2023 Supply Chain Planning Playbook: 10 Key Trends Shaping Global Trade

1. Taking a Closer Look - Analyzing the State of Your Supply Chain

Today's complex supply chains comprise inventory in motion with stakeholders, goods, and systems interspersed around the world. Realizing the full impact that comes with aligning your shipping systems will position your brand for long-term stability and success.

While there has been a lot of buzz about robotics and automation, better and newer technology and increased visibility have been the most significant drivers of competitive advantages. Retail and e-commerce brands, in particular, are increasingly investing in better shipment tracking technology, ERPs, and forecasting tools.

As Bernie Hart, VP of Customs & Trade Business Development at Flexport, notes: "The Frankenstein approach of supply chain operations executing on multiple cobbled-together systems and processes will continue to be a significant bottleneck. Visibility at a SKU level is a requirement from placing the order to final delivery."

Whether businesses are shipping fast-moving consumer goods for the first time or have established trade lanes, they can benefit from reliable, SKU-level data in real-time. To use that data effectively, your entire supply chain must function as an efficient, well-oiled machine and quickly adapt to new and existing challenges.

Breaking down inefficiencies is especially important to combat market volatility. We expect a turbulent market in 2023 as demand and supply try to find an equilibrium, all with a potential backdrop of a worldwide recession.

As brands continue to grapple with global instability, material shortages, and geopolitical shifts, macroeconomic risk management will become an integral part of planning tools and processes. Now is the time to question if you have visibility into potential risks, strategies for mitigation, and flexible compliance requirements that can grow with your business in 2023.

To best position your brand in a time of unpredictability, industry experts encourage prioritizing freight forwarding partners that bring technology-driven strategies and end-to-end solutions, all connected via an easy-to-use platform to help you ship, scale, insure, track, and deliver shipments—24x7.

2. Resilience is the Goal. Flexibility & Maximum Optionality are the Keys

Companies can optimize and increase resilience and profitability—and in turn their bottom lines—by redesigning their supply chains to be more flexible, agile, and responsive to market changes. Traditional planning approaches limit flexibility in global supply chains, making it hard to respond quickly to changes in customer demand, market shifts, and economic downturns.

Leaders from multiple departments, including operations, sales, sourcing, and marketing, should get together with the logistics team regularly to set realistic goals and mitigate potential risks. This requires company-wide visibility into new and historical data and a deep understanding of the company's supply chain capabilities, sales forecasts, and budgetary constraints.

As Lisa Anderson, President of LMA Consulting Group, Inc., advises: "Shippers should prioritize the SIOP (Sales, Inventory, and Operations Planning) process to remain resilient to changing conditions, while improving customer service, profitability, and cash flow."

True supply chain flexibility means you can easily adjust production levels, raw-material needs, and transportation modes to allow for quick pivots when the unexpected occurs. Supply chain professionals must be able to glean timely, business-critical insight from large volumes of data without having to increase headcount or overheads. Building this type of flexibility into your supply chains allows you to easily scale to meet the needs of your customers, suppliers, partners, and investors.

Identifying the right mix of shipping routes and methods to help you prevent delays is key to avoiding more stockouts and surpluses. Need something shipped in a hurry to hit peak season dates? Use air for your top SKUs, so you don't sell out of your top products. Air Freight offers shipment-level GPS tracking, in-person escorts and geofencing, and the ability to course correct exceptions faster.

Make sure you work with a forwarder who can help you course correct, alongside your team, to rebook or resolve and reduce delays.

3. Supply Chain Data Isn't Just for Logistics Teams

When companies have the technology and processes to enable cross-team collaboration, it helps them maximize supply chain efficiency and responsiveness. The data silos created by stakeholders in traditional supply chains—dominated by the use of spreadsheets and emails to communicate between teams—mean that there's no easy way to get the overall picture of an order's status.

Anders Schulze, VP & Global Head of Ocean Freight at Flexport, emphasizes: "It's hard to prepare for an event like a global pandemic, but if different teams are on the same page with streamlined workflows, you can mitigate bottlenecks faster."

Flexport's internal data shows that as many as 25% of customer shipments are impacted by late or missing paperwork. Late or incorrect submission of documents, such as the Commercial Invoice, Packing List, and the House Bill of Lading will block or delay Customs clearance, and as a result, delay the final delivery to your warehouse or retail location. By tracking communication and documentation end-to-end, from supplier to customer, all in one place, you're better positioned to work together to find ways to improve these processes.

