2023

With more Americans buying rechargeable cars — and several automakers expanding their hybrid and all-electric offerings — the automotive industry is turning to the rare earth metals market. These materials, namely lithium, cobalt, nickel and several others, are critical for manufacturing the lithium-ion batteries electric and hybrid cars need. But with such minerals already being limited in the U.S., there are growing fears that demand may vastly outstrip supply, compromising other industries that rely on such materials.

This is particularly true of graphite. Used as a lubricant for making pencil leads, heat exchangers and as a moderator in nuclear reactors, graphite has a wide variety of industrial applications. But it's also crucial to battery production, serving as an electrode both for batteries as well as fuel cells.

However, as The Wall Street Journal reported (based on Benchmark data), natural graphite is very difficult to come by these days because production hasn't been able to keep pace with demand. Indeed, at the current rate of usage, the U.S. could have a 1.2 million metric ton shortfall of natural graphite by 2030.

Brent Nykoliation, executive vice president of NextSource Materials, told the Journal that this could be a massive predicament for automakers, given how much of a traditional car battery is composed of graphite.

"Graphite always seems to be the forgotten battery material, yet it's in half the battery," Nykoliation said. "It's the largest raw material in the battery."

The typical lithium-ion battery can have up to 10 times as much graphite as it does lithium, another mineral that is needed for the manufacturing process.

Prospective buyers say the environmental benefits of EVs are fueling their interest.Prospective buyers say the environmental benefits of EVs are fueling their interest.

EV sales top 200,000 in third quarter of 2022
While electric vehicles aren't nearly as popular as traditional gas-powered automobiles, sales have intensified substantially over the last year or so — and are expected to pick up the pace as competition increases and prices diminish. Indeed, in the third quarter of 2022, over 200,000 EV were sold nationwide, according to Kelley Blue Book. That's the first time that quarterly EV sales have surpassed 200,000.

They've also gained a following among young people: A majority of 18- to 29-year-old Americans said that they're "somewhat" or "very" likely to buy an EV the next time they're in the market for an automobile, according to polling by the Pew Research Center. And among those who have considered buying an EV, close to 75% said their desire to help the environment was a major reason why.

As demand has grown for graphite, exceeding the pace with which mines can replenish the material, prices have followed suit, with a metric ton of battery-grade natural graphite selling for $812.50, the Journal reported. That's a 25% increase compared to 2020.

Automakers say that they're working with their suppliers to see what can be done to acquire as much graphite as they can and how producers can scale up output. Some are resorting to using synthetic graphite, made from petroleum. However, critics point out that the production processes involved emit massive amounts of carbon into the atmosphere, a primary contributor to greenhouse gas emissions — nullifying the environmental advantages that EVs are supposed to foster.

As any supply chain professional will tell you, managing various day-to-day operations and keeping track of everything going on in the supply chain are among the most difficult parts of the job. These tasks, combined with the increasing levels of complexity and risk that modern supply chains have had to go through, has made tracing exactly what's going on even more difficult than it had been in the past. For these reasons, many high-end supply chain organizations are investing their money into visibility solutions to get a better handle on their supply chains.

Why is visibility so important?

The most critical part of running any supply chain is ensuring you are making the best possible decisions quickly. For any organization to make clear rational choices, a vast quantity of information is needed. This kind of information can only be accessed by specific visibility solutions which can help pinpoint where inefficiencies are occurring in any transport of goods. Some of the key advantages that visibility solutions bring include:

Less risk

According to McKinsey, organizations that have implemented digital dashboards for their supply chain visibility needs were twice as likely to have avoided the supply chain issues that plagued the industry in the early months of 2022. This reduction in risk is due to the fact that organizations with end-to-end supply chains can easily determine where there is likely to be risk, or identify problem areas and work quickly to avoid them.

Higher levels of proactivity

The ideal supply chain should be proactive to risk and change rather than reactive. Having increased visibility means that your organization will be able to see issues from a lot farther off, or better understand the inefficiencies that may have existed in your supply chain for a long time without oversight. At the end of the day, visibility is all about information, and the data that you can gain from investing in a visibility solution can rapidly add value to your efforts for a more proactive and long-term sustainable supply chain.

Reduced costs

Ultimately, visibility boils down into long-term operational efficiency. The ability to make more effective strategies across your supply chain can help reduce costs associated with product sitting in one place too long, inefficient transit routes, or loss due to risk. With greater visibility also comes better reporting on risk, which can be used to help convince your insurers you deserve better rates. A well-implemented visibility solution with organizational backup can help to deliver a strong ROI for any organization involved in mid-to-large scale logistical operations.

