COVID-19 has severely impacted supply chains. Statista research found nearly 67.8% of businesses suffering large or moderate negative effects from the coronavirus pandemic.
Moving into 2022, companies must transition from survival mode to one of thriving and exploit future growth. To do this, they will require new digital technologies, including blockchain, to build new supply chain opportunities.
Here are some of our top predictions for supply chain trends in 2022.
Logistic service providers must think more about eCommerce
Technologies like inventory management or ERP are one advantage in eCommerce logistics. Still, supply chain management organisations must also look to newer technologies that better digital eCommerce tools.
Ecommerce is not only for retailers. Gartner states that 80% of B2B sales will be digital by 2025. Gartner's research shows that when B2B buyers compare options, they'll only spend about 5% of their time with an individual company's reps.
Any B2B business that relies on in-person meetings with sales reps and phone calls may lose ground against the competition in 2022.
A Purpose-built eCommerce ecosystem that brings customers, LSPs and eCommerce customers together will boost competitiveness in 2022.
COVID-19 has seen rapid adoption of cloud technology
Cloud technology in supply chain logistics certainly isn't new. Still, thanks to COVID-19, it's seen a boom since 2020. It will likely continue to experience growth as we move into 2022 and beyond and maybe need to work more remotely.
The cloud industry has seen enormous growth, leading to a potential market size of $1,251.09 billion by 2028.
A surge in extensive data consumption, digital transformation and adoption of 5G has all contributed to this enormous growth, and the further development of AI and internet of things (IoT) technology will contribute further.
Electric vehicles and equipment will become more automated
Autonomous vehicles and robots were confined to science fiction or global behemoths like Amazon.
Now supply chain companies and warehouses can take advantage of such technology. It's likely that in 2022 this critical trend in the logistics and supply chain sector will only grow. For instance, equipment that we've seen increasingly automated includes:
- Automated delivery: Delivery drones are becoming more important within the logistics puzzle, automating the last mile of delivery using driving or flying robots. Starship Technologies uses small automated robots to move goods within a small area.
- Automated tracking: Self-driving trucks will be more widespread long before self-driving cars. Investor funding for this technology has grown in the past few years, especially in light of the shortage of haulage drivers.
Automated technology Robots offers vast benefits, including increasing safety and automating manual, repetitive tasks.
Last-mile as a service
Today, customers want faster and more accurate deliveries at lower prices. Brands like Amazon are generally capable of meeting these demands. Still, smaller businesses and logistics companies must keep up or lose business.
Third-party logistics has been a solution for several years. Yet, the 2022 trend will see logistic companies collaborating to build a better global supply chain using blockchain networks.
Rather than focusing on your own company providing 2022 a high-value last-mile delivery service – or do you reimagine and build together with others to boost last-mile capabilities?
Given the heavy customer focus on this area, changing how last-mile deliveries can meet customers' expectations means working with others.
This is a trend to watch for this year.
Sustainability will be a focus
Sustainability has previously cropped on supply chain trends, and it's likely to occur on them for years to come. COP26 in Glasgow in 2021 shed light on climate change issues, which will accelerate in 2022.
With green consumerism on the rise, customers expect more companies are expected to implement eco-friendly supply chain processes. Whilst the specific goal of green supply chain management is often the reduction of CO2 emissions, companies should also look to adopt the concept to add value to their client base.
Companies optimise for reverse logistics
End-of-life goods, customer returns, end-of-lease rentals, and delivery failures used to be straightforward when customers bought from brick-and-mortar shops. Today, logistics is global, and goods are increasingly bought via eCommerce – which means we must return them through the channels they purchased them through.
This is why reverse logistics has grown in importance. Optimised reverse logistics is essential for any business part of the supply chain network. Handling goods flowing back in as efficiently as it can move goods out.
But there are challenges to this process. Businesses need to predict which items are likely to come back up the supply chain and where they are most likely to arrive. If this cost outweighs the item's value, companies lose money. It's also vital that the goods themselves don't get lost in the process.
Focusing on driver retention
Without drivers, supply chains break down. According to Forbes, one qualified driver is for every nine job postings.
Moving goods on lorries is the primary source of container transport once the goods are unloaded at a port. A shortage of haulage drivers means less capacity to move the goods, and they sit idly at the port facilities.
Business operations suffer when goods don't move as they cannot fill up stock or goods sold to customers.