This lack of cross-team data access can also impact the business in other ways. For example, lenders are increasingly requiring a lot more due diligence to offer financing to small businesses, and without detailed reporting on the health of a brand's supply chain, your finance team will find it almost impossible to secure cash flow in today's lending market. A logistics platform and processes that allow for sharing of shipment data, declared values, customs filings, and more helps your finance team better position your brand for a loan with fast turnaround times.

4. Better Demand Planning and Flexible Insurance for the Win

Brands are dealing with different sides of the same coin where they can't strike the balance between too much and too little inventory. Either way, the common factor remains—retailers are not stocking the right quantity of the right products. Better demand and inventory planning tools are changing the game for brands as the global pandemic made it painfully obvious that traditional forecasting models weren't good enough for these turbulent times.

Lisa Anderson, President of LMA Consulting Group, Inc., notes: "Executives realize they must gain better control over their end-to-end supply chain to serve customers, meet business objectives, and successfully navigate external conditions."

Companies need better, faster, and more accurate ways to predict what comes next and to find creative ways to respond faster to shifts in demand and spending.

What does this mean for smaller e-commerce and retail businesses that don't have abundant warehouse space to store next year's inventory? In situations like these, experts recommend you start by addressing your business' forecasting accuracy.

There were many unavoidable and unpredictable incidents in supply chains over the last three years. With larger container ships, longer transit times, unpredictable pandemic lockdowns, cyber threats, and political turmoil, your goods are increasingly at risk. In Q4 of 2020 alone, two cargo ships experienced heavy weather and lost 1,900+ containers. In 2018-2019, there were 425 ship fires that led to cargo loss and damage.

Ryan Horrocks, Sr. Business Development Manager at Flexport, emphasizes: "It's not a matter of IF unexpected loss or damage occurs, but when. I cannot stress enough how important it is to be adequately prepared. Cargo insurance is a great start."

The issue isn't how often it happens; it's the financial impact of that event. If an entire season of goods is in one shipment, the loss could be devastating for your business. If you don't have a flexible insurance plan, your only recourse is carrier liability which is generally very limited. Spending a few hundred dollars now can potentially save you tens of thousands should the worst happen.

5. Brands Are in Savings Mode, Looking to Lower Total Landed Costs

The last three years have been a stressful, crazy rollercoaster ride for logistics professionals. First, inventories dropped to historic lows, which led to inconsistent product availability for online and in-person shoppers alike. Now, brands face stock overages with limited warehouse space and plummeting ocean shipping rates coupled with inflation and a steep decline in consumer spending.

Anders Schulze, VP & Global Head of Ocean Freight at Flexport, observes: "We have moved from an environment with 20% more demand than supply, to a new world where there's 20% more supply than demand. This is a massive opportunity to save costs at every leg of the supply chain."

Logistics professionals wear many hats–all day, every day. Working as a CEO/COO/VP of Logistics/CXO/Head of Recruiting doesn't leave a lot of time for actual logistics planning. And since supply chains have only gotten more complex and expensive, it's important to wear all your hats to find ways to cut costs. Brands often narrow their focus to freight rates, overlooking other ways to save.

With current inflation rates and predictions for a long-term recession, it's no surprise that businesses are taking a step back to reassess logistics operating costs, order management, and overall landed costs in 2023.

Several brands are relying more on air freight in 2022 to stock up on high-demand SKUs, a strategic decision that's more business-critical than cutting shipping costs. Instead, companies may benefit from selectively trimming expenses where possible, while refocusing capital where it can ensure long-term resilience and growth.

There are other areas of savings that can help. For example, Duty Drawback is a great way to reclaim money for your business. This U.S. Customs program allows companies who export a portion of their sold products to receive huge refunds on tariffs.

6. The Case for Nearshoring & Reshoring - Will This Reshape Trade?

The past few years have shown shippers how difficult it is to navigate unprecedented challenges that impact cross-border movement of materials and goods. Some brands are exploring nearshoring and reshoring to mitigate supply chain risks and respond faster to potential disruptions.

Matt Koivisto, Director of North American Trucking Procurement at Flexport, advises: "If the last few years have taught us anything, it's to plan for the worst and work towards building a robust supply chain that can withstand regional and global crises. Now is an ideal time to move sourcing closer to home."

