2022 Supply Chain Predictions
What’s in the supply chain cards for 2022? From limited transportation capacity to skyrocketing material costs to continuing supply chain disruption, learn what’s on deck and how to deal.
INFLATION UPS THE ANTE
Supply chain woes won’t go away any time soon. As CEO of a mid-sized company dealing firsthand with supply chain issues, I recognize inflation is a major driver. We’ve seen costs skyrocket on labor, container shipping, and manufacturing parts. As a result of wage pressures and high demand for shipping, inflation will continue to rise and supply chains will struggle into 2022.
If you look across markets, inflation is highly concentrated. This suggests there are concentrated rather than long-term problems in a few markets. Conventional thinking suggests that, as with PPE, for example, supply will soon balance demand. Semiconductors are a good example of this as supply is slowly improving, although not yet keeping pace with increased demand.
The big unknowns are how additional shocks will impact a system just coming off life support. New variants, extreme weather, and/or political intervention are all likely in some form in the next 12 months. Businesses will be planning as such.
Executive Vice President
Sudden price fluctuations are not unheard of—with supply chain challenges exacerbating inflation, they may feel like they are becoming the norm.
In 2022, businesses need to take time to understand the impact: How will a sudden price increase affect their bottom line if they raise prices? If fewer people buy their products, their revenue will decline; if they keep prices as is, they may sell a higher number of units but endure lower profits per item sold. These are not choices any business wants to make.
To prepare, they need to develop what-if scenarios and explore workaround solutions they can deploy quickly. They need to analyze future costs to fully understand what a single raw material change will do to the price of their finished goods.
President, Manufacturing Division
ECI Software Solutions
PLAYING THE INVENTORY HAND
Pre-ordering to ease the tension resulting from supply chain issues is one major trend to continue in 2022. Supply chain disruptions have wreaked havoc on consumers and buyers expecting on-time orders. At the same time, consumers are increasingly pre-ordering items to be manufactured and even customizing them to their liking.
This alleviates tension on the supply chain by allowing businesses to continue to sell and generate revenue while keeping customers informed that fulfillment will take longer than usual. This strategy is also on the rise because businesses across industries, especially in the B2B space, are perfecting their e-commerce channels by investing in their online presence, making these pre-order purchases more convenient and easier.
This trend will continue as businesses invest more in e-commerce capabilities and scale pre-ordering capabilities to stay competitive and deliver on buyers’ expectations.
Co-founder and Principal
Supply shortages will persist for both durable and non-durable goods. More manufacturers will consider vertical integration (for batteries, chips, etc.). At the same time, we’re likely to see more hoarding among consumers and higher stocking levels among manufacturers and distributors.
President and CEO
The system isn’t working, and future closures will wreak havoc on just-in-time supply chains. We are pushing more and more into a system that isn’t working. Many are focusing on when things will get better and the answer is no time soon.
With just-in-time supply chains, there is some room for delays here or there for excess stock if a factory closes for a day or two, but anything more than that causes a problem. A single disruption in a supply chain in one place, when everything is lean and complex, affects most of the direct chain, but also that impact spreads across other supply chains—such are the interdependencies in global trade flows.
If you don’t have visibility, you have issues. Essentially, we have created specialist economies: Cardboard gets made in China, semiconductors are in Southeast Asia, and if there is a disruption in one of those markets there is a problem for an entire industry.
Executive Vice President
DOUBLING DOWN ON CAPACITY AND RATES
Changes in consumer buying behavior continue to drive tight transportation capacity in 2022. Shippers and logistics service providers (LSPs) can expect a tight transportation market and delays across all modes. Maritime shipping volumes are running at record rates, and ocean carriers are booked well through 2022.
What’s driving the increased demand are relatively strong economies and a fundamental shift in consumer behavior to purchasing more goods and fewer services such as travel and entertainment. Shippers and LSPs need to adjust trade flows to less congested lanes and to new technologies that unlock trapped transportation capacity due to inefficiencies that still exist in the transportation market.
EVP of Industry and Services
Transportation capacity will be severely limited in 2022. Equipment markets continue to fall behind schedule in delivering replacement tractors and trailers, led by OEMs with few options to navigate parts and production labor deficits. Even if shortages improve, and equipment markets correct themselves, transportation providers may still be unable to hire enough drivers to meet demand in 2022.
