• Monday, April 22, 2024
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Trends that will shape logistics and global supply chains in 2023

Navigating Nigeria’s economic storm: Supply chain challenges addressed

We live in an interconnected world. That’s why we must care about the movement of goods and commodities from origin to consumers. It involves transportation through trucks, trains, and ships, so a disruption in these channels has a ripple effect on the economy. Global logistics and supply chains are an integral part of the global economy.

In 2021, the World Trade Organisation (WTO) reported that international trade in manufactured goods was $14.8 trillion, representing 68% of the total global merchandise. Of course, the seamless global logistics and supply chain network facilitated this value in the global merchandise trade.

I’ll wait to get the figures for 2022, but without a doubt, we all know how the pandemic and the Russian-Ukraine war impacted global logistics and disrupted the supply chains. Given the economic value underpinned by the global logistics and supply chain industries and the rapidly growing scale of these industries, especially as the globalization of trade advances, forecasting the trends that will shape global logistics and supply chains in 2023 is critical.

These trends will carve global logistics and supply chains this year.

1. GEOPOLITICAL TENSIONS

If anything, 2022 has shown that geopolitical tensions will loom large over global logistics and supply chain efforts. The Russo-Ukrainian War began in February 2022 and has spiked global inflation to unseen levels with consequences, especially on global commodity prices, including a spike in energy, agricultural products, and metal prices. This is a stark reality because Russia and Ukraine provide the origin point for 32% of the global trade in wheat, 32% of the global trade in barley, 17% of the global trade, and over 50% of the worldwide trade in sunflower oils, seeds, and meals.

Geopolitical tensions that may frame the global logistics and supply chain industry in 2023 include the ongoing China-United States Trade War, the China-Taiwan tensions, and power play in the Indo-Pacific region and Eurasia.

Despite Western and some non-Western capitals joining to vote against Russia’s aggression in the UN General Assembly, the war is far from over. Now, seeing this war is disastrous for Russia, the question is whether Putin will roll his last dice and invoke nuclear escalation. That will unsettle the globe, but I don’t think major powers will break a nearly 80-year nuclear taboo. But we can’t rule anything out and must watch geopolitics very closely because it can influence global logistics and supply chains.

2. INTERNET OF THINGS (IoT).

In 2023, it is expected that supply chain optimization will play a significant role in supply chain management and the global logistics industry. Two supply chain analysts, Jinhao Xie and Chao Chen have postulated that an IoT model can improve the effectiveness of supply chain by providing “information groups” to the process.

Supply chain experts predict an IoT-enabled supply chain and management process can reduce the Average Queue Time (AQT) of vehicles in a supply chain process by nearly seven times and the Average Waiting Time (AWT) by almost four times. Ultimately, the experts confirmed that an IoT-driven supply chain and management process could benefit many small and macro machinery industries worldwide.

It is hard to discountenance the impact and growing trend of supply chain optimization through the Internet of Things that will envelop the global logistics industry in 2023. Companies in Nigeria need to begin taxing their supply chain departments to look into enhancing their operations through IoT and not wait for the future.

3. BIG DATA ANALYTICS

Business analytics and data synthesis of logistics and supply chain management refer to applying specific advanced analytic techniques and using data to answer questions or solve problems relating to supply chain management. Given that “supply chain analytics has become a critical component of a chain’s ability to achieve its competitive advantage,” business analytics and data synthesis go to the heart and spine of agile supply chain systems in the modern world.

In a paper titled “The Impact of Business Analytics on Supply Chain Performance,” Peter Trkman, Kevin McCormack, Marcos Paulo Valaderes de Oliveira, and Marcelo Bronzo Ladeira argue business analytics can improve the competitive advantage and performance of supply chains through the assurance of critical analysis of data gathered in vast quantities regularly that sophisticated business analytics provides.

While driving home their points, the experts gave the example of large companies needing supplier evaluation frameworks that include several variables for each supplier in calculating a supplier performance score. They surmised that a large company with thousands of suppliers would need advanced business analytics procedures to implement supplier evaluation frameworks.

Indeed, data analytics will be more prominent in global logistics and supply chains in 2023.

Read also: Africa’s environment of uncertainty and its effects on supply chain risk

4. INCREASED FOCUS ON SUSTAINABLE SUPPLY CHAIN MANAGEMENT (SSCM)

Even before the Covid-19 pandemic in 2020, International Trading Enterprises (ITEs) have had to reappraise their roles in the environmental sustainability plans of their logistics and global supply chains.

In September 2019, Jeff Bezos, then Chief Executive Officer of retailing giant, Amazon, pledged that the company would be “carbon neutral” by 2030 and that 80% of Amazon’s energy use would come from renewable energy sources by 2024. In March 2020, the United States Postal Service (USPS) also began delivering its packages via emission-reducing propane autogas trucks, further cementing the shift of the logistics industry towards sustainable logistics processes. Indeed, other global logistics and supply chain powerhouses like DHL have since pivoted towards sustainable supply chain management.

As 2023 unveils, there is no gainsaying that major players in the last-mile delivery sector will introduce more programs and goals toward environmentally sustainable logistics and supply chain processes.

CONCLUSION

This is a partial list of key trends that will underlay the global logistics and supply chain industry in 2023. However, they are guaranteed to shape the industry this year. And industry players must carefully look out for these trends and incorporate them into their supply chain processes, ensuring even more competitive operations.