As 2022 kicks off, it’s busier than ever for retailers, manufacturers, and logistics companies alike. From Halloween to the New Year, it’s a non-stop grind through the busy season. And that’s not without its challenges. The supply chain industry has become more flexible in the past two years than ever before: COVID-19, natural disasters, crowded ports, and more have forced companies to adapt, and adapt quickly. To stay ahead of the curve, WSI is looking into the future to anticipate the biggest supply chain trends for next year.
We consulted with company leaders TJ Mccarthy (Supply Chain Process Lead) and Måatt Schroeder (VP of Investment and Pricing) and asked them their thoughts on what we’ve staked out as next year’s biggest trends. Here are our picks:
1. LOGISTICS-AS-A-SERVICE (LAAS)
When you hire a logistics service provider (like us!) to handle your distribution needs, you employ a team of experts to help you get your products where they need to go. The distribution and fulfillment branches of the supply chain have expanded rapidly in the past decade, and TJ Mccarthy expects this expansion to continue as many stores are offering discounts for recurring online orders. For example, customers have the option to subscribe to receive toilet paper via Walmart or Amazon at a 10% discount, when previously they would have to order every month at full price.
At the same time, companies are looking to scale and grow, which often requires them to outsource their logistics operations to 3PLs. One of our concerns is variability. “The risk for these companies in utilizing what is essentially a 4PL service,” says Matt Schroeder, “is that, unlike other services, warehousing companies don’t necessarily have a minimum service level expectation from carriers: there are widely varying capabilities across warehouse companies, and that can directly impact the ultimate service those companies are receiving.” At WSI, we know that Reliability is Everything™, so we are capable of a wide range of inventory management, fulfillment, and transportation services for whatever your business may need.
2. INSOURCING AND MADE IN THE USA
“The transportation cost and lead time of products made abroad are becoming prohibitive,” observes TJ, “This has led to three major developments: first, delays at inbound ports and rail capacity continue to delay shipments, second, long lead times equals higher inventories, and third, there are incentives of all types available for manufacturers in the USA.” It’s no secret that American ports have been congested for the past two years, and experts don’t anticipate them opening up anytime soon.
Avoiding those busy ports by producing domestically will certainly reduce lead times, but one of the potential drawbacks is higher manufacturing costs. Matt sees this cause-and-effect and proposes a solution: “With increased automation and the supply chain issues everyone has experienced throughout the global pandemic, it can sometimes be a choice between slightly lower margins and no revenue at all. As a USA-based 3PL, WSI can absolutely help companies manufacturing within the USA to quickly and efficiently distribute their product.” Not ready to make the switch? Take advantage of our global transportation network.
3. AUTOMATION AND ROBOTICS
Automation has become fully integrated with our everyday routines: Ordering from kiosks at McDonald’s, getting coffee poured by automated baristas at Starbucks, and checking out our own groceries at Walmart. Companies are using automation and robotics to enhance their supply chains. UPS and Amazon, for example, are testing automated delivery drones. “Robotics and automation will become even more critical throughout the next year,” says Matt. Amid the pandemic, supply chains across the nation are facing massive labor shortages. “There is a tradeoff to consider when looking at automation and robotics for public 3PLs in that oftentimes great automation materially reduces flexibility.” WSI has public buildings from coast to coast and is constantly searching for useful automation that will suit our more industrial-based operations. “We’re looking forward to using robotics and automation in our fulfillment-based operations and are targeting deployment in the next 12-24 months as we find an opportunity that is both a prudent investment and not overly limiting.”
The EPA calculates that the transportation sector “generates the largest share of greenhouse gas emissions” in the United States, citing over 90% of those emissions coming from gasoline and diesel. TJ explains that there is a rising global awareness of the energy costs of transportation. Many countries such as New Zealand, Denmark, France, and the UK have mandated zero emissions. We can see the effort to reduce carbon emissions at home, with the increasing popularity of electric vehicles, solar power grids, and residential composting facilities. Our mission at WSI is to provide the best service while remaining a responsible steward of our environment. “Sustainability is increasingly becoming top of mind for customers,” says Matt, “WSI is committed to pushing sustainability both within our company and to our customers through items such as the use of sustainable packaging, electric lifts, automated lights, and much more.”
5. DIGITAL TRANSFORMATION
Retailers are now striving for a “seamless customer experience”, making it possible for customers to order products through any medium: on the phone, via social media, online, and in traditional brick-and-mortar stores.
An important question we ask ourselves is, “How can we manage those different types of customer channels and fulfillment models?” TJ answers this, “By taking advantage of real-time visibility and tracking throughout the supply chain process through the use of scanning and RFID” we can achieve that seamless customer experience. Matt adds, “Ultimately, we can achieve this by leveraging a world-class technology stack and WMS (Warehouse Management System) to seamlessly aggregate, pick, and ship orders from a variety of disparate sources. This means, that regardless of the channel, our customers’ end customers will have an excellent experience.”
There you have it; our picks for the top supply chain trends in 2022! We expect LaaS, Insourcing and Made in the USA, Automation and Robotics, Sustainability, and Digital Transformation to dominate the operations of the nation’s supply chains in the next year. WSI’s principle of Absolute Reliability guides us to stay up to date on these trends, as well as anything else that comes our way as we ring in the new year. Have some thoughts about our picks for next year’s trends? Talk to us.