Founder and CEO,
Several factors led to high truck freight rates in 2021, including faster-than-anticipated economic recovery, increase in e-commerce, equipment shortages, and labor issues. These factors are expected to continue, keeping rates high in 2022, though the pace of increasing rates should ease.
With economic recovery expected to continue through 2022, trucking services will be in demand as retailers attempt to keep shelves stocked. Additionally, as the chip shortage subsides, we can expect auto manufacturing and deliveries to increase, putting further pressure on trucking services.
E-commerce will continue playing a larger role in retail sales. Consumers can be expected to shift some of their spending to travel and experiences. While we expect to see continued growth in 2022, it will be at a more measured pace, which will help ease some stress on truckers.
Equipment shortages will continue to play a role in truck freight rates through at least the first half of 2022. Supply chain constraints will hamper production of heavy- and medium-duty trucks through the first half of 2022, while increasing chassis production will not have a meaningful impact until Q3.
Driver retention issues will continue to be a challenge. Several programs have led to an increase in commercial driver’s licenses (CDLs) issued. Even with an abundance of licensed drivers available, keeping drivers in the industry will be a challenge.
AVP, Credit Analyst, Industry Manager
Transportation capacity constraints are a long-term systemic issue and not likely to turn around quickly.
We are currently experiencing a mix of constraints—from a lack of labor to infrastructure constraints needed to keep the growing volume of freight flowing.
Original equipment manufacturers (OEMs) have delayed delivery of much-needed new trucking assets. Carriers struggle as drivers opt out because competing jobs continue to pay higher wages. Government grant programs targeted at building new driver training facilities and programs will only provide relief if the industry can attract new drivers. Rising fuel costs and inflationary pressures will only add to this challenging outlook.
Carriers now reject more than 1 out of every 5 loads tendered under contract. Trucking will see a growing gap between supply and demand. However, these transportation constraints also offer tremendous opportunities. Rail has an opportunity to recapture lost market share and significantly ease trucking capacity constraints if they can figure out how to make rail easier to use with greater transparency.
Private transportation fleets could be the biggest gainers. There has never been a more compelling time for those operators to provide their fleets to spot markets. They can increase fleet utilization by reducing empty miles and capture significant revenue. Resolving transportation capacity constraints requires everyone in the transportation ecosystem to rethink how they offer their services and how they utilize their assets most effectively.
Supply Chain Transformation Practice Lead
NTT DATA Services
Upstream investments will increase. In 2022, retailers will shift their focus to the supply chain and, specifically, warehouse and distribution center operations. Many still use legacy technology systems or manual processes to guide inventory, fulfillment, and logistics actions—and that doesn’t mesh with modern retail models.
Many technology solutions used in stores will extend to the back of the store and beyond. Automation of inventory movements, decision-making, and task assignments will quickly follow.
Director, Supply Chain Solutions
I foresee massive growth in a few key areas of supply chain planning and execution technology. First are demand planning and inventory optimization platforms that are built with an AI/ML predictive analytics engine. These will support omnichannel retailers and brands in planning inventory and position inventory to improve customer service.
Second are order management platforms that are built with the ability to integrate with complementary commerce platforms. This technology gives retailers endless opportunities to delight customers.
Finally, expect a resurgence in visibility platforms that help distribution and retail supply chain-centric enterprises answer the question: “where is my order”?
Continued fulfillment innovation will further optimize retail operations: After coping with the pandemic-driven supply disruptions and consumer demand shifts to online and omnichannel fulfillment, retailers will revisit their inventory strategies across the supply chain, but especially as it relates to getting inventoryc to customers.
In 2022, retailers will experiment more heavily with dark stores, gray stores, dropship, and more dynamic use of fulfillment rules—for example, replenishing stores from the e-commerce DC if inventory is moving faster in stores than online, or holding back a replenishment order for stores to send to the e-commerce DC instead if the opposite is happening.
VP, Retail Innovation
The retail sector is a fast-growing segment for digital twins and an early supply chain opportunity. The total market for retail/consumer digital twins is expected to exceed $471 million, more than doubling within two years.
Examples include Dassault Systèmes’ Store Electronic Systems and Microsoft Azure’s Digital Twins to help address retail issues such as model physical spaces to simulate customer traffic patterns, and review in-stock/out-of-stock conditions. HERE offers digital twin capabilities that can support retail, such as connecting a digital twin to embedded sensors to gather data for financial analysis and projection. This, in turn, helps retailers and brands refine and optimize forecasting, adjust pricing, or offer customer-specific opportunities.
