Supply Chain Stability Improving Despite Ongoing Challenges: Study

Research from the Association for Supply Chain Management (ASCM) and KPMG LLP suggests a complete return to pre-pandemic normalcy remains unlikely in 2024 though.

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Annika AdobeStock_589591429

2023 was a year of tremendous improvement and increased supply chain stability overall, with several variables still driving continued fragility. However, research from the Association for Supply Chain Management (ASCM) and KPMG LLP suggests a complete return to pre-pandemic normalcy remains unlikely in 2024.

"While supply chain challenges do persist, the overall return to increased levels of stability is a testament to the incredible efforts of countless supply chain professionals,” says ASCM CEO Abe Eshkenazi. “The Index continues to confirm that people make all the difference. We must continue cultivating supply chain talent to mitigate disruptions, build resiliency and drive growth.” 

“Geopolitical factors have posed risks to the logistics sector, leading to disruptions in distribution, transportation, and capacity,” says Brian Higgins, principal, customer and operations, KPMG LLP. “It is important to continuously monitor and adapt to the complex geopolitical landscape, as well as pay close attention to emerging technologies, such as generative AI, that are critical in the future success of supply chain management.” 

Key takeaways:

 

  •  Factors that have contributed to recent instability include cross-border patrol closures between United States and Mexico, trade corridors and rising conflicts leading to commercial ship attacks in the Red Sea. However, there are also positive signs such as greater nearshoring efforts in Mexico and Canada, reducing reliance on other regions.  
  • Inventory levels, inflated during the pandemic, are now strategically decreasing throughout the supply chain, indicating a shift toward optimized inventory management.
  • Lower unemployment rates and increased automation adoption are key factors contributing to this evolving trend.
  • Geopolitical tensions persist, disrupting the global movement of goods, notably impacting ocean freight, especially between Asia and the European Union, and to a lesser degree, the United States.

“Even though the Supply Chain Stability Index shows a reduction in operations instability throughout the year, there are still challenges such as cross-border patrol closures and conflicts leading to commercial ship attacks. While a complete return to pre-pandemic normalcy in 2024 is unlikely, there are positive developments such as the comeback of just-in-time inventory strategies and a slight easing of competition for talent in the labor market. However, the logistics sector still faces significant challenges due to geopolitical factors and volume fluctuations. It is important for supply chains to remain vigilant and adopt resilient strategies for continued progress,” says Jim Lee, supply chain AI leader at KPMG LLP.

"As we navigate the complexities of modern supply chains, having actionable insights is paramount and this Index helps shed light on risks that remain as well as areas of progression. For example, we’re now seeing just-in-time inventory strategies making a comeback and the competitive talent market beginning to ease, thanks to the effective use of technology," says ASCM EVP of strategy and alliances Douglas Kent. “We must continue to leverage data to monitor and adapt to the complex and ever-evolving supply chain landscape.” 

 

 

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