18 Quick Tips For 2022
Looks like 2022 will be fraught with many of the same challenges as last year. But IL has your back. We collected 18 tips from our audience—the leaders in logistics—to help you navigate with certainty.
1. Collect data insights.
2021 was a frenetic year for manufacturers, retailers, and distributors specifically related to logistics and freight procurement. And arguably nothing has caused more headaches than truckload capacity. From rising costs, increased tender rejection, poor on-time delivery, and lack of data transparency, it should be no surprise that shippers are struggling to maintain transportation key performance indicators (KPIs). And unfortunately, it doesn't look like things will get any easier in the short- to medium-term in 2022.
With that said, a growing push in the logistics and freight industries around data transparency, coupled with a long-overdue digital transformation that automates old processes, will help ensure shippers have the sophisticated tools necessary to gain real-time visibility into the capacity market, and actionable data to make data-driven decisions.
2. Take both a bird's eye view and a granular look at data.
The pandemic has both shaken and slowed supply chains across industries so dramatically, requiring professionals in the field to take a keener look at every single step of the process, and recognize the important role technology plays in making this possible. It's no longer just you and your supplier—in fact, it's more critical now than ever before to have both a bird's eye view of the entire system, and granular insight into each step along the way.
This kind of visibility is going to be key to shipping and receiving products in a timely fashion—and in a way that remains compliant in 2022. As such, we see innovative and forward-thinking supply chain leaders integrating and investing in software that provides this kind of critical visibility into every component of the supply chain for more timely and streamlined outcomes.
Senior Proposition Manager
ONESOURCE Global Trade, Thomson Reuters
3. Liquidate & limit your SKUs AND Give e-commerce customers visibility into order status.
Warehouse vacancy rates are still historically low. Storage rates have doubled—and in some areas, tripled—over the past year. Because warehouse operations have become so complex, it's highly unlikely that new facilities will be off the ground in time to increase capacity any time soon.
We have record levels of inventory coming into the country and record levels of inventory already here, sitting on warehouse shelves. Some merchants are holding on to inventory that hasn't moved in over a year. At current and projected storage rates, those merchants will soon be upside down in their investments.
Savvy merchants will do three things to overcome this capacity issue. First, they will look to immediately liquidate anything that has been sitting on a shelf eating up margins. Second, they will narrow their SKU catalog to only their fastest-moving SKUs. Finally, a leaner SKU catalog allows merchants to contract a smaller footprint within the warehouse, reducing storage fees and creating flexibility to more easily distribute their inventory for faster time in transit on final-mile deliveries.
Ware2Go, a UPS company
The state of the global supply chain is forever changed—and that's a good thing. Over the past 20 months, retailers, suppliers, and vendors' traditions became obsolete, forcing them to address long-term pain points exasperated by the immense disruptions brought on by the port bottlenecks and shipping delays. In a time when delays have become commonplace, retailers need to take their tail out from between their legs and realize over-communication is key.
Those succeeding are the ones with visibility into their suppliers and warehouses, and the ones who communicate product listings, cart status, and tracking by text and email afterward. Transparency before, during, and after the order process is critical as we enter 2022, and retailers guaranteeing this transformation establish trust with their customers.
VP of Industry Relations and Partnerships
4. Refine reverse logistics processes.
In recent years, retail and e-commerce industry leaders have focused on optimizing forward supply chains for greater efficiency, lower cost, and better automation. But the reverse supply chain has traditionally been forgotten. This will change significantly in 2022.
As consumer buying habits continue to be robust, so too will product returns—and those returns will take up a larger share of retailers' and e-commerce companies' resources. This will be true for both B2C retailers and B2B companies, whether omnichannel or exclusively e-commerce.
To mitigate this, supply chain leaders will shift their focus to modernizing their reverse logistics—a space that is still largely dependent on spreadsheets and manual tasks.
Technology that delivers consistent workflows, better automation, and clearer visibility into the end-to-end returns process will be essential for retailers and e-commerce companies to keep their heads above the sea of returns. For their customers, a frictionless and responsive returns experience will improve satisfaction and drive loyalty in an era when it's easier than ever to take their wallets elsewhere.
5. shift inventory Strategically.
E-commerce strategy will continue to evolve through 2022 in two ways. First, brands and retailers will correct weaknesses identified due to supply chain disruption, such as on-hand inventory levels being too low and single threaded solutions for sourcing or movement. Second, organizations will leverage multiple locations to fulfill orders. With rising transportation costs, brands and retailers will continue to shift inventory closer to their customers, whether that's in stores or through other distribution centers.
This shift reduces time from click to delivery and mitigates the costs. Opening additional locations to hold inventory and ensuring there is an order management system in place to direct orders to those inventory locations to be filled is a major priority for peak season in 2022.
How retailers can plan for disruption in 2022. Given that there have been two years of supply chain disruption, retailers faced a challenging planning environment. 2020 and 2021 may not provide accurate benchmarks for future performance, and 2019 is too dated to support plans.
