included in ongoing Supply Chain Matters blog commentaries.
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