According to a recent survey by ABB's robotics and automation division, 70% of U.S. manufacturing companies plan to establish or relocate production capacity, their customers, or potential buyers closer to home. In a study from Kearney, 92% of executives express positive sentiments toward reshoring, and 79% of executives who have manufacturing operations in China have either already moved part of their operations to the United States or plan to do so in the next three years, and another 15% are evaluating similar moves.

What we've seen in reality is that the reshoring trend has been moving very slowly due to various hurdles brands need to overcome. Compared to other locations, Asian manufacturing hubs are still the most cost-effective in terms of production.

In addition to the cost factor, moving manufacturing or tier 1 supplier relationships closer to home may not increase resiliency. Ultimately, shippers still have to balance costs with other dependencies and supplier expertise in their end-to-end supply chain network.

7. The Biggest Challenge and Opportunity for Brands is Visibility

Every segment of the global supply chain has taken a hit over the last couple of years. If it wasn't port labor issues, it was the Suez Canal blockage. And if it wasn't the delays caused by the COVID lockdown, it was consumer demand for goods over services that surged in 2021 driving an unprecedented volume of shipments, port congestion, and significant delays across every step of the supply chain.

Tom Gould, VP of Global Customs & Trade at Flexport, states: "The biggest logistics challenge or opportunity for brands in 2023 is visibility. Both supply chain visibility as finished products move from shipper to importer, and product traceability 'from dirt to shirt'."

Investing in a logistics tech platform/stack that enables you to make confident decisions–and that can grow with your business–is now a must-have for shippers. In an industry dominated by spreadsheets, emails, and phone calls, it's challenging for a small business or e-commerce company to stay on top of keeping SKUs in stock and keeping customers up-to-date on their order status. You need real-time data and visibility into every step of your supply chain—from purchase order to final delivery—so you can make decisions even after your goods are en route.

Small businesses polled by Gartner cite "enhanced decision-making potential" as a driving factor in supply chain technology investment. For example, the ability to access self-service data on transit times with only a few clicks can help your team plan which route and/or mode to use for which SKUs. The increased complexity of modern supply chains also calls for better analytics to help you stay in front of future unknowns.

8. Sustainability is Now a "Must Have" for Supply Chain Leaders

For businesses of every size, the need to make real strides toward a more sustainable supply chain has never been more pressing. Climate change and its ties to shipping and the retail industry are well-known. There is a fundamental shift in millennials' preference toward eco-conscious brands. This cohort wields more spending power than any before it, and they're buying according to their values.

By 2030, the collective income of millennials worldwide is expected to top $4 trillion. 75% of them consider it important that a brand gives back to society, and 52% say they'll be loyal to brands that align with their values.

New and upcoming legislation is also shifting towards further transparency and responsibility. Multiple legislative changes in the U.S. now require some brands to start tracing and reporting the climate and social impacts of their supply chains and other operations. This is changing the way businesses account for supply chain transparency and responsibility, and more states may follow suit.

While every organization's emissions footprint will look a bit different, a rough breakdown may include:

• Transportation/logistics (including upstream and last mile)
• Manufacturing (rethink the production process of goods)
• Packaging (can you use more recyclable, reusable, reduced weight packaging, etc.?)
• Energy efficiency (in all owned buildings including offices, warehouses, retail stores, etc.)

Ultimately, net zero planning needs to be bigger than carbon neutrality, including a reduction of all greenhouse gas emission types. The component of reducing impact, rather than just offsetting it, is what makes this approach different. For shippers, there are competing interests. Moving cargo quickly and reliably is key to business stability and growth, but there's no such thing as greenhouse gas-free shipping yet, so companies need to be intentional about climate impact.

A rising industry expectation that will shape the future of shipping is supply chain "circularity," which focuses on squeezing out every bit of value from materials and resources. This approach forces brands to dramatically shift their strategy from a linear one-time use of materials to an indefinitely looped life cycle by connecting waste and by-products from various processes to other raw material needs.

9. Supply Chain Automation Technologies Are Here to Stay

For over a decade now, sellers, 3PLs, freight forwarders, manufacturers, and ports have been increasing their use of AI, Robotic Process Automation (RPA), and warehouse robots to make supply chains safer and more efficient. A 2022 survey by the B2B magazine Modern Materials Handling reported that 53% of survey respondents said that spending on automation and systems will increase this year.

Zeid Houssami, VP & Global Head of Air Freight at Flexport, predicts: "Tomorrow's supply chains will look much more sophisticated as executive leaders learn from being unp