Retailers on either side of the financial spectrum will thrive as consumers shop in high-end and experience-based stores or in off-price retailers. But commodity-based retailers will struggle to remain profitable unless they reimagine the way they operate—both in-store and across the supply chain.
Today’s consumers pressure retailer margins with expectations for fast, free shipping, sustainable products, and sizable promotions and price matching. To stay afloat, retail businesses have to meet consumer demands while implementing strategic cost containment initiatives that find profit improvements and efficiencies and reduce spending in marketing, IT, corporate services, and more.
ALL IN FOR E-COMMERCE
We’ll see companies follow in the footsteps of Nike and evolve from wholesale to direct-to-consumer e-commerce distribution. The improved margins and inventory controls are just a few reasons why this will continue to be a smart strategic trend.
Co-founder and CEO
This year, there will be a continuing and rising shift from physical to digital retail. In the next 5 years, e-commerce and brand sales will be 30% of all retail sales. Brands like Nike, whose digital sales represent 21% of total sales, will be a contributing factor to e-commerce increasing from 13.8% to 30% in the next five years. Wholesale is becoming the new retail to drive revenue and retail is becoming the new wholesale to improve gross margins.
Strong growth across e-commerce tech and service providers throughout the pandemic indicates that conventional sellers are leaning harder on e-commerce to manage unpredictable conditions. Daily consumer spending online is outstanding, and I’m confident the e-commerce industry will keep filling the gaps of physical retail during COVID.
There is nothing more important for sellers right now than having real-time visibility into the product pipeline, and then being able to communicate that information to consumers. Retailers are looking for solutions to help manage inventory problems and improve specialized customer service.
Sellers can no longer employ a “set it and forget it” strategy. Resources, content, and strategy must be adjusted constantly, but in every case, clear, real-time data is the antidote to market anxiety. Sellers have to watch their data like a hawk, and be ready to move quickly when conditions shift.
Regional parcel carriers will play a more critical role in e-commerce delivery. Even the world’s largest parcel carriers struggled with limited capacity in 2021 under the barrage of e-commerce orders. But one carrier’s challenge is another’s opportunity.
The use of regional parcel carriers will surge in 2022. Specializing in short-haul deliveries, these regionals comprise just 6 to 8% of the overall U.S. parcel delivery market, but cover more than 85% of the U.S. population.
As national carriers continue to experience capacity pressure, regionals provide a strategic relief valve to keep products flowing and avoid delays. But mostly it comes down to costs. FedEx and UPS announced rate increases and an ever-expanding list of accessorial surcharges can drive costs even higher. Within their defined territories, regional carriers often have lower rates on next-day and 2-day delivery, and they have fewer surcharges.
Another plus, because they don’t have to route parcels through a hub, regionals typically offer later pickup times, while still meeting overnight delivery requirements.
For these reasons, shippers will rely more on regional parcel carriers in 2022 to diversify their carrier base, increase capacity, and lower parcel shipping costs.
With great popularity comes great scalability…challenges. E-commerce continues to explode. This rapid market expansion puts direct-to-consumer brands between a rock and a hard place: The markets for both advertising and logistics services are becoming more fragmented, complex, and expensive than ever. To survive, brands need to seek out a diversified mix of vendors.
This means partnering with brick-and-mortar chains and emerging marketplaces in advertising. In logistics, this will be defined by multicarrier portfolios and shipping technologies. Ultra-fast delivery grabs headlines in dense urban areas, but housing markets in less populated regions and secondary metros have seen the greatest growth—meaning many of the most affluent consumers now live in areas that are the most expensive to deliver to.
To lower the cost of delivery, digital brands will either need to sacrifice speed or pass shipping costs onto consumers. And because the atoms of physical logistics don’t scale as easily as the bits of digital advertising, 2022 will be a year of consolidation and partnerships among logistics vendors to try and achieve economies of scale.
Vice President, Marketing Strategy + Planning
Pitney Bowes Global Ecommerce
We will see a lot of investments in supply chain technology, especially in artificial intelligence (AI) and machine learning (ML) capabilities as a response to labor shortages and supply chain uncertainties. A majority of logistics supply chains will invest in AI by the end of 2022, resulting in massive productivity gains. As more operations are digitized, ML will be key for demand forecasting applications.