The best approach will be to create the most accurate estimates possible of demand and required inventory levels and then develop contingency plans to adjust as plans actualize. Things like vendor managed inventory, distribution center inventory, store inventory that can be available to any customer, and additional safety stock for fast movers should help mitigate risk.
6. Leverage multiple channels.
The e-commerce industry is bigger than ever, but customer satisfaction and the movement of goods have never been more of a challenge for product sellers. With trillions of dollars in sales up for the taking, e-commerce is poised for incredible growth in 2022 after an already record-breaking year.
To succeed and compete against retail giants like Amazon, retailers need to diversify their sales channels. To do so, they must invest in adequate technology solutions that allow for seamless omnichannel operations and end-to-end visibility. Consumers now expect to be able to track their orders from start to finish. Providing customers with full transparency into the entire fulfillment process will no longer be an option, but will instead be a requirement.
By investing in modern, innovative technologies, retailers can better serve customers despite ongoing and future supply chain disruptions in the year ahead.
7. Apply last-mile technology to the middle mile.
Middle mile is the new last mile. The most complex aspect of logistics typically is that last mile to the customer's door. But with the rise in e-commerce, the middle mile is becoming just as complicated.
Responding to consumer demand for same- or next-day shipping, businesses now resort to less than truckload (LTL) shipping in the middle mile. LTL has outpaced long-haul trucking in both demand and cost during the past two years, finds U.S. Bureau of Labor Statistics data, and it's likely to continue to rise along with online shopping. LTL will be critical to local fulfillment for companies competing with national brands. Businesses should consider applying last-mile logistics technology to the middle mile to improve efficiency and reduce costs.
Co-founder and CEO
8. Small and mid-sized businesses: prioritize partners over poachers.
COVID-19 spurred growth within e-commerce marketplaces, as many shoppers realized the benefits of the digital marketplace. Social media platforms have only furthered this trend, with TikTok being the latest company to evolve its in-stream shopping tools.
In 2022, small and mid-sized businesses (SMBs) need to take a closer eye to their e-commerce partnerships. While many SMBs have seen the benefits of selling via these third-party platforms, some have also experienced the downside: customer competition. Identifying e-commerce platforms that are partners versus poachers is critical, ensuring that small businesses maintain customer relationships.
9. Choose your partners carefully.
With digitalization revolutionizing logistics and bringing about more efficient processes, information exchange, and visibility, we will see the industry shift into a careful selection of partners based on their technological aptitude and insights. This will strongly be the case for Mexico since new tax regulations are forcing companies to adapt and optimize their processes in order to comply.
Smaller carriers will struggle to comply with requirements when dealing directly with clients without the technical infrastructure of brokers. The accounting team of every logistics company will be put to the test and the ones that manage to leverage efficient and automated processes will avoid the crisis of on-time compliance for every shipment. From that angle, staying competitive will require a stricter filtering system of logistics partners and suppliers.
Head of Product
A warehouse is more than just a place to store merchandise—it's an integral partner in your e-commerce strategy and your success as a business. It's critical for brands to undertake a full audit of any potential new partners, and continually audit existing partners to ensure you get the performance you need.
Fulfillment and Logistics Partnership Director
10. Optimize assets.
As fleet managers re-evaluate their operational strategy, they will look for intuitive asset management technology that offers flexibility, actionable data, and real-time transparency. As we saw in 2021, businesses without the right technology in place have paid dearly with inefficiencies, delays, and errors—resulting in overburdened resources and increased costs.
Looking ahead, asset management optimization through data-driven technology will serve as a critical competitive differentiator in 2022.
Through accelerated adoption of asset management technology, businesses will realize efficient workflows, reduced maintenance and repair costs, updated administrative processes, and end-to-end transparency. Hence, their customers will benefit with critical equipment visibility that improves operational efficiency while reducing out-of-service losses.
In 2022, businesses will also bolster strategic planning efforts to strengthen their supply chain with the goal of "pandemic proofing" their operations. As such, they require asset management technology that leverages data more than ever. This provides a complete and real-time picture of their assets as they move through the supply chain supported by predictive and actionable analytics to efficiently make informed decisions.
With robust EDI and open API tech philosophy, businesses are able to avoid data constraints that are being encountered elsewhere in the supply chain market.
Chief Technology Officer
Consolidated Intermodal Technologies (CIT)
11. Remember people underpin technology.
Companies that are successful this year will be investors in their people. True performers in the technology field need to be continually challenged and have opportunities to spend a portion of their time learning the new industry technology.
The best companies will encourage their team members to spend 10% of their time on applying cutting-edge technology to the supply chain problem. Innovation is driven by employees already within the organization. Technology leaders need to actively help team members develop and manage their career planning. Lip service to development and opportunity will cost companies their best technology talent.
Ensuring that the technology staff understands the entire stakeholder model and how to deliver value for clients, whether internal or external, means the business views the results as success. When technology is successful, the business has the tools needed to be successful. Supply chain solutions to the current environment will lean heavily on technology, which begins with people.
VP of Technology & Innovation
Pegasus Logistics Group
12. Map your processes—apply supply chain taxonomy.
Manufacturers will look to technology in 2022 for supply chain solutions, but purchasing a fancy tool will not solve problems unless you're prepared. Artificial intelligence is widely misunderstood, with the largest companies just beginning to reap the benefits of machine learning after years of work.
