4 Supply Chain Trends Affecting Businesses in 2023

The pandemic may have been the first major event to throw global supply chains into chaos, but it’s far from the only reason local businesses have struggled to maintain consistent access to materials and inventory.

Across the United States, labor shortages have made it difficult for suppliers to meet the volume of demand, while inflation has increased the cost of both labor and materials. Shipping backlogs have created supply chain bottlenecks that persist even as production in some industries has returned to normal. At the same time, global geopolitical conflicts have disrupted supply chains for goods ranging from energy to food to microchips.

While there are signs of recovery and an eventual return to normalcy, these supply chain issues aren’t going to disappear overnight. Businesses of every size need to be prepared for ongoing supply chain challenges as we head into the 2023 calendar year. Here are four key trends to keep in mind.

1. Labor Shortages May Continue to Destabilize Supply Chain Operations

Labor strikes and an overall U.S. labor shortage are placing an artificial cap on overall production across the supply chain. With factories struggling to hire enough workers for their facilities, and shipping businesses struggling to attract truck drivers and other key personnel, these labor shortages and making it harder for supply chains to return to a normal pace of operations.

A worker-friendly job market in the U.S. is giving job-seekers better options, which is complicating efforts to recruit new hires. Your local business might be experiencing the same challenges in stocking your retail space and/or office. And with labor strikes stopping some supply chain activities altogether, these disruptions may not be entirely predictable.

2. Retailers and Manufacturers May Be Slapped With Oversupply Challenges

Shortages have been the dominant storyline related to supply chain issues over the past few years. But as those backlogs catch up, suppliers and retailers are facing new problems on the opposite end of the supply chain spectrum: excess inventory and oversupply.

The reasons for this specific problem are complex. While suppliers have been working hard to catch up with demand, this recovery has taken place precisely as demand for certain materials and supplies has declined.

Inflation, combined with shaky consumer confidence and scaled-back spending, has reduced consumption across many verticals. Many retailers have been dealing for months with challenges related to oversupply, and have struggled to sell off this unwanted inventory.

Increased economic uncertainty, including the possibility of a recession in 2023, may exacerbate these inventory headaches and strain retailers caught between their product suppliers and their shifting customer preferences.

3. Material Shortages are Likely to Persist

Along with labor shortages, some industries continue to struggle with acquiring the materials they need to support core operations and services.

A domestic shortage of microchips, for example, is creating significant strains on certain industries: the automotive industry is experiencing supply chain disruptions and backlogs that are expected to persist for years, even after the passage of legislation to increase microchip production in the U.S.

It’s also possible that global availability of certain materials, including those coming from Russia and China, may be in short supply or only sporadically available—not only in 2023, but possibly longer.

4. Despite These Challenges, Supply Chains Should Normalize Over Time

Today’s supply chain difficulties are a strain on businesses of any size, but particularly local businesses struggling to acquire inventory and maintain consistency in their overall brand experience. But in spite of the persisting challenges straining global supply chains, there’s widespread optimism that a greater sense of normalcy will be achieved in 2023.

Assuming that inflation cools down and inventory availability is rebalanced, businesses should be set free from the seesaw of material shortages and surpluses, even if an economic recession does occur. Meanwhile, a more stable labor market is expected to make it easier for businesses to control their labor costs and attract qualified workers to their open positions.

As your business waits out this supply chain instability, don’t overlook the importance of investing in brand and revenue growth through your digital ad strategy. Cox Media’s experts can help your business improve its recruiting efforts and stabilize revenue generation even in the face of supply chain uncertainty.

Contact us today to see how we can help.