ML-enabled demand forecasting has been shown to lessen supply chain errors by up to 50%. Organizations can leverage ML-based demand planning to optimize inventory levels efficiently. ML enhances demand forecasting by aggregating real-time information from multiple data points. ML analytics and forecasting also reduces the need for mass historical data as it detects trends from similar products and uses that data to make improved predictions, which allows upgraded performance with every iteration.
I predict we will see applications of AI accelerate drastically to avoid another catastrophic domino effect like we are seeing now.
Outdated prediction models are a critical flaw in capacity planning. Every day we see stories of different links in the chain failing to predict the obvious, given the failure right before them. AI has the unique capability to understand the situation from a more holistic view than any single entity. AI that can understand shopping trends emerging months ahead of time and adjust needs for cargo ships will become a norm.
Businesses will have rising vendor expectations. Companies are starting to demand more from their vendors in terms of functionality, cost-effectiveness, and reliability.
Supply chain teams now need tools that work, use their data in ways that haven’t historically been done, and provide a competitive advantage. Companies are no longer settling for clunky, one-size-fits-all warehouse and labor management systems that come with costly upgrades and don’t work the way teams need them to in the new realities of today’s business world.
In 2022, expect to see more multi-tenant applications that allow parties to collaborate in real time and give stakeholders visibility and accountability to what’s happening. Blockchain, which has been nothing more than a supply chain buzzword for years, may actually translate to some valuable use cases to address some of the challenges, inefficiencies, and black holes that have existed for years but have not been heavily scrutinized until recently.
VP Solutions Consulting
Standard solution/platform based service level agreements (SLAs) will be replaced by business SLAs. As more enterprises engage additional vendors for technology solutions, they will demand much stricter SLAs than are standard historically. Further, our customers will hold all their vendors to a holistic business-level SLA over individual platform-specific SLAs. Their offering to eventual end customers would be as weak as the weakest provider. I estimate the standard SLA in the B2B world will shrink to 30 minutes or less in 2022, especially for critical business transactions.
Meeting a 30-minute SLA is a challenging task—especially for vendors who have hundreds of customers. To meet this shortened SLA demand, more supply chain technology vendors will offer completely self-serviceable products that do not require external support at a moment’s notice. Otherwise, vendors will need to significantly increase their hiring to meet such short SLA demands.
VP, Customer Experience
3G sunset will impact supply chain visibility. In 2022, carriers including AT&T, T-Mobile/Sprint and Verizon will complete their 3G sunsets to make way for 5G networks.
Once these 3G networks go dark, any device that relies on a 3G cellular connection will stop transmitting data. This includes telematics gateways installed in trucks, tractors, and trailers, as well as the sensor devices that communicate with those gateways.
Organizations that are still reliant on 3G devices to track, monitor, and manage their supply chains will lose visibility, to the detriment of transportation efficiency, ongoing asset tracking, and compliance.
Organizations need to start taking proactive steps to upgrade their portfolios of devices to 4G to ensure continuity of data collection and transmission.
Vice President, Product Management
DEALING IN DISRUPTION
Uncertainty, instability, and delay in global supply chains revealed that companies were seriously underinvested in the management of their first mile of supply, including planning, supplier and carrier collaboration, ocean and air shipment visibility, and interactions with multiple forwarders and 3PLs at once. These underserved first-mile processes were critical to business survival when pandemic impacts settled in for the long haul to worldwide economies.
The future demands that businesses adapt continuously to frequent supply chain disruption and volatility. Companies will re-prioritize first-mile service provider partnerships and technology investments as they pursue greater supply chain transparency, starting with overseas suppliers. Improving resilience requires more agile source-make-move decisions and execution support. Getting products across that last mile to end customers reliably depends entirely on improving control and flexibility for the first mile.
Senior Director, Go-to-Market
In 2022, businesses will re-examine their business continuuity plans to ensure supply chain resiliency is front and center. Additionally, companies are taking action to diversify their supplier base, ensuring that product shortages and international regulations will not slow down delivery times and overall operations.