Visibility solutions are critical for any organization looking to make a positive impact on its supply chain. Having a clear picture of what is going on across your network at all times, and using that data to create informed plans is invaluable for your business.

There have been rumors of an incoming recession for a while now. With this in mind, there's no time like the present to evaluate whether your supply chain will be able to weather the storm of another set of unfavorable economic conditions. There are plenty of challenges that a recession can bring, and having a set response for each of them could help your organization stay ahead of the competition.

Why this recession may be different

Luckily, this possibly upcoming recession is accompanied by some underlying conditions that change a lot about traditional thinking. According to a Gartner report, there's a big difference this time around, namely that today's supply chains are currently supply-constrained due to global uncertainty and the ongoing effects of the COVID-19 pandemic. This may give your organization the opportunity to finally balance out its supply with its demand and retain a much more even keel than it might be operating on today. The report goes on to say that for organizations to get ready for this possible recession, there are three things that need to happen:

  • Your company needs to identify where its resource bottlenecks are.
  • Your supply chain organization needs to evaluate where it feels it can take risks even in a down-turned market.
  • You must prepare for when the market starts to recover to thrive.

What this means for many companies is that the recession may not be as bad for them as originally thought. The clear message that Gartner is sending should be reiterated and thought about by any supply chain professional. Success comes from taking careful stock of what could happen in the future and managing your risks appropriately. Companies that understand this the best will come out of the recession as if it had never happened, and indeed possibly in a better position than they were before.

There are still steps you can take as a precaution

While the recession may not be bad for your organization, there still is no guarantee. Your company should be taking steps to ensure it isn't blindsided by a sudden change in economic conditions. Here are couple of best practices that you should follow just in case:

  • Keep a close eye on your suppliers: You might be in a good spot for the recession, but it doesn't mean your suppliers are. A supplier might suddenly fold, leaving you in the lurch. By keeping an eye on how they're doing, you'll avoid any unpleasant surprises.
  • Plan ahead: While this is the first rule of supply chain management, taking the time to understand where your organization may fall in terms of a recession will be helpful for your company in the long run.

Whether a recession comes in 2023, having clear knowledge of where your company could be vulnerable and creating plans to mitigate risk represent the best way to ensure your organization doesn't face major trials should the economic worst come to pass.

If you haven't updated your organization's cybersecurity posture yet — it's time to consider it. Supply chains are a valuable asset that malicious actors view as high priority targets as they are a central backbone to any company. Furthermore, large supply chain organizations are viewed by nation state-level cyberwarfare organizations as force multipliers for their attacks, helping them cause chaos on a widespread level. The risk of cyberattack on your organization's supply chain is only going to increase from this point forward as cybercriminals become more advanced and bold in their attacks.

Any company can be affected by cyber threats

While cyberattacks bringing supply chains to a halt isn't a new idea, Maersk and FedEx were famously shut down by the NotPetya attacks that struck the companies' holdings in Europe, as well as other organizations, for billions of dollars' worth of damage. Many business leaders are predicting even more catastrophic attacks to happen worldwide in the wake of the global instability we are facing heading into 2023.

A World Economic Forum report has recently found that 93% of cybersecurity experts and 86% of business leaders believe that an incredibly damaging cyberattack could happen within two years. This is a cause for concern for any organization running its own supply chain, or that of others — as it could cause lost business and general confusion for long periods of time.

As the supply chain space has become more digitized and reliant on technology, it has also ramped up the levels of risk that it faces. Each tool your organization uses can be compromised and could lead to your network facing serious malware, spyware or ransomware issues. Should this happen, your organization could face a loss in delivery speed, an inability to properly ship products or track those shipments and a loss of trust from your customers. Luckily for your business, there are some best practices that can be followed to mitigate the risks that you face.

Making sure your supply chain is more secure

With only 21% of supply chain executives believing that their supply chains are highly resistant to cyber threats, the time to start updating your security protocols is now. In order to get your security posture in line with what it should be, there is one main step that you should consider to ensure your company is adequately protected.

Adopt a cybersecurity framework

The first thing your organization should do is find and adopt a cybersecurity standard recommended by a governing body. A clear example of this would be the NIST framework ,which provides strong controls for organizations as well as reporting practices and requirements for a solid cybersecurity posture. These frameworks are strong tools for any IT professional to have a clear understanding of what they need to do, and how to do it — it's also very helpful that these standards are reasonably strong against cyber threats.

Selling for significantly more than they did as little as a year ago, egg prices have cracked all sort of records. While some have attributed the cost growth solely to the effects of inflation, there are a variety of factors at work, much of it having to do with diminished supply.

