Why 70% of Supply Chain Leaders Are Still Experiencing Challenges

If you’ve been listening to reports coming out throughout 2023, you might have gotten the impression that the supply chain crisis of the past few years has been significantly easing. According to DispatchTrack’s new Supply Chain Perspective report, however, things aren’t quite that simple. It turns out that 70% of delivery organizations are still experiencing supply chain challenges as of the first half of 2023.

That’s not to say that everything is doom and gloom—on the contrary, nearly two-thirds of respondents reported having a positive outlook for the rest of the year. But reports of supply chain harmony have been somewhat exaggerated, and supply chain leaders have been grappling with inventory issues, cost increases, and other challenges. All this is putting businesses in a position where they know they need to adapt quickly.  

How are they thinking about those challenges, and what do they plan to do about them? Read on to find out. 

What Are the Top Supply Chain Challenges for 2023?

Though a significant majority of businesses said that they were still experiencing challenges, there was no universal consensus as to what the top challenge was. More than half said that fuel costs were still one of their top issues, but beyond that there were no other challenges that were causing issues for more than 50% of respondents. Here’s the full breakdown of significant challenges. 

• fuel costs (59%)
• inflation (46%)
• delays outside of their control (41%)
• unpredictability (38%)
• driver shortages (32%)
• losing business due to the economy (30%)

Looking ahead to the next 6 months, the proportion of respondents concerned about the various challenges was similar:

• fuel costs (51%)
• losing business due to the economy (48%)
• inflation (44%)
• unpredictability (33%)
• driver shortages (32%)
• delays outside of their control (31%).

If there’s an overarching theme here, it’s this: just because a particular supply chain issue drops out of the news, that doesn’t mean it’s been magically solved for most logistics operators. Things like the driver shortage and inflation have been plaguing businesses in this area for years, and long-term fixes haven’t really come along for most businesses. 

Of course, different challenges impact businesses differently. To wit, our study found that about two-thirds of businesses were still grappling with supply issues—but they were split on whether they were experiencing oversupply or shortages. Sometimes, these kinds of inventory issues stem from the same kinds of uncertainties upstream in the supply chain.

It should also be noted that while there isn’t exactly a consensus on what the most significant supply chain challenges are, the top two responses (fuel prices and inflation) both had to do with cost. In many cases, the driver shortage can fit into that bucket as well. Simply put, the supply chain chaos of the past few years has left a lot of businesses wondering how they’re going to continue grappling with delivery costs that are in many cases much higher than they were in years past. To wit, 62% of respondents expect operating costs to be 10% to 20% higher this year than in past years.

Where Are Supply Chain Leaders Focusing Their Efforts for the Coming Year

With costs rising and supply chain chaos continuing apace, what are delivery organizations doing to combat these challenges? For one thing, many of them (40%) plan to raise their rates to keep up with inflation. A few (10%) plan to limit warehouse space to counterbalance inflation. 

But by and large the respondents to our survey were looking towards the future and thinking about potential investments to help make their operations more resilient and cost-effective going forward. 

Here are the top areas of focus for the rest of the year:

• increase technology usage or adopt new solutions (57%)
• hire more drivers and increase delivery capacity (55%)
• add additional warehouse space (31%)
• invest more in sustainability initiatives (23%)

Hiring more drivers is obviously easier said than done, but the fact that the majority of businesses are trying to increase their delivery capacity does at least suggest that high levels of demand are going anywhere anytime soon. And increasing technology usage hopefully indicates that more and more businesses are working to find ways of making their delivery processes more flexible and more resistant to the kinds of challenges we’ve been talking about. 

Sustainability initiatives were lower down the list, but previous DispatchTrack reports have shown that there is an interest in green logistics practices in delivery industries. While increasing efficiency in say, fuel usage, can be a way to become more sustainable while simultaneously addressing cost pressures, it’s possible that the current supply chain uncertainty is bumping down green logistics on the list of priorities for many businesses. 

Tactics for Overcoming Supply Chain Challenges

There’s no one-size-fits-all approach that’s going to magically mitigate the kinds of challenges that modern delivery organizations are under. At the same time, there are tactics and technologies that can make a big difference for individual challenges. 

Fuel costs

One of the best ways to fight rising fuel costs is simply to drive fewer miles. How do you make this happen? By leveraging AI-powered route optimization to ensure that you’re running the most efficient possible delivery routes. In this way, you can potentially reduce fuel costs across your operations by more than 10%.  

Inflation

When it comes to fighting costs more broadly, you need an even broader approach to efficiency gains that goes beyond route optimization. For instance, you can potentially reduce delivery costs by overhauling your customer communications. If you can send real-time delivery notifications before, during, and after the day of delivery—and even offer customers a live delivery tracking portal—you can significantly cut down on costly where’s-my-order-calls. If you offer customers the ability to self-schedule their own deliveries, you can reduce expensive phone time even further and potentially decrease not-at-homes (since your customers are less likely to miss deliveries in time slots that they’ve chosen themselves). 

Driver shortages

Reducing miles driven via route optimization can help with this—since you’re more effectively able to maximize your delivery capacity. But empowering your existing drivers is just as important. Most last mile delivery drivers have a tough job, and historically it’s been difficult to give them the tools they need not just to succeed but to document their success. This can result in drivers getting blamed for failed deliveries or damages that weren’t their fault, which is obviously bad for morale and can lead to turnover. To combat this, you can equip drivers with a mobile app that enables them to document their delivery runs with time-stamped and geo-stamped pictures, notes, and proof of delivery. This way, if your driver shows up at a delivery site and there’s actually no one there to receive the delivery, they can prove that they were in the right when the customer calls to complain. Little things like this can really add up when it comes to retaining drivers. 

Delays, unpredictability, and losing business due to the economy

You can’t exactly plan for the unexpected—but you can make sure that you’re flexible enough to respond efficiently when the unexpected arises. By the same token, there’s no reliable way to predict the impacts the economy might have on your business, but you can prioritize resilience and agility so you can weather any storms that arise. 

In practice, there are few ways to approach this:

• Future-proof your technology by pivoting towards cloud deployments and AI-powered technology.
• Prioritize visibility before, during, and after deliveries in order to create strategic intelligence about your entire delivery operation.
• Ensure robust reporting so that you can get insights into your operations as needed and proactively identify areas where you might be vulnerable to disruption. 
• Identify ways to optimize your transportation network (e.g. where your distribution centers and warehouses are located relative to delivery sites) so that you can serve customers more efficiently overall.

Again, no single technology or best practice is panacea. But as businesses looking ahead to the remainder of 2023 invest in technologies to help them weather the storm, they should keep in mind all the ways that the right delivery management tools can make them more resilient, agile, and intelligent.