Despite signs of lessening port congestion in the U.S., several recent surveys conducted with supply chain professionals show that economic conditions, rising inflation and global tensions prevent a return to normal.

Carl Marks Advisors
(supply chain unlikely to stabilize until first half of 2024 or beyond)

A recent survey of supply chain executives conducted by Carl Marks Advisors in partnership with SupplyChainBrain found that more than half of the total respondents do not expect a return to a “normal” supply chain until the first half of 2024 or beyond, while 22 percent said that they expected disruptions to continue until the second half of 2023. Respondents also said they see threats clouding the landscape and complicating a return to a reliable supply chain, most notably the war in Ukraine, 30 percent and labor concerns, 24 percent.

The survey, conducted from May 20 to June 10, included responses from 107 U.S. supply chain executives across various industries.

In the survey, 75 percent of respondents said supply chain issues had negatively, or very negatively, impacted their company revenue. Eighty percent said their supply chain costs had risen by 20-to-60 percent between December 2020 and December 2022. Ocean shipping was the leading broken transportation and logistics link, at 68 percent.

While companies implemented a change to mitigate the impact of disruptions, including keeping more inventory (30 percent), diversifying suppliers (27 percent) and using alternate ports (14 percent), they have struggled to manage the cost of these new initiatives, with 55 percent of respondents saying their companies had to absorb more than a quarter of supply chain cost increases.

Looking ahead, more than two-thirds of supply chain executives said they were “very concerned” that the U.S. economy could tilt into a recession over the next 12 months due to rising interest rates, high inflation and geopolitical uncertainty, and a resultant pull-back in consumer confidence. When asked what “magic levers” could bring supply chain costs under control in 2022 and help mitigate uncertainty, ending the war in Ukraine (32 percent) and lowering fuel costs by 20 percent (31 percent) were the leading responses.

“With no apparent end to the Ukraine conflict in sight, we would expect fuel costs to continue to put pressure on supply chains for the remainder of the year and possibly beyond,” said Peter Keogh, managing director, Carl Marks Advisors. “Moreover, with the U.S. economy potentially entering a recession, we could see an extended period of uncertainty.”

(supply chain could worsen before getting better)

QIMA’s June 2022 poll of more than 400 companies with international supply chains showed that 95 percent had felt the impact of disruptions in 2022, and at least two-thirds of companies expected they would continue, or worsen, by the end of 2022.

QIMA, a global quality control and compliance service provider, found that with the ongoing sourcing diversification, brands and retailers have focused on forging stronger relationships with suppliers and appreciated the value of reliable sourcing partnerships in tackling the endless supply chain challenges.

Asked to rank the Top 3 supply chain challenges, the Top 5 responses from the survey were:

  1. keeping to production and shipping schedules, cited by 71 percent;
  2. forecasting demand and managing inventory, 50 percent; 
  3. securing manufacturing capacity, 46 percent; 
  4. ensuring product quality, 38 percent; 
  5. getting visibility into the supply chain beyond Tier 1 and communicating with suppliers, both at 26 percent.

Efforts to decrease reliance on China continue, especially in the wake of the 2022 COVID-related lockdowns in the country. Respondents, asked to rank 2022’s most impactful supply chain disruptions, the number one answer was logistics and port disruptions, cited by 76 percent of respondents, followed by China COVID factory lockdowns, 61 percent; rising raw materials/commodities costs, 56 percent; raw material shortages, 46 percent; and rising labor costs, 28 percent.

(driving efficiencies, reduced costs, top supply chain priorities)

PwC Digital Trends In Supply Chain Survey 2022 found increasing efficiency, cited by 63 percent of respondents and managing or reducing costs in supply chain operations, cited by 58 percent, topping the priority list for the next 12-to-18 months.

Rounding out the Top 5 supply chain priorities were:

  1. automated processes and analytics, cited by 21 percent of respondents; 
  2. increase responsive/resilience, also at 21 percent; and 
  3. digital upskilling of employees, 19 percent.

PwC said its findings suggested that companies are focused on the bottom line in the short term. “Many companies are still in a defensive posture and not yet leaning into such actions as increasing supplier diversity and transforming procurement practices,” said PwC.

Among the supply chain issues that ranked highest for moderate or major risk factors were 

  1. securing raw materials and supplier operational issues; 
  2. supplier financial health;
  3. insufficient diversification of supplier base for critical supplies;
  4. insufficiently localized supply chain; and 
  5. the inability of suppliers to respond to technological challenges.

Eighty percent of respondents said technology investments have not fully delivered expected results, with not having the right talent and technology taking much of the blame. 

Many companies, 58 percent of respondents, see higher-than-normal turnover among supply chain employees, and 23 percent agreed that their companies have the necessary digital skills to meet future goals. Most respondents expect to change their company’s operating systems in 2023.

PwC’s survey was conducted between November 2021 and January 2022 of which 244 U.S. operations and information technology providers participated.

(supply chain disruption continues through 2023)

Procurement software firm Ivalua surveyed 233 procurement executives from manufacturing companies across the U.S. and the UK in May 2022 and found that 97 percent experienced “significant disruption” in the direct materials supply chain, with 84 percent saying modernizing supply chain processes is a strategic priority.

According to the survey, 64 percent of respondents said they were not confident the current supply chain could meet the increasing expectations of their executives, and 46 percent said they have a deep understanding of their suppliers’ capabilities and risks. Notably, 71 percent said they have had a supplier take advantage of the supply chain crisis to increase prices unjustifiably.

Nearly half of procurement executives, 44 percent, said they expect the supply chain issues to ease by the end of 2023, while 18 percent expect the supply chain disruption to reduce by the end of 2022. Notably, they said that modernized sourcing technology is more than twice as likely to save the supply chain problems and would end sooner in 2022 verses later in 2023.

Respondents indicated that the most significant gaps in their current procurement and supply chain infrastructure include

  1. lack of visibility into supplier risk,
  2. disjointed source-to-pay process due to multiple systems, and
  3. lack of spend reporting.