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Resources  /  Blog  /  5 Challenges Facing the VPs of Supply Chain & Manufacturing in 2023
Thought Leadership

5 Challenges Facing the VPs of Supply Chain & Manufacturing in 2023

July 18, 2023

If you thought supply chain and manufacturing challenges would be the least of your worries going into 2023, you’re either a resilient optimist or spent the last three years living under a rock. Unfortunately for supply chain and manufacturing executives, disruption is still the name of the game.

While the problems might have changed, make no mistake — the industry is in the midst of 2023’s post-pandemic, pre-recession fog. So much is up in the air, and without the right awareness and counter-strategies in your back pocket, you might end up getting swept up in the wave of change rather than riding it out. 

In this blog we’ll outline five of the most common supply chain and manufacturing challenges in 2023 for VPs, what they mean for the industry as a whole, and how predictive procurement tools using AI and machine learning are emerging as the most effective way to keep up with the ongoing disruption.  

What Problems Are Manufacturing & Supply Chain Leaders Experiencing?

Both accessing and manufacturing critical materials in 2023 is proving to be difficult. Between volatile geopolitical environments, increasing regulations, and shifting consumer demand, economic uncertainty is hitting various areas of the supply chain and manufacturing industries hard. Let’s break down five common challenges executives are likely facing.

1) Logistic Issues

Logistics are no exception when it comes to facing rising costs in 2023. As the cost of fuel and labor increases, timely product arrival and keeping customers satisfied is becoming more difficult to deliver (literally). Just look at Amazon’s slower delivery times — if the logistics giant can’t keep up, who can?

people in warehouse looking at something

2) Cost Control 

Ultimately, each issue above plays into the biggest challenge facing supply chain and manufacturing leaders in 2023: rising costs. To put it quite simply, it’s a little bit of everything, and it all adds up over time. Rising material prices, operational costs, transportation expenses, and manufacturing delays are putting profitability at risk. 

3) Manufacturing Constraints

The three most impactful areas driving manufacturing constraints are people, materials, and equipment. Sourcing material is still proving difficult in 2023. While that’s not necessarily anything new, growing labor shortages are adding even more pressure to an already difficult situation. 

4) Inflexible Operations & Labor Disruptions 

As inflation continues to fluctuate in 2023 and beyond, so too will customer demand. When operations are ill-equipped to respond to such changes, the ability to adapt to changing market demands can become a real problem for manufacturers and supply chains. 

In addition, your ability to be flexible is also dependent on your ability to supply labor — something that’s becoming more difficult. For example, more unions are disrupting port operations, adding to already existing problems like data standardization, excessive dwell fees, and other operational issues. This spells big problems for businesses who rely on such ports for their supply chains.

5) Shortages

Supply chain and manufacturing practices are only becoming more globally interconnected as leaders use outsourcing as a method to cut down costs. Therefore, material shortages in one area inevitably means material shortages in another. Ensuring a steady flow of materials and components is being made even more challenging by long lead times. In summary, shortages aren’t going anywhere.

To avoid death by a thousand paper cuts (or costs), executives need to consider streamlined methods to enhance efficiency, optimize resources, and make sure the vast quantities of internal data is working for them rather than against them. Arkestro’s Predictive Procurement Orchestration (PPO) software is one way to get more done with less.

How the Manufacturing & Supply Chain Landscape Is Changing

Between increasing energy costs and price surges of key inputs, global corporations with manufacturing and supply chain operations are re-evaluating the status quo on just about everything in order to optimize for future disruptions. For example, more manufacturers are considering onshore operations over friendshoring and nearshoring as a way to cut down on storage and transportation costs.

Additionally, customization is becoming an increasingly important factor when it comes to manufacturing. Many online retailers want differentiated products and smaller quantities to better deliver to customer segments. The question for manufacturers is how they’ll keep up with this need while protecting their operations from disruptions.

Whereas stability and ease of operations were themes of decades past, the future of supply chain and manufacturing lies in agility, flexibility, and resiliency. How can industry executives keep up? By meeting challenges with innovation. Namely, using automation, AI, and machine learning to improve processes and cut down costs.

Here are several ways technology is evolving to meet shifting supply chain and manufacturing needs:

  • Data sharing is connecting and optimizing everything from manufacturing to warehousing to logistics.
  • Embedded analytics and AI is making real-time reporting and interactive data visualizations a reality. 
  • Demand forecasting is becoming more accurate, improving procurement spend through order data and real-time market analysis.

In order to prepare for the future, embracing technological advances is key. Without more powerful tools to lead out on problems that aren’t going away anytime soon, company leaders will have a hard time keeping up. That’s where Arkestro comes in. 

hands on keyboard

How Predictive Procurement Orchestration (PPO) Alleviates Manufacturing & Supply Chain Challenges

Investing in digital technology is the easiest way to start alleviating your supply chain and manufacturing challenges. Don’t take our word for it — 80% of CEOs are using digital tools as a method to counter economic pressures. Plus, 36% of manufacturers experience “above-average business value” from spending on digitalization compared to peers who don’t.

If you want to drive growth and profitability, embracing future-ready solutions is the only way to capitalize on the current market rather than fall behind. Arkestro’s Predictive Procurement Orchestration (PPO) software can help. 

Here are just a few of the ways Arkestro can mitigate the supply chain and manufacturing challenges facing executives in 2023:

    • Predictive Procurement Orchestration (PPO): Harness the power of the data around you to gain insights that drive real action.
    • Predictive Insights: Quickly identify opportunities and risks, extend your reach but not your headcount, and get forward looking alerts.
    • Predictive Execution: Create competitive context, quickly manage exceptions, and automate the ordinary to ensure optimal spend.

    David Schultz, VP, Chief Supply Chain Executive at Westfall Technik, says: “PPO allows Westfall to get the best pricing from preferred suppliers on favorable terms more frequently. That’s a great value proposition from where I sit.” Discover how the international plastics manufacturer leveraged Arkestro to speed up their procurement processes and saved 18% from an incumbent supplier within 72 hours of implementation!

    people in lab

    With Arkestro in your toolbox, your supply chain and manufacturing problems won’t loom quite as large. Our platform uses machine learning, AI, and game theory to ensure you’re saving money, optimizing your processes, and learning for next time. Learn more about PPO and Arkestro here.