Due to lack of drivers, small lorry companies have little incentive to increase their capacity due to rising costs of buying new vehicles, maintaining them and paying driver salaries.
Lorry companies need to invest in driver intention and incentives, whilst governments must ensure their visa processes are easier to attract more drivers. The UK alone has seen a 37% drop in the number of drivers needed.
Supply Chain as a Service
The supply chain industry is evolving at a pace where anything is offered 'as-a-service', and supply chains are no exception.
Supply chain-as-a-service (saas) is where companies can forge a higher return on investments by partnering with others to support all or part of their supply chain needs, from:
- procurement
- manufacturing
- warehousing
- production control
- logistics.
It offers a virtual supply chain team enabled by cloud or blockchain software. Companies can realise lower and variable cost structures, drawing on proven technology and systems with the ability to scale instantly.
Circular supply chains close the loop
A circular supply chain is where goods and raw materials that flow in the reverse direction can be recycled, reused or resold. If they flow within the supply chain again, they can be reused and resold.
According to recent Gartner surveys, 70% of supply chain leaders plan to invest in the circular economy. In comparison, 51% expect their focus on 'circular economy strategies' to increase over the following years.
Businesses will strive to pioneer sustainable and circular business models, persuading people to make better procurement decisions and influence more sustainable value chains.
This circular supply chain will likely continue trending in 2022; advertising these green business models will be a competitive advantage for eco-conscious consumers.
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Cross-docking facilities cut storage costs
Cross-docking transfers inbound goods to an outbound carrier through a cross-docking facility. Cross-docking is a temporary storage facility that removes or reduces the need for inventory storage.
All incoming goods to the Cross-docking are sorted and loaded onto outbound trucks as fast as possible.
The cross-docking market is growing globally, and by 2030, it is expected to reach $342 billion. This growth is fuelled by rising customer expectations for delivery times, putting pressure on logistics through the demand for faster deliveries.
Local expansion is the new global expansion
COVID-19 was a turning point for many businesses. When it disrupted access to the global supply chain, many logistics businesses sought new and significant opportunities by going local instead.
Whereas it took several days for an e-commerce order to arrive, consumer behaviour now requires that everything be available for ultra-rapid fulfilment at a reasonable price. Due to the highly competitive market, on-demand delivery is quickly turning into a differentiator.
However, most supply chains struggle with providing same-day delivery; it was once even unheard of.
Today, it is more than merely an add-on service; it is now the norm. Players like Amazon have raised the bar in supply chain efficiency by offering rapid fast delivery for Prime members.
This is why localising the supply chain has become so common in the quick commerce market. During economic upheavals, like the current COVID-19 pandemic, companies can quickly adapt or reinvent their supply chain partners to minimise external threats.
That is why supplier relationships matter – and will matter more and more in 2022 and beyond.
Supply chains must keep pace with omnichannel retail
Retailers are going omnichannel, meaning their aim is to deliver a seamless shopping experience online, via mobile, social media, or in-store.
No matter which platform, if an experience is negative through one channel, it will impact the company as a whole. Customers expect the same shopping experience no matter where they purchase, including tracking their goods bought and when they will arrive. Supply chains are disconnected, with retailers unsure whether packages have been dispatched and when they will come to a customer's location.
Creating a digital twin will empower the customer to track and observe packages from purchase to delivery.
Using crowdsourced delivery and multiple logistics partners
Efficient multi fleet management is another crucial step towards optimising cost, meeting and raising customer expectations and ensuring the digital supply chain continues working.
Delivering planned or same-day orders at scale will require multiple logistic service providers and last-mile delivery companies. Those LSPs and last-mile delivery companies will be location-specific or only guarantee specific delivery days. Others may be cheaper or excel in other areas.
The optimal way to lower cost whilst increasing speed is to automate which order goes out to which fleet. For example, a restaurant may outsource its deliveries to a crowdsourced delivery fleet during peak hours but use its employees to deliver once peak hours are over.
Another example is utilising a pool of drivers to deliver from multiple stores or fulfilment centres within the exact geographical location. However, this, too, necessitates technology to identify and track which drivers are available in the nearby vicinity.
When optimising delivery management, companies will need to focus on managing both fleets as a whole and the drivers individually. Using multiple fleets and tracking the packages between them will be a crucial supply chain trend in 2