Companies over the next few years need to spend time and money: Increase the quality of data currently stored in their servers; expand the collection of data to sources outside their ERP systems (the Internet of Things), and learn to utilize this information to better understand business facts and behaviors.
Effective system integration across all business functions is complex, and integrating external information—from suppliers and other external data—adds another layer of complexity and risk of capturing inaccurate data. Full utilization of these systems requires a company to develop an accurate and complete business process taxonomy, which is a map of necessary business processes from each department of an organization and supply chain partner. ERP software and consultants bring technology knowledge, but only those performing the functions can explain the knowledge of an organization. This holistic approach to systems integration is critical for technology to help minimize the effect of supply chain disruptions.
Global Leader, Manufacturing and Distribution
Partner, Citrin Cooperman
13. Integrate disparate supply chain technologies.
Due to the tight labor market, companies will focus on core processes and explore opportunities to outsource non-core functions like returns management and liquidation.
Sustainable business has become table stakes and businesses need to prove results to regulators and consumers.
As we move into 2022, supply chain managers will need to make integration technology a central focus to keep both sustainability and profitability top of mind.
Pandemic-induced supply chain hurdles offer a reboot opportunity for companies. As business leaders are forced to rethink strategy, they can leverage technology to both improve supply chain performance and address sustainable supply chain management practice from product design through to distribution and the end of an asset's life cycle.
Technology delivers a measurable, demonstrable way to prove commitment to environmental protection in all facets of the business.
14. Apply the freight container model to e-commerce packaging.
The pressure to combat climate change is speeding the development of reusable packaging, and expanding it to new types of supply chains. Optimizing shipping routes to minimize carbon footprints will become common practice.
Sustainable supply chains will build in ways to pick up corrugated material such as cardboard boxes and packing fillers like peanuts, and reuse them as many times as possible.
There's huge untapped potential in applying the freight container model to consumer packaging, where each unit is used countless times, maintained, and packed with products in highly optimized ways. Another model worth looking at is the thermobox that food delivery services use, which could be used as a modular industry standard across verticals.
As public opinion accepts the need to cut emissions, even last-mile consumer deliveries will adopt recycled and reused packing materials, find ways to use less plastic, and match packing boxes more closely to the size of the item.
Circular supply chains will also replace traditional linear operations. It will become accepted practice to offer pickup for items that have reached the end of their lifecycle, invite customers to return empty items for refill, and/or remove as much friction as possible from the process in cases where refill/reuse already exists.
15. Consider recurring business models to mitigate supply chain issues.
The supply chain crisis is here to stay, and in order for businesses to survive long enough to see the light at the end of the tunnel, leaders must find ways to be creative and differentiate themselves from the competition.
Companies, especially small businesses, that can expand beyond their core offerings and offer services, which by nature are not supply chain-reliant, will have the upper hand. Additionally, those who look to transform their business to a recurring model, offering subscription-based services and products, will be more resilient to supply chain disruptions with planned purchases and also capture market share left on the table from businesses that folded during the pandemic.
Companies that are able to bill monthly or annually, and become less dependent on day-to-day sales of products and services, will win the supply chain game. Ultimately, businesses that are able to get creative with their offerings and figure out a recurring billing model will be less reliant on a volatile supply chain for cash flow in 2022.
Vice President, Small Segment and Business Operations
16. Increase modes and safety stock.
Nearshoring may not be a long-term solution for many shippers who also have to consider the cost of opening new factories, retooling existing manufacturing sites, and finding a workforce ready to take on the challenge. Given the difficulty of executing this and the potential for further bottlenecks in the future, completely redesigning the supply chain takes more time and adds more complexity than many shippers are able to handle. A more productive approach in the long term is to take more control over the logistics process, look to alternative transportation modes, and hold more inventory.
EVP & CRO
17. Upskill your workers.
The high turnover among truck drivers and warehouse workers will continue to strain supply chains in 2022. To fill the gaps left by the shortage and ensure your company is able to continue growing, focus on technology implementation, upskilling, and training.
Warehouses and trucks are becoming more modern and automated, helping companies streamline operations and meet quotas despite high employee turnover. However, new technologies also require companies to focus on training existing employees and upskilling workers across the supply chain to efficiently utilize various solutions.
The focus on upskilling, and how technology like the cloud and automation can streamline distribution and manufacturing, will be huge in 2022. Companies would be smart to start talking about it today.
VP of Sales
18. Diversify sourcing.
Supply chain shortages will continue into 2022 and it will be crucial for companies to find ways to make their supply chains more resilient to keep up with consumer demand. Success and profit will come for companies taking new approaches.
As ports try to keep up with international sourcing challenges, market participants will be expected to put more of an effort into supplier diversification and consider buying elsewhere from companies with greater capabilities. Providing multiple channels from which global companies can access goods and services is how we will see success in supporting rising consumer needs.
Chief Technology Officer/Chief Digital Officer
Körber Supply Chain