Supply Chain 2023 in 23 Images

It's hard to remember where 2022 ended and 2023 started given that many of the big supply chain stories share the same themes and threads. Here are 23 of them...

Strikes

Strikes at ports across four continents, a close shave for UPS, the acceleration of the demise of Yellow and many other actions saw unions getting much of what they demanded. The UAW took an unusual and effective approach, taking a page out of the supply chain risk manual - more on this is here.

Materials

Tesla's engineering challenges from the choice of stainless steel to manufacture the Cyber Truck made headlines but is a minor challenge compared to the those that manufacturers will face as geopolitical and environmental pressures limit access to certain materials, particularly for electrification. More on this is here.

Inventory

Retailers spent much of 2023 working to reduce inventory levels following an extreme example of the 'bullwhip effect' and now have to ensure that the right goods are in the right place at the right time for a hard-to-predict holiday season.

Social

TikTok Shop launched in the U.S. in September as an in-app shopping experience with Amazon's customers in its sights. Although TikTok has a massive lead in the 'social' side of Social Commerce, Amazon has a massive lead in the 'commerce' (supply chain) side of this. More on how this might play out is here.

Robots

In March 50,000 people descended on Chicago for PROMAT to see the latest in material handling technology. As workforce constraints grow and new delivery models (e.g Robotics-as-a-Service) emerge, automation technology is primed for accelerated growth...as long as the necessary power and digital infrastructure is in place...which it often is not. More on this here.

Headwinds

The era of 'free money' came to a close as higher interest rates, economic uncertainty, the collapse of Silicon Valley Bank, and other factors caused investors to pull back, putting significant pressure on startups, particularly those that had raised big sums at high [multiple] valuations. 2024 is likely to follow the same tune as few startups were able to raise money in 2023.

AI

Hardly a day of 2023 went by without the promise or peril of AI being in the headlines. Many in supply chain voiced frustration that the promise of AI is yet to be fulfilled but no event showed how high the stakes are and how fragile the ecosystem is as the self-inflicted meltdown and subsequent resuscitation of OpenAI.

Cyber

In November, a large-scale attack on critical infrastructure shut down port operations across Australia, prompting a backup of some 30,000 shipping containers that were unable to unload for several days. More on this attack and cyber threats to supply chains is here.

JiT

Narrow definitions of 'Just-in-Time' and the now-obvious need for supply chain resilience put JiT methodology in the cross-hairs of many commentators. In August, a production system malfunction brought Toyota's domestic output to a halt, adding volume to the 'Just-in-Time-is-Finished' chorus.

Politics

Governments across the world waded into the world of supply chain management. For some it was painful to see such a complex ecosystem reduced to soundbites; for others it was welcome and overdue for governments around the world to highlight how supply chains underpin almost every aspect of life.

Chips

Semiconductor chips were, again, are the center of geopolitics as the US administration tightened restrictions on the sale of high-performance semiconductor chips, the Dutch added export controls for advanced chip making equipment, and China added export controls on rare earths important in the manufacture of certain types of chips...to name a few. The British went as far as 'wargaming' the impact of chip supply being cut off.

China

China has been at the center of global supply chains for decades but lessons from Covid lockdowns, growing trade tensions, new regulations, rising costs, and geopolitics are causing companies to reassess their reliance upon China. The main lesson from 2023?...Moving away from China will be harder than most people assumed.

Slavery

Legislators and consumers called for action to combat modern slavery in supply chains. US importers struggled to meet the requirements of the Uyghur Forced Labor Prevention Act and, in October, the European Parliament adopted a regulation prohibiting the sale of products made with forced labour. Organizations like Hope for Justice increased engagement with global corporations as a key pillar of combatting slavery.

Reshoring

An acknowledgment that it is impossible to 'decouple' from China accompanied significant efforts by companies to 'derisk' their reliance on China. An industrial building boom in Mexico was evidence of this although much of the inputs for Mexican factories originate in China and China's direct investment in Mexico grew. South Korea's growing reliance on China for certain critical inputs in the wake of Russia's invasion of Ukraine also reflected how hard it will be to significantly reduce manufacturers' reliance on China.

India

India was projected to overtake China as the world's most populous country in April and has been hard at work to offer companies alternate manufacturing capacity to China as well as navigating geopolitical fault lines between China, Russia and The West. India is also investing heavily in necessary upgrades to infrastructure to support these ambitions.

Earnings

Earnings calls in 2023 continued to mention 'supply chain'; often as an impediment to growth but sometimes as an important element of their success. JLR went as far as to point to its investments in supply chain resilience and digitization as one reason for its success.

War

Russia's invasion of Ukraine ground into its second year, marked by stalled counteroffensives and enormous loss of military and Ukrainian civilian lives. The collapse of a deal to allow exports of grain led to Ukraine announcing a 'humanitarian corridor' hugging the western Black Sea coast near Romania and Bulgaria. More recently companies have halted Red Sea shipping amid attacks by Yemen’s Houthi militants.

Heat

2023 has been the hottest year since records began. The effects of this were seen in waves of wildfires, droughts, crop failures and infrastructure such as energy grids struggling to keep pace with demand. More here on this vicious cycle that extreme heat triggers in power supply chains.

Food

Drought was one of various factors impacting global food supply. War, protectionist policies, inflation and food waste all contributed to a growing 'polycrisis'. More on these dynamics is here.

Waterways

Drought impacted many of the world's waterways that are major arteries of regional and global trade and upon which local economies rely. The Mississippi, the Amazon, Rhine and the Panama Canal were amongst them. More here on how and why these and other waterways were impacted in 2023.

Floods

Warmer air and oceans led to more extreme weather events across the globe and where this met weak infrastructure, the impact was catastrophic, adding to the urgency for world leaders to accelerate efforts to address global warming. A Senate Budget Committee hearing in October on 'How Climate Change Threatens Supply Chains’ heard how economic and humanitarian disasters will only increase.

Electrification

A theme throughout 2023 has been decarbonization and electrification. In the closing days of the year, delegates at COP28 agreed to 'transition away' from fossil fuels. If you are looking for evidence of how human ingenuity may help us scale this steep mountain, a collection of remarkable images of innovative solar arrays is here.

Pink

It was not all doom and gloom. Greta Gerwig's Barbie movie took the world by storm and if proof were needed that 'the world is a supply chain', shortages of pink paint were reported as Barbie painted the world pink.

The Last Word

That's 23 images but it seems fitting to finish with a few wise words from Charlie Munger who passed away in November...

“It’s so simple. You spend less than you earn. Invest shrewdly, and avoid toxic people and toxic activities, and try and keep learning all your life. And do a lot of deferred gratification because you'll prefer life that way. And if you do all those things you are almost certain to succeed. And if you don’t, you’re gonna need a lot of luck.”

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