Businesses’ and consumers’ requirements may change in an instant, as many sectors have discovered, and supply chains must be flexible enough to shift course when there is an imbalance in consumer and corporate demand.
Already months into 2023, economic projections show that businesses still have a long way to go before they can remain stable and profitable. I’ve highlighted five crucial supply chain techniques that are crucial for organizations to stay flexible in the upcoming year to cope with the difficulties ahead and build on lessons learned from the past.
Nearshoring of Manufacturing to Mitigate Supply Shortages
Over the past two decades, the pandemic has had a significant influence on American corporations’ offshore practices.
Since the 1980s, offshoring has been the favored, economical method used by American businesses to carry out their production. Offshoring remained at the top of the list of global manufacturing thanks to the use of cheaper Chinese labor to accomplish profitable production.
However, the system was badly disrupted when COVID struck and China shut down manufacturing across several locations. I wasn’t mistaken when I said, “The engine seized.”
As a result, American manufacturers got alarmed and many started to concentrate on reshoring and near-shoring methods. This pattern has gained momentum and is projected to continue in 2023.
Because nearshoring is about putting yourself closer to your suppliers, manufacturers, and clients, it is effective. Nearshoring is a realistic option nowadays since it may be done from strategically placed locations close to your partners. Even the current government has discussed nearshoring with companies in Mexico.
The expansion of nearshoring is encouraging. Benefits of this transformation include faster shipping, improved relationships with suppliers, and the capacity to respond quickly to changes in the external supply chain. To improve the GDP of the nation, it is essential to combine nearshoring strategies with developments in AI and manufacturing automation.
Accelerated Adoption of AI and ML to Fuel Improvement for People and Processes
Manufacturers may get a variety of advantages from using AI and ML, including increased productivity, cost reductions, and new capabilities. However, implementing these technologies may be a difficult and varied task.
Global manufacturers need to prioritize digitization and improve their risk management skills as the economy continues to provide difficult headwinds for the majority of firms. They can do this by streamlining MRO expenditure analysis or by introducing a supplier intelligence service as a part of their procurement procedures.
This idea is applicable to many other sectors, including aircraft, paper goods, and automobiles. Finding particular industrial process areas that can be enhanced using AI and ML is a crucial first step for businesses beginning to use these technologies.
This might entail looking for patterns and trends in data from already installed systems. Businesses might endeavor to clean up current data for use in training models or try to add new sensors and data-gathering systems.
Manufacturers may start training and deploying AI and ML models to efficiently optimize the targeted aspects of the production process once the data and resources are available. AI/ML models can be incorporated after being examined and validated.
These modern AI/cloud-based solutions can aid in data harmonization and supply chain network architecture optimization. They may be used to create new interfaces and workflows to enable the usage of the models, or they may be linked with current software and control systems to streamline the procedure.
The use of AI and ML in the production process may be successful or unsuccessful in part based on changes made to business culture, staff training, and degrees of risk and change that are greater. But achieving the objectives of the digital transformation—significant cost reductions, novel capabilities, increased effectiveness, and deeper understanding of inventory structures—is worthwhile.
Technology Investments to Continue Despite Inflationary Pressures
Major manufacturers continue to invest in their AI and technology supply chain practices despite high borrowing rates, inflationary pressures, and an unstable economy.
According to Supply Chain Dive, money is pouring into digital firms that can aid supply chain professionals with artificial intelligence (AI) technologies, predictive analytics, automation tools, software systems for storage, distribution, and logistics, and information systems and controls.
Early in 2023, MacroFab’s recent $42 million infusion of fresh financing for its cloud manufacturing platform for electronics makers will serve as a perfect example.
In fact, over two-thirds (64%) of the businesses polled in MHI’s most recent Supply Chain Industry report—which was conducted by the country’s leading material handling, logistics, and supply chain association—reported that they were boosting their supply chain’s technological investments.
According to a different analysis from the CapGemini Research Institute, almost 40% of the organizations polled want to increase their technology investment in order to accelerate their business transformation and cut expenses.
We envision a bright future for businesses to adapt their approach to managing their operational risk with working capital by creating a more robust supply network, as investors look to AI-enabled enterprises to lead the push.
Supply chain strategies have developed to include novel methods that support corporate objectives in the changing environment of 2023. Manufacturing nearshoring represents a move towards closeness for increased supply chain resilience.
By using data-driven insights, adopting AI and ML boosts productivity and lowers costs. Continued technology expenditures demonstrate the industry’s acknowledgment of technology’s critical role in boosting supply chain efficiency despite economic uncertainty.
For firms, the integration of supply chain and marketing strategies has become essential. By utilizing these strategies, businesses put themselves in a position to be flexible, adaptable, and receptive to market needs. A robust supply chain foundation strengthened by these tactics is a cornerstone for future success as industries navigate unfamiliar seas.