Advanced analytics and automation will continue to accelerate, helping organizations mitigate disruption via digital, agile supply chain management. The implementation of predictive and prescriptive analytics—as well as advances in big data, algorithms and robotics—will have broad-reaching effects. Specifically, the organizations that harness the power of these solutions will benefit from greater visibility, data-driven decision-making, execution efficiency, predictability and profitability. Of course, all of this hinges on effective data security and governance, as well as a dedication to reskilling employees.
The Association for Supply Chain Management (ASCM)
Build resilience through active collaboration. Nobody can plan for every possible scenario, but teams need to still be prepared for anything. Companies realize that all teams having real-time access to the same data can help each function perform better. Active collaboration also reduces the need for constant reporting and status sharing. If all teams have access to the same data, teams reduce their dependency on each other, freeing time and resources to focus on core responsibilities and supply chain strategies.
Prioritize supply chain risk management in strategic planning. Organizations must audit their people, processes, and technology for key points of failure. Regardless of industry, size, or business model, a deep understanding of vulnerabilities is essential to disruption mitigation.
Supplier visibility is another vital capability required for success in the next age of supply chain management. Despite increased spending on Supplier Risk and Performance Management (SRPM) products, many executives don’t have clear visibility beyond Tier 1 suppliers. Growing demand, a lack of data analytics, and shorter product life cycles further exacerbate this challenge.
Founder and CEO
Automate, automate, automate. Embracing robotic process automation and similar technologies enable supply chains with agility and resilience. Integrating these technologies simplifies transactions, automates the redundant, highlights exceptions, and limits human touch while increasing visibility to keep goods moving smoothly. Continuous innovation and increased agility are not optional, they are necessary to succeed and proactively plan and avoid disruptions.
Global Director of Supply Chain Consulting
SUSTAINABILITY IS NO BLUFF
In 2022, more organizations will translate their sustainability goals into tracking and reporting Environment, Social and Governance (ESG)-related data throughout their supply chains.
As demand for ESG transparency rises, these will be key drivers in the creation and implementation of industry-specific supply chain sustainability targets by businesses. This begins with introducing a risk-based approach to qualifying and holding suppliers accountable to their ESG impact, including more enhanced screening of suppliers through sustainability agreements in Request for Proposals (RFPs) as part of the procurement process.
Sustainability should also be assessed both upstream and downstream of the supply chain, from the extraction and processing of materials with minimal environmental impact to ensuring end products can be properly recycled.
As the world continues to digitize, technology will be leveraged further to ensure that sustainability policies are effective and progress is being made toward corporate initiatives.
We see companies put more emphasis on building sustainable global supply chain networks by investing in technology that will help reduce their carbon footprint in every step of the process, from manufacturing to distribution and transportation.
Chief Technology Officer/Chief Digital Officer
Körber Supply Chain
Social initiatives like improving sustainability and supporting local businesses have become nearly as important to buyers as efficiency. B2B buyers are also ordinary consumers, and consumers are increasingly prioritizing meaningful purchases that support their core mission. In 2022, expect buyers to make more socially conscious purchases, valuing sustainability and smaller businesses over cost savings and efficiency.
Director & General Manager
SAFETY CHECK ON DECK
Today’s cargo security solutions may be prompt at detection, but at best reactive. They deliver notifications when security is breached through sensor and non-sensor events. The incident is managed, but seldom avoidable.
Future cargo security solutions will extend today’s technology to not just detect a breach, but also predict breaches in advance using sensor and non-sensor intelligence. They will further forecast impacts of predicted events across the entire network. For example, using sensor-data modeling, vulnerable points on a specific lane for a specific product and a specific shipment mode can be identified in advance.
Supply chain risk has become a vital national security challenge. Cybersecurity risk is becoming a larger component of the overall supply chain risk landscape as expanding the digital footprint of the supply chain increases the attack surface of critical infrastructures. We need a transformatively different approach.
The answer is not to do the same things better; it’s to tackle cyber supply chain security in a fundamentally different way. We must have better knowledge of vendors, improve risk prioritization, conduct multifaceted, ongoing monitoring assessments, drive remediations quickly, and take a programmatic approach. Following these steps can significantly improve cyber supply chain security measures.
Senior Associate, Leader, Cyber Risk and Assessment
Supply chain threats will remain one of the most serious issues global businesses will face in 2022. Widespread product shortages and scarcely qualified operators are only the tip of the iceberg. With manufacturers and freight companies already spending much effort to address these issues, organizations along the supply chain increasingly fall vulnerable to a convergence of additional threats—more frequent and damaging natural disasters and more opportunistic criminal cartels.