1. Avian influenza
Perhaps the biggest contributor to the problem is avian influenza. Otherwise described as bird flu, avian influenza is a highly contagious viral disease that has hit many poultry farms throughout the U.S.  Because avian influenza can be spread from chickens to animals, farmers have been forced to cull their flocks on the off-chance that their birds may be infected. For example, in Nebraska, a leading national producer of eggs, over 6.7 million chickens have been linked to the outbreak, according to federal data obtained by The Wall Street Journal. Colorado, meanwhile, has seen its hen population dip by 90% over the past year. Overall, at least 58 million birds (including turkeys) have died because of avian influenza, whether they were infected or culled as a preventive measure, the Wall Street Journal reported separately.

Maggie Baldwin, a veterinarian in the Centennial State, told the WSJ that the strain has decimated Colorado's poultry population — and there's no end in sight.

"One of the challenges is that we don't know why it has been able to thrive for so long," Baldwin explained. We're almost a full year into this outbreak and it is ongoing."

Egg prices are up everywhere, largely due to diminished production from chickens.Eggs prices are up everywhere, largely due to diminished production from chickens.

2. Food costs
Another contributing factor is inflation, particularly food inflation. Both the United Nations' Food Price Index (FPI) and the Labor Department's Consumer Price Index (CPI) climbed dramatically in 2022. While these respective measures have diminished more recently — down nearly 2% in December for the FPI and 0.1% for the CPI — food costs remain considerably higher than they were a year earlier.

3. Poor chicken feed quality 
Although the evidence is more anecdotal than documented, some poultry farmers have claimed  their hens aren't laying any eggs. Generally speaking, a fully grown hen lays one egg every 24 to 26 hours. But both professional and amateur chicken farmers have taken to social media and said some of their chickens have gone several months without producing a single one.

"My chickens have not laid an egg since July, and nothing's changed," said one man in a TikTok video, as reported by Evie Magazine. He added that he's seen other people on social media attest to encountering the same issue. The man further stated that production resumed after switching to a different feed that he bought from a local producer. 

The primary cause of higher egg prices is bird flu, and it's unclear when that condition will subside. The limited supply of eggs likely won't normalize until chicken flocks are replenished, which could take several more months, depending on how quickly farmers are able to bounce back and the speed with which hens grow. According to the University of Wisconsin-Madison, egg laying hens usually begin to produce eggs by the time they reach 5 to 6 months of age.


Medical equipment has been in short supply since the start of the COVID-19 pandemic. However, even as the public health crisis subsides, supply chain uncertainties persist, leading some manufacturers to reconsider some of their long-standing supplier relationships.

US dependence on Chinese medical suppliers is overblown — but still real

The United States has long been dependent on China for a range of medical supplies and equipment. While the degree of dependency is sometimes exaggerated by pundits and commentators, U.S. medical facilities still import a significant volume of equipment from China, including medicines, personal protective equipment, testing kits and more.

One report from the U.S. International Trade Commission near the start of the pandemic found that among 203 medical product categories analyzed, China is the dominant source of imports for 32 of them.

Commenting on the report, the Cato Institute concluded that, "far from suffering some sort of major 'dependence' crisis … the United States generally imports essential medical goods from a diverse (and everchanging) group of foreign suppliers."

Medical facilities in the United States consider diversifying their suppliers to offset their overreliance on China.Medical facilities in the United States consider diversifying their suppliers to offset their overreliance on China.

Slowdowns in China are concerning but limited in impact

Much of that is due to changes U.S. manufacturers and government officials implemented in the first days of the COVID-19 pandemic. As the virus swept through China and the Chinese leadership instituted strict lockdowns to combat its spread, U.S. officials worked to identify alternative suppliers and build stockpiles of key medical supplies.

Despite this diversification of medical suppliers, further COVID-19 outbreaks in China in 2022 and 2023 and the resulting manufacturing slowdowns have created shortages that individual facilities have found it difficult to address.

Officials are on guard, waiting to see how the measures taken at the start of the public health crisis will stand up to the latest closures.

"We're looking a lot for potential early warning signs in the medical supply chain for any kinds of disruptions," said one U.S. official to NBC News. "At this point, we haven't detected any current or likely disruptions, at least to the flow of drugs or devices or supplies of PPE (personal protective equipment) to the United States given what's going on in China."

Manufacturers might not be willing to wait and see

Still, official reassurances aside, some medical facilities might begin reconsidering their options, which could be a significant economic boon to China's neighbors and other suppliers.

Medical Design & Outsourcing identified Malaysia, Thailand, Vietnam, Costa Rica and Mexico as potential candidates before the pandemic, and manufacturers in other sectors are already considering moving operations to countries like India and Vietnam.

