The past year has been a turbulent one, particularly for companies in the hospitality industry. As 2022 comes to a close, hospitality executives are looking forward to the new year, focusing on more effective strategies to fortify their supply chain management.
But with a new year comes new challenges, and 2023 poses several that could impact your supply chain planning.
From geopolitical instability to looming recessions and ongoing coronavirus outbreaks, there are always new risks that company leaders must learn to navigate.
Much of the current focus has temporarily shifted toward the approaching holiday season. However, hospitality business leaders must look a little further down the line and prepare their organizations for upcoming challenges.
To ensure your business is on top of supply chain trends, here are just a few things to look for in 2023, and how to make sure your company is prepared.
Labor Shortages
With COVID-19 coming to an end, hoteliers are looking forward to the path of recovery. However, with labor shortages expected to continue well into 2023, hospitality businesses face challenges to keep up with ongoing demand.
Labor shortages and staffing issues are not new challenges for hospitality companies. But as demands for recreational travel experiences sharp increase, industry experts foresee hotel and lodging businesses, as well as restaurants and catering companies, are particularly challenged.
The last two years have shed light on the manual, outdated processes many businesses still follow, and workers are noticing them, too. Now, employees seek fairer working environments, more flexible work arrangements, and higher pay—all with a decreasing willingness to compromise.
And since the hospitality industry holds a reputation for long hours, lower starting pays, and challenges for work-life balance, more workers are expected to leave their jobs in search of financial stability.
But despite these issues, hospitality companies can still find ways to protect their supply chains from labor fluctuation. The key is staying agile.
International Port Congestion and Rising Shipping Rates
For many industries, the past two years of pandemic-induced disruptions and delays have created lasting effects—and the hospitality industry was no exception.
According to a recent Reuters report, the unprecedented levels of global port congestion are expected to last at least through early 2023, unfortunately resulting in higher shipping rates.
This type of disruption can lead to greater risks, like ongoing delays and increased maintenance costs. Port congestion results in low inventory on freighters and consequently, shipping costs become more expensive. For hotel and restaurant operators, goods and supplies cannot reach them in time, order backlogs pile up, and supply chain issues ensue.
However, some reports show that next year might see an increase in the construction of new shipping vessels. Nearly 30% of the current installed fleet capacity is on order, with about half of that percentage expected to be delivered throughout 2023—potentially reducing the cost of freighters and lower shipping rates.
Increasing Inflation
Regardless of the nature of the company, all organizations in the hospitality business can agree on one common threat—inflation.
While no one can predict the future, the current impact of decades of high inflation must be navigated. Just in the U.S., consumer prices went up by 9.1% between 2021 and June 2022. According to the U.S. Bureau of Labor Statistics, this was the largest increase in over 40 years.
Overseas, the problem is even worse, with the most recent statistics citing a 10.7% increase in Europe.
The war in Ukraine has certainly played a part in increasing inflation, as it pushed up costs across the board—food, beverages, and labor.
Since this is a global issue, inflation cannot be solved overnight. However, companies can start developing strategies now to better manage their supply chain finances and ensure protection when the next wave of risks hits.
Combine this issue with the pending economic climate, and the need for tighter management strategies and smarter budgeting decisions are going to become crucial in the hospitality business.
Strengthen Your Supply Chain
While these challenges might sound overwhelming, particularly in a period of recovery, companies can still access tried and tested solutions to maintain profitable growth.
Through BirchStreet Systems, hospitality organizations can take advantage of highly specialized solutions that offer assistance in invoice management, inventory management and tracking, recipe management, real-time reporting and analytics, and more to ensure accurate purchasing and budgeting processes—thus, strengthening your supply chain for the new year.