Unless supply chain leaders holistically and quickly address these threats, consumers are likely to see current challenges continue and worsen over time.
Chief Commercial Officer
STACKING THE WORKFORCE
Labor will be a tricky issue for merchants to navigate in 2022. Supply chain labor costs are up and warehouses had to get smart about hiring and onboarding processes. To get employees up to speed quickly, they had to make their technology and processes easy to learn and implement with a huge focus on user experience.
Additionally, the e-commerce boom has introduced unique challenges. First, it is now a requirement to ship on Saturday to be competitive on top-tier marketplaces. Second is the way e-commerce order volume is typically dispersed. Because most online shopping happens on the weekend, merchants have to significantly pick, pack, and ship more volume Saturday through Tuesday compared to the rest of the week.
These challenges tend to disproportionately affect mid-sized merchants who don’t quite have the volume to secure Saturday fulfillment or guaranteed labor on their highest-volume days. These merchants need to take advantage of fulfillment providers that can aggregate their weekend order volume to negotiate affordable and reliable labor on their behalf.
Ware2Go, a UPS company
Anticipate a convergence of training, plus better pay and benefits for existing employees, as well as hiring talent with foundational skills in data analytics. Organizations must be creative when attracting, reskilling, and retaining talent, as traditional approaches may not be as relevant to future supply chain needs.
The Association for Supply Chain Management (ASCM)
In 2022, supply chain labor shortages will continue to grow and make it difficult for providers to retain and keep top talent in jobs long-term. Organizations continue to look for ways, outside of bonuses, to attract skilled candidates for roles since they aren’t applying for them.
They need to redefine the work environment to create an engaging culture that will work to entice skilled candidates. Labor management enhancements and pay performance will also be critical components to attracting the right candidates. Additionally, with the labor shortage and expense of adding net new warehouse square footage, we’ll also see a rise in automation designed to make the most out of a limited footprint.
Blue Horseshoe (Part of Accenture)
To attract and retain talent, companies need to take a data-driven approach to improving employee retention.
First, quantify the problem——both the scope and its impact on the organization. How does your turnover rate compare to the industry average? How much does your turnover cost annually?
Second, identify the root causes: pay, time between promotions, training opportunities, bad bosses, locations. These are all variables which, when evaluated using accurate and consistent data, can reveal hot spots for resignations.
Global Leader, Manufacturing and Distribution
Hiring for retention will be the main hiring focus for the supply chain industry in 2022, with a particular emphasis on streamlining applications due to increased competition. Introducing innovations like automation will help further streamline the process while ensuring it is effective and fair for candidates.
Companies will also be focused on evaluating and hiring candidates with transferable, generalized skills—like critical thinking and problem solving—instead of specific industry or technical expertise to fill roles quicker.
In 2022, hiring managers will continue to be challenged with building a hiring process that is effective and efficient. The biggest difficulty will be hiring good workers quickly to mitigate turnover and candidate dropout. To increase efficiency, companies will have to make intelligent changes to their hiring processes, such as implementing more focused hiring assessments and taking advantage of the data they already have within their organization.
Carter Gibson, Ph.D.
TRUCKING: THE JACK OF ALL TRADE
Two rising issues to watch out for in 2022 include detention and facility delays and driver parking. While supply chain delays and the driver shortage continue exacerbating these trends, both the trucking industry and the supply chain must prioritize driver accommodation. Drivers remain frustrated because delays and parking issues have negatively impacted their delivery times and stalled routes traditionally timed to the minute. Trucking companies incorporating predictive analysis and automation into their planning will empower fleets and drivers to better prepare for these potential delays and more effectively optimize routes.
Another issue revolves around congestion at the ports. Port congestion won’t decrease any time soon. A new domestic pilot program was introduced to help speed the process. The federal government has relaxed certain regulations and crews can stack containers higher. Some ports have extended gate hours. The focus in 2022 will remain on working to overcome these barriers and resolve supply chain issues sooner rather than later.
CEO and Founder
A considerable talent shortage.