While it's yet to be seen if the latest COVID-related disruptions will lead to a complete rethink of the manufacturing relationship with China, those conversations are likely already taking place in boardrooms across the country.

As suppliers increasingly look for ways to overcome operational challenges in their warehouses, some are beginning to leverage smart warehouse technology like automation and artificial intelligence to improve the productivity of their warehouse associates and enhance their processing efficiencies.

Reflecting this trend, the global smart warehouse technology market is expected to surge over the next few years, reaching a valuation of $29 billion by 2028, according to data from KBV Research.

Popular smart warehouse technology in use today

There is an extensive range of smart warehouse solutions currently used by some of the largest (and highest-performing) companies. Among the most common are:

  • Warehouse management systems: WMS software centralizes all supplier and inventory data in a single system, giving your warehouse managers complete oversight of all fulfillment functions. Managers can use this information to make data-driven decisions about their internal processes to optimize performance and improve output.
  • Robot palletizing solutions: These machines automate the tedious and time-consuming process of packaging materials onto pallets for storage and transportation. Not only do robot palletizers drastically enhance processing efficiencies and improve production speeds, they also reduce the incidence of human error for better quality outcomes.
  • Internet of things (IoT) devices: You can equip materials in your warehouse with advanced IoT sensors to digitally track their movements throughout your supply chain. IoT devices can support your inventory management functions while giving you precise tracking information about specific items for more accurate reporting and forecasting.

As smart technology becomes an increasingly important part of daily operational procedures, expect organizations to rely on it to bolster their supply chain management strategies.

Warehouse management software could help companies transform their central tasks and processes.Warehouse management software could help companies transform their central tasks and processes.

Operational advantages throughout your company

While increasing efficiencies and improving productivity are among the primary advantages to deploying smart warehouse technology, organizations stand to experience numerous other downstream benefits as well. These include:

  • Investing resources into high-value priorities: Automating the manual, repetitive functions of your warehouse liberates your human capital and lets warehouse associates focus their creative resources on more complex problems. It also directs your limited bandwidth to higher-value priorities that drive innovation and create new value for your customers.
  • Facilitating scalability during high-demand seasons: Streamlining your operations with a leaner workforce gives you the capacity to scale up or down depending on your needs. It allows you to handle a larger volume of inventory without creating bottlenecks or inaccuracies while keeping costs within budget.
  • Improving customer satisfaction: On the whole, smart warehousing technology reduces labor and operational costs (which suppliers can push down to consumers) and enhances processing times for faster (and more accurate) shipments. All of this leads to greater customer satisfaction, loyalty and long-term profitability.

Used strategically, smart warehouse technology can play a vital role in future-proofing your business and increasing your operational resilience in the face of endemic supply chain challenges.

High inflation has been one of the lingering consequences of the COVID-19 pandemic. According to the U.S. Department of Labor, the Consumer Price Index in November 2022 had increased 7.1% over the previous 12 months. Resurgent consumer demand, business closures, transportation disruptions and port congestion have all conspired to put pressure on suppliers and raise the cost of doing business.

Many suppliers and manufacturers have struggled to adjust their management and logistical structures to keep pace, forcing them to push increased costs down to consumers. While this can help them maintain profit margins in the short term, it only contributes to the rise of prices across the supply chain and the long-term persistence of inflation, putting businesses in a double bind.

Regardless of the possible solutions, inflation is likely to pose several challenges for suppliers and manufacturers throughout 2023 (and beyond). These include:

1. Increased foreign exchange risk exposure

Many manufacturers and suppliers today maintain business relationships across international borders, meaning they often have to deal in multiple currencies and balance fluctuating exchange rates. Inflation tends to impact countries in different ways, however, and less stable currencies are often unable to weather the crisis and maintain their value.

Businesses that buy from suppliers based in countries with weaker currencies could expose themselves to significant risk if the values of those currencies drop too much, while those that sell to certain buyers might make bloated returns that artificially inflate performance reports and revenue projections.

Businesses might respond to inflation by overstocking warehouses, which could make inflation worse.Businesses might respond to inflation by overstocking warehouses, which could make inflation worse.

2. Raw materials procurement could fuel further inflation

Raw materials are in short supply and many manufacturers are finding it difficult to source the materials they need to fuel their production processes. As Zurich Insurance noted, manufacturing executives often respond to supply shortages by purchasing excess raw materials to bolster their inventories.

While this might help the few fortunate companies that can secure needed materials offset the impacts of supply shortages, it can have wider, negative consequences for other stakeholders across the supply chain. Procurement surges cause demand to increase further, which puts even more pressure on suppliers to deliver sufficient quantities of raw products.

