Supply Chain Stability Index: “Tremendous Improvement” in 2023

The Association for Supply Chain Management (ASCM) and KPMG released the latest data from its Supply Chain Stability Index, designed to help supply chain professionals understand the stability of US operations and act as a barometer for the global supply chain community. The results show 2023 as a year of tremendous improvement and increased supply chain stability overall, with several variables still driving continued fragility.

The report suggests a return to pre-pandemic normalcy is unlikely in 2024 due to factors such as cross-border patrol closures between U.S. and Mexico trade corridors, and rising conflicts leading to commercial ship attacks in the Red Sea. There are still reasons for optimism, however, such as greater nearshoring efforts in Mexico and Canada, which helps reduce reliance on other regions.

“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,” said 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.”

Brian Higgins, Managing Director at KPMG, added, “Geopolitical factors have posed risks to the logistics sector, leading to disruptions in distribution, transportation, and capacity. 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.”

Keys to improvement

By adopting best practices, leveraging digital technology, and developing workforce skills, top companies can separate themselves from the competition.  

Other key themes companies should pay attention to:

• Inventory optimization: Inventory levels, inflated during the pandemic, are now strategically decreasing throughout the supply chain, indicating a shift toward optimized inventory management. Purposeful efforts across all nodes in the supply chain are leading to improvements in inventory.
• Automation and the future of labor: The competition for talent, notably for entry-level roles across the entire supply chain, persists, albeit with a slight alleviation from the previous intensity. Lower unemployment rates and increased automation adoption are key factors contributing to this evolving trend.
• Ongoing logistics challenges: 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. These factors underscore ongoing residual risks within the sector.

“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,” added ASCM Executive Vice President of Strategy and Alliances Douglas Kent. “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. We must continue to leverage data to monitor and adapt to the complex and ever-evolving supply chain landscape.”

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