In 2022, the trucking industry will continue its uphill battle. Faced with one of the worst driver shortages to date, we won’t see relief any time soon as nearly a quarter of the workforce is expected to retire in the next decade. Now is not the time to do wrong by your people. Competition for talent is fierce and fleet owners need to make sure their drivers feel loved while brokers need to treat their partners with respect.
3PLS CALL IN THE CHIPS
The 3PL industry will eagerly jump at the opportunity to manage returns for their customers. As long as 3PLs can offer a returns process that’s faster and more cost-efficient than what a retailer could achieve on their own, 3PLs stand to differentiate themselves in a crowded market. In the coming year, this new business opportunity will become more lucrative, and the 3PLs that are prepared for it will win and retain the greatest market share.
3PLs will be redefined. Expect many retailers to recruit sellers and become third-party marketplaces—meeting consumers where they already are. 3PL warehouse spaces have reached a premium. More importantly, 3PLs want to prioritize more outbound fulfillment of inventory, which entails picking, packing, and shipping. This creates a void for retailers who have to navigate the complexities of becoming their own de facto 3PLs and use their store space to fulfill outbound orders and returns processing.
VP of Industry Relations and Partnerships
Third-party logistics will remain under tremendous pressure to do more with less, especially as they continue to feel the effects of the ongoing labor shortage in supply chain roles. In 2022, 3PLs will contract based on throughput rather than headcount to shield from labor uncertainty and benefit from increased efficiency through automation.
With mobile automation that isn’t tied to any facility infrastructure, these benefits can be realized not just in one contracted facility but transferred across facilities as demand requires. 3PLs will extend robots-as-a-service into productivity by subscription, reaping the benefits of fast implementation, on-the-fly flexibility, modular fleets, and universal applicability across sites.
VP of Product
Having a solid 3PL provider with multiple carriers in each market and leveraging key industry partners for drayage management can be the difference between barely keeping your head above water and thriving in today’s chaotic market.
A multi-carrier strategy provides shippers with flexibility, additional capacity, and the ability to benchmark rates and mitigate issues on the fly. Accurate, actionable data is also paramount to designing and executing a successful bid strategy. Sharing your forecast and weekly volumes by port ramp with your 3PL provider can get you better pricing, committed capacity, and will help carriers better service your business.
Executive Vice President, Commercial & Logistics
PLAYING THE GLOBAL GAME
Supply chain officers are not in the back row anymore. Pre-COVID, presentations from the chief supply chain officer (CSCO) to leadership may have been scheduled as a courtesy, right before lunch. Now the CSCO is a VIP at every meeting. CSCOs are changing strategies in real time, including:
- Dual sourcing and dual tooling
- Routing container ships to other ports of entry
- Off-loading container contents at the port
- Just-in-time inventory has been abandoned and companies will continue to stockpile through 2022
- Move product sourcing for those with low margins but require a large amount of container space
Longer-term, companies are implementing supply chain management solutions that can bring the entire supply chain into view by connecting to sourcing partners.
Global Leader, Manufacturing and Distribution, Moore Global
Partner, Citrin Cooperman
Global supply chains should be strategic, a business enabler, a revenue driver and a differentiator. In 2022, more organizations will attain incredible value from harmonizing data across ecosystem partners and applying analytics. Data-driven insights will serve as a basis for intelligent decision making and prompt actionable management decisions. By introducing best practices and technologies from other industries like scenario modeling, AI/ML and digital twins, the supply chain of the future will be transparent, agile, resilient and responsive on a global scale.
Founder and CEO
WAREHOUSING WILD CARD
In 2022 we’ll see more companies stockpile inventories to adjust to the overall supply chain shortage. We already see a boom with construction of new warehouses. A lot of companies were utilizing third-party warehouses to cross-dock lower levels of inventory. Now many are building their own warehouses and distribution centers across the country.
The other piece of this boom is the demand for e-commerce. In the past, companies would ship to retail locations very quickly after products were manufactured. Now they ship to DCs, where they are warehoused until the consumer orders online.
Tyler J. Wiard
Director of Business Development
Expect buildings to be retrofitted or designed to have the proper specifications needed to accommodate investments in automation technologies such as robotics for package handling and driverless trucks. The average clear height for new big box warehouses has already increased by 23% to 37 feet since 2000, notes a Savills report. Assume that heights will grow as robotics advancements allow tenants to leverage vertical storage.