3. Rising interest rates make it harder to access capital

The U.S. Federal Reserve has increased interest rates in an effort to tamp demand and stabilize prices. Raising interest rates makes loans and credit lines more expensive, however, making it difficult for suppliers and manufacturers to access capital they need to address the unique economic challenges posed by rising prices.

Without fast access to cheap capital, businesses have to institute stricter oversight and better management of their cash flows, ensuring budgets are tightened and receivables are properly processed to limit the impact of reduced working capital. If they don't, they might not have the cash reserves to sustain normal business operations.

As demand for solar panels continues to increase, manufacturers' overreliance on China-produced polysilicon and other raw materials used in the production of solar panels could put the solar supply chain at serious risk.

Geopolitical tensions between the United States and China and the lingering consequences of the COVID-19 pandemic have both caused serious disruptions in the market that have already had downstream consequences for stakeholders throughout the supply chain.

China sits atop the world's supply of polysilicon

China is the world's leading producer of polysilicon, a raw material of tiny crystals that is used as one of the basic elements in solar panel manufacturing. The polysilicon crystals are melted down to produce ingots, which form the basis of the photovoltaic wafers in finished solar panels.

In 2021, China controlled 79% of the world's production of polysilicon, according to research from the International Energy Agency (IEA). Further, the world's leading three producers of polysilicon are presently all based in China, according to Bernreuter Research.

The global solar market is highly exposed to geopolitical tensions between the United States and China.The global solar market is highly exposed to geopolitical tensions between the United States and China.

US-China tensions have hit solar markets

The inherent challenges of the overconcentration of the world's supply of polysilicon were put on display in 2021, when it was reported that a significant portion of China's polysilicon output — 42%, according to the above IEA report — came from the country's Xinjiang province. Xinjiang has been in international news in recent years due to allegations of forced labor and cultural genocide in the province.

The United States moved to ban some polysilicon imports from Xinjiang, which seems to have already created bottlenecks. Reuters reported that thousands of shipments of solar energy components have been locked in ports in the wake of the new regulations. These challenges are likely to persist if the United States imposes further restrictions on polysilicon imports originating in Xinjiang.

China's polysilicon suppliers have suffered under COVID-Zero

A more immediate concern for global solar manufacturers is the lingering effects of the COVID-19 pandemic. China's aggressive approach to curtailing the spread of the virus (termed "COVID-Zero") has forced many polysilicon suppliers to shut down operations (or at least greatly curtail their manufacturing output).

In a statement, the China Silicon Industry Association reported that the prices for raw materials like polysilicon dropped significantly at the end of the 2022, which puts severe financial pressure on normal business functions, while many manufacturers were also operating well below normal capacity.

Global solar panel manufacturers' dependence on Chinese markets will continue to disproportionately expose them to disruptions and slowdowns as China implements new measures to fight the virus.

Supply chain challenges have dominated international headlines, and much of the focus has been on the fallout from the COVID-19 pandemic and the lingering consequences of the public health crisis.

However, climate change poses a more fundamental threat to global supply chains, as extreme weather events, sea-level rise, unpredictable weather patterns and new compliance regulations all conspire to restrict the ability of suppliers to move goods between markets.

Sea-level rise could impact critical transportation hubs

Sea-level rise poses serious risk to ports and other transportation centers located on or near major waterways. In a recent report, the National Oceanic and Atmospheric Administration (NOAA) projected that sea levels could rise by roughly one foot by 2100, a significant increase that could cause serious damage to transportation infrastructure located near the world's rivers, oceans and lakes.

As Yale Environment 360 points out, ports are critical distribution centers to a much wider (and more complicated) network of suppliers, vendors and manufacturers. When transportation centers near critical waterways are unable to deliver goods beyond their central distribution points, manufacturers located further inland are unable to source the raw materials needed to deliver finished products.

Flooding could severely impact the resiliency of global supply chains.Flooding could severely impact the resiliency of global supply chains.

Changing weather patterns might hurt global food supply

Many Americans don't realize that much of the food they consume travels along highly integrated supply routes before reaching their plates. In 2021, the United States imported roughly 15% of its food supply, according to the U.S. Food and Drug Administration (FDA).

Climate change could have serious impacts on the global production of food that might severely disrupt those supply chains. Agriculture depends on the relative predictability of the climate, but as weather patterns like rainfall and temperature become increasingly unpredictable, farmers are finding it more difficult to produce a high enough crop yield to meet global demand.

Furthermore, climate change is disrupting the natural habitats of many plant and animal species, fundamentally altering the ability of livestock and foodstuffs to thrive. Even where the ability to produce at normal levels remains sustainable, food quality could ultimately take a hit as drought, flooding and extended frost periods take their toll.

Red tape may place additional burdens on suppliers

As the public becomes increasingly concerned about the impact of climate change, government bodies are responding by introducing new compliance regulations to promote more sustainable business practices.

While effective, these restrictions also create additional bureaucratic hurdles that producers, suppliers and manufacturers must navigate to transport raw materials and bring finished products to market.

Even as stakeholders adjust to the new regulatory environment and relieve bottlenecks, the added costs of doing business will likely be pushed down to customers, adding further costs to other stakeholders along the supply chain.

With the supply chain better but not back to normal and carriers overworked by never-ending "next-day deliveries," retailers are turning to drone technology as a huge breakthrough when it comes to order fulfillment. So much so, some believe that 2023 will truly be the year that drones as a means of transportation will truly "take off."

But as it happens, when the retail industry history books are written, 2022 may be remembered as the period in which drone delivery took flight, as two of the country's largest organizations spent the year staking their place as authorized users.

Last year, Walmart successfully completed thousands of orders that were dropped off via the sky. Indeed, according to a company announcement obtained by Supply Chain Dive, the big box retailer performed 6,000 of them in 2022 across seven states, including Arkansas, home to its corporate offices.

Vik Gopalakrishnan, vice president of innovation and automation for Walmart North America, noted his delight at an historic achievement.

"I'm incredibly proud of our team for creating the largest drone delivery footprint of any U.S. retailer and providing customers with an incredibly fast – and innovative – option for delivery. We're encouraged by the positive response from customers and look forward to making even more progress in 2023."

The other states in which drones were deployed for customer delivery were primarily in the South and included Florida, Texas, North Carolina and Virginia. Mountain West customers saw them as well, specifically in Utah and Arizona.

As one of the largest organizations in the world (all companies, not just retail) and with more than 4,700 brick and mortar locations in the U.S., it may not be too surprising that Walmart leveraged this high-end delivery method given its considerable resources. But Walmart is hardly alone when it comes to drones: Entities like FedEx, UPS, DHL and Domino's Pizza have used drones for delivery either last year or prior to it. Also, even small-business restaurants use drone services for some customers.

More drone deliveries are expected in 2023 and beyond.More drone deliveries are expected in 2023 and beyond.

Amazon Prime Air introduced in parts of California and Texas
Another major player in drone investment is Amazon. The e-commerce giant announced in June 2022 that it received a go for launch from the Federal Aviation Administration after seeking its approval. That green light herald the creation of Prime Air, a delivery service that uses UAVs to make quick (60 minutes or less) drop-offs to customers who are within sufficient range of a warehouse equipped with drone capability. While Prime Air has not been formally rolled out to all Prime subscribers, it is now available for use in test locations. These include Lockeford, California and College Station, Texas, according to reporting from ARS Technica.

Speaking to KTXL, a FOX TV affiliate in Sacramento, Amazon Air Spokesperson Natalie Bank said these parts of the country will be the first to experience a service the company believes will soon be more widely available.

"We are starting in these communities and will gradually expand deliveries to more customers over time," Bank said.

Experts say drones for now will only be used to deliver smaller items, such as certain types of food, home supplies and paper goods. According to Walmart, the company sells over 20,000 items that are drone drop-off eligible, each weighing 10 pounds or less.

In one form or another, virtually all industries are utilizing automation to facilitate their work processes for greater efficiency, speed and accuracy and to lower costs. Chief among those users are retailers, leveraging the technology in their warehouses and distribution centers to improve the flow of goods in and out of their facilities and to save on costs by minimizing downtime and errors. From conveyor belt systems to robotic arms to material handling equipment for picking and packing, warehouse automation is no longer the exception — it's the rule, particularly among major brick-and-mortar and e-commerce retailers.

Given its ubiquity, a few questions arise: What will warehouse automation look like in 2023? Will warehouse occupancy grow to accommodate the infrastructure? How will it address business owners' supply chain challenges? Here are a few predictions:

1. Surge in robots-as-a-service usage
Robots as a service, or RaaS, refers to the delivery of robotic solutions on a subscription or pay-per-use basis. Similar to software as a service (SaaS), RaaS allows businesses to use robots without having to purchase and maintain them.

According to Supply Chain Brain, due to the ongoing labor shortage, RaaS will likely gain more traction in the months ahead to plug unfilled roles that would normally be held by individuals.

Moving forward, employers will need to make decisions on their paths forward by asking themselves tough questions. Why has the labor shortage persisted as long as it has? What inducements, beyond better pay, will encourage more people to apply? How much money are they saving through RaaS, and if so, does it make sense to expand their use? These are all key questions that will chart the path forward for organization.

