Page 24 - ITLN Jan-Feb 2023 for Magzter

Guest Column
Vikash Khatri

ADAPT

AUTOMATE

AGILE
KEY FOR

2023 SUPPLY

CHAIN

The rapid pace of change in the
economy, technology, and geopolitics
has led to more volatility and
unpredictability in the global supply
chain. In such dynamic environments
supply chain organisations must
realize the need for adaptation and
automation to stimulate agility.
Vikash Khatri

ast year was not a very promising year on
the global economic front. The escalation of
geopolitical issues led to disruptions on many
Lfronts ranging from food security to the global
supply chain. The beginning of 2023 is also giving
mixed signals of heading towards a recession. As per
Barclays, the world is expected to grow at a mere 1.7
percent next year, a major slowdown against 6 percent+ This decline in economic growth also has a
in 2021 and approx. 3.2 percent in 2022. Inflation has consequential impact on the logistics and supply
been also been a challenge for most countries. chain industry and will drive the sector towards more
Many economies are showing indicators to fall into a resilience. Some of the key trends of the sector may
mild recession in 2023. Few researchers have forecasted be as follow-
that global consumer prices will rise an average of 4.6
percent. Geopolitical tensions are expected to remain a Reshoring
concern and might not escalate further. Other drivers Covid-19 has given a clear message to supply chain
indicating some signs of recession include the energy leaders about offshoring and associated supply chain
crisis in Europe, policy rate hikes and the new wave risks. Recent problems in the supply chain originating
of the Covid-19 pandemic in China. Central banks from China due to the fresh Covid-19 wave, internal
are raising policy rates to contain inflation across unrest and a few external issues are leading to less
geographies. OPEC has recently downgraded the favourable situation for China. Which has resulted shift
demand estimate for oil in 2023. International Energy in the pattern of procurement to a so-called ‘China + 1’
Agency (IEA) has also estimated a balanced outlook in strategy, in which companies keep producing in China
the oil market. Similarly on the domestic front growth while moving some capacity to onshore or any third
rate will taper down in the coming year. As per the country. Most of such add-on manufacturing is moving
World Bank, Indian economy is expected to grow 6.9 to ASEAN or South Asian countries. Production units
percent in the current fiscal, which is one of the fastest are also shifting closer to customers in order to help in
growths in the world but it will decline in FY24 due to the the risk-adjusted optimisation of the supply chain. This
deteriorating external environment. trend has some negative impact on direct procurement
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