Head, Industrial Practice Group
Get ready for a surge in warehouse robotics in the coming year. Major supply chains have already started deploying robotics to speed and improve accuracy in retail fulfillment. Mobile and collaborative robots working alongside humans can help organizations overcome staffing complexities, latency issues, and workplace safety concerns. Order picking can account for over half of staff costs.
By deploying robotics to reduce labor and fulfillment latency, warehouse operators can harness time saved to focus on other areas of improvement such as warehouse workflow enhancement. Warehouse robotics adoption will also start ramping up due to reduction in costs of robots. More robotics vendors are now adopting subscription-based models and are providing a wall-to-wall robotics-as-a-service offering that allows warehouse operators to avoid large up-front costs and enjoy streamlined implementation.
LAST MILE LAY DOWN
Last-mile innovation will have a positive impact on sustainability as well as on consumers and the bottom line for merchants. Look for partnerships, even among competitors. Trucks that might be only partially filled or even empty on a return trip can be full if businesses are willing to collaborate. This is not only more efficient for brands, and moves goods more quickly, it lowers the carbon footprint for last-mile delivery.
I expect to see more electric vehicles on the road as companies look to update their fleets and try to meet their own carbon emission goals.
I predict more innovation on returns, especially for apparel brands. Look for 360 videos at the purchase stage, AI wardrobe fitting, and other innovations so customers are more likely to order the correct item on the first try, eliminating the need for returns.
Fulfillment and Logistics Partnership Director
Same-day delivery is coming—and the gig economy is making it a reality. The pandemic furthered the online delivery moment. More consumers showed an interest in two-day and same-delivery, spurring a flurry of last-mile delivery options to make this a reality. In 2022, same-day delivery interest will continue, with more carriers exploring shared driver and gig economy options to make this a reality. As carriers explore and test these new options, transparency and communication will be essential to long-term success.
THE INTERMODAL PLAY
Today, intermodal shipment movement milestones are captured in disparate systems and subsequently, the data is not of the same quality throughout the journey.
For example, the port system captures data about the shipment’s movement within the port, the transporters capture and manage the milestones about which airline, vessel, or truck the shipment is in, and the customer creates and tracks the purchase order (PO). A significant amount of data captured through these multiple systems could have manual inputs that are prone to error. This results in a broken visibility trail or delayed updates, increasing risk.
Shipment milestone data of the future will be democratized through a common, high-quality data lake powered by product-level sensors. This will drive automated updates, accuracy, and timely capture of milestones for any shipment without relying on the supply chain actors.
Carriers limiting their IPI (inland point intermodal) rail services was a big challenge for importers throughout 2021. It’s driving a resurgence in demand for transload and cross-dock services along the West Coast, and now on the East Coast—in places like Savannah and Norfolk. We expect this trend to accelerate through 2022 and into 2023. For many importers in the Midwest, transloading may simply be the only way to move international cargo to inland distribution centers.
More importers are eyeing the East Coast for 2022. One driver is the fear of a West Coast labor strike. With vessel delays in southern California reaching record highs, any labor disruption could further erode conditions.
Transit times from Asia to the East Coast may prove faster in 2022. We see importers, especially larger retailers, quickly increasing their East Coast distribution footprint. However, shippers need to act fast: Drayage and warehouse capacity in New York, Norfolk and Savannah is limited, so any plan to increase your East Coast footprint needs to be in place by the end of Q1 2022 before it is too late.
Michael Van Hagen
Sr. Vice President, Supply Chain
World Distribution Services
Continuing intermodal collaboration will drive interoperability. Since the first days of intermodalism, collaboration, cooperation, and communication have been at its core. No one can operate within a silo; each intermodal stakeholder needs to work together to do its job. Over these past two years, the supply chain has relied on the collaborative relationship of the intermodal community to move freight like never before.
Throughout the pandemic, it became increasingly common for competitors to become collaborators to keep the supply chain moving. We gained a new respect for the importance of sharing equipment and space, but most importantly, we learned the value of sharing information and data. Keeping our partners informed with updated and accurate information was the only way we could forecast and optimize our equipment, making sure it was at the right place at the right time. This planning was critical to keeping the cargo moving.
Looking to 2022, this trend of building partnerships and putting supply chain fluidity ahead of personal goals will become more commonplace.
Chief Executive Officer
Consolidated Chassis Management, LLC (CCM)