RaaS will likely expand in warehouses over the coming months as warehouses grapple with labor shortages.RaaS will likely expand in warehouses over the coming months as warehouses grapple with labor shortages.

2. Humans will become more relevant, not less
In light of the fact that automation continuous to flourish — inside and outside of warehouse settings — some believe that humans are on the cusp of being fully replaced, a feeling they've had for a while. Several years ago, for example, over a quarter of respondents in a Gallup poll believed they'd be out of a job within 20 years because of automation. 

Experts say otherwise. That's because warehouse automation needs to be overseen by human beings to guard against malfunctions, for maintenance and to ensure the equipment starts and stops when its supposed to. Machines are also designed to perform more repetitive tasks rather than those that require contemplation and critical thinking. Organizations that rely on warehouse automation — such as retailers and logistics companies — are still actively recruiting people, despite their increased usage of robotics.

3. Dip in warehouse demand
While warehouse automation may be expanding, demand for warehouse space is slowing, largely due to the dramatic increase in interest rates fueled by inflation and actions of the Federal Reserve. That's expected to continue into 2023 as mortgage rates tick higher.

According to Cushman & Wakefield data obtained by Supply Chain Dive, the amount of occupied warehouse space fell over 9% in the fourth quarter compared to the third. The commercial real estate firm added that warehouse supply will push higher in 2023 because demand is declining at the same time as contractors are completing construction.

Organizations are poised to continue investing in warehouse automation, but in spaces they already occupy.

When history is written, the current recession may go down as one of the more unusual ones for the United States' economy. Unlike the Great Recession in the late 2000s, when hiring fell virtually across the board and the unemployment rate grew in response, many industries are still feverishly seeking job applicants, which has kept the national jobless rate quite low. But other major employment sectors — such as IT and finance — are downsizing due to poor earnings and diminished demand.

An industry that's in the former category is manufacturing, as a new report shows the overwhelming majority of employers in the sector are experiencing a workforce shortage.

More than 3 in 4 manufacturing companies are experiencing problems with hiring and retaining skilled workers, according to a newly released survey from the National Association of Manufacturers (NAR). With 76% of polled respondents indicating as much, staffing shortages were second only to supply chain disruptions as producers' most common challenge.

Chad Moutray, the NAR's chief economist, pointed out that hiring and maintaining staff have been persistent pain points for producers for quite some time now.

"Companies continue to have workforce issues," Moutray explained, as reported by Supply Chain Dive. "Some are raising wages and still are having difficulties finding anybody, which is holding back their ability to expand and stay productive."

What's also impeding their output is retention. According to the U.S. Chamber of Commerce, as of October, manufacturers have the highest quit rate of all industries at 5.5%, with wholesale and retail trade in a distant second (3.2%). As a result, 40% of job openings in manufacturing are unfilled, U.S. Chamber of Commerce data also shows.

Hiring woes continue to plague manufacturers.Hiring woes continue to plague manufacturers.

Similar to other industries, when it comes to insufficient employment, the pandemic was the tipping point. Many producers were already experiencing problems with hiring and then the measures designed to curb the transmissibility of COVID-19 forced some employers to cut their payrolls. But with those same manufacturers now hiring again, workers remain on the sidelines, despite business owners raising wages to attract them back. Producers expect to keep doing so for the foreseeable future, according to the NAM poll.

It isn't all about the money
More money can't be their only strategy, according to Paul Wellener, vice chair of industrial products at Deloitte. Wellener told Supply Chain Dive that other incentives individuals seek include flexible work arrangements and opportunities to learn new skill sets through training. Training has been more of a focus for manufacturers of late but also even before the pandemic. In 2019, for example, they collectively spent $26.2 billion on internal and external training programs, according to NAM figures

Manufacturers are also increasingly embracing remote and hybrid work environments. As a Gallup poll in 2021 revealed, approximately 9 in 10 respondents at the time said they wanted to continue taking advantage of the ability to work from home when the lockdown measures were fully lifted. A majority said hybrid was their preferred work environment.

From far-reaching wildfires in states that typically don't get them in the summer to a spike in Category 4 hurricanes in the fall, the devastating repercussions of climate change play out across the country on a regular basis. While weather as a rule is variable, evidenced by the natural changes in air temperatures from seasonality, the data proves that the planet's temperature is on a steady track higher. Just this past November, for example, the earth logged its ninth warmest November on record, according to the National Oceanic and Atmospheric Administration. Given weather phenomena affect human behavior, it's fair to say that climate change has both a direct and indirect impact on the supply chain. And according to a new threat assessment, manufacturers may be in the eye of the storm, with increasing heat impeding their productivity.

In a report released by the United Nations, if the earth temperature's keeps rising at its present pace, then the average U.S. worker in product-based industries will lose approximately 0.4% hours of productivity over the course of a full year. This estimates comes courtesy of the UN's Human Climate Horizons Project, an initiative that offers insight on how climate change may impede people's ability to flourish.

Given there are over 8,700 hours in the typical calendar year, a four-tenths of a percent dip in productivity may seem infinitesimal but as climate expert Hannah Hess told Supply Chain Dive, that's a significant decline in a country of over 350 million people in the world's largest economy.

"Think of how your workforce responds when it's super hot outside," Hess explained. "Here's how those days are going to multiply over the course of the century. And here's how that is also projected to have a larger and larger effect over time on your workforce."

A new report from the U.N. warns about the effect of extreme heat on productivity.A new report from the UN warns about the effect of extreme heat on productivity.

Cold snap leads to delivery delays
It isn't just oppressive warmth that can reduce output; extreme cold does as well, which many scientists also attribute to climate change. In the days just before Christmas — typically the busiest time of the year for manufacturers, retailers and logistics entities — a polar vortex swept over much of the country, bringing with it freezing temperatures and driving snow. As a result, many recipients expecting packages didn't get them in the windows they were expected to arrive. Indeed, in the Midwest, on-time delivery performance was just 49% on Dec. 23 and a mere 37% on Christmas Eve, according to project44 data obtained by Supply Chain Dive. Airlines were also impacted by the massive snowstorm, causing thousands of delays and flight cancelations.

The UN report also warned of an uptick in flooding fueled by climate change. Flooding is unique among weather-related events, in that every part of the world is potentially vulnerable to it.

Experts warn the inevitability of the climate crisis necessitates manufacturers to adapt and do everything they can to ramp up production, such as through strategic investments and added staffing. Hess also urged business owners to "do your part" by reducing carbon emissions, a major contributor to climate change.

A well-oiled supply chain is heavily dependent on energy, and as much of the country pivots away from fossil fuels in favor of cleaner, more sustainable forms for its various transportation needs, the U.S. Postal Service (USPS) has announced its intentions to phase out its gas-powered service vehicles in favor of those that operate on electricity. If all goes according to plan, a substantial portion of its newly renovated fleet could hit the streets by the end of the year.  

Thanks in part to the Inflation Reduction Act and Bipartisan Infrastructure Law, the USPS is prepared to spend upwards of $9.6 billion on hybrid and all-electric automobiles, or what the USPS is referring to as "Next Generation Delivery Vehicles" (NGDV). These funds will pay for the manufacture and delivery of at least 60,000 service vehicles, the overwhelming majority of which will be all electric. With the goal of obtaining 106,000 all-new service vehicles overall, these purpose-built vehicles may eventually entirely replace the USPS's current fleet of 220,000 gas-powered vehicles. At a bare minimum, the USPS intends at least 40% of its carriers to be using battery electric when the phased transition is complete in 2028.

USPS Postmaster General Louis DeJoy said this initiative represents a significant milestone for the Postal Service as well as for Americans who rely on an efficient postal system for their letter and package delivery needs.

"We have a statutory requirement to deliver mail and packages to 163 million addresses six days per week and to cover our costs in doing so – that is our mission," DeJoy said in a press release. "As I have said in the past, if we can achieve those objectives in a more environmentally responsible way, we will do so."

The USPS' ubiquitous mail trucks will soon be replaced by next-generation delivery service vehicles.The USPS' ubiquitous mail trucks will soon be replaced by next-generation delivery service vehicles.

$3 million to come from legislation
Roughly one-third of the spending for the NGDVs will derive from the Inflation Reduction Act, which was passed by Congress and signed into law by President Joe Biden in August 2022. While much of that bill focused on lowering prescription drug prices for consumers, it also aims to increase the nation's domestic energy production and manufacturing without contributing to carbon emissions.

Additionally, the Infrastructure Investment and Jobs Act — which was passed in late 2021— is also expected to support the energizing requirements as more EVs — used by the USPS and ordinary Americans —  hit the road. For example, this bill earmarks $7.5 billion for a broader network of EV charging stations, with the goal of reaching 500,000 within the next decade.

"The $3 billion provided by Congress has significantly reduced the risk associated with accelerating the implementation of a nationwide infrastructure necessary to electrify our delivery fleet," DeJoy added.

The 40% commitment represents a substantial shift from the USPS's initial intentions. In February 2022, the agency said that 10% of its fleet would be battery powered. After receiving pushback from lawmakers as well as environmental advocates, the USPS upped it to 40% five months later.

While it's unclear the exact date by which the USPS will begin using more BEVs, it says that both homeowners and business owners should anticipate seeing more of them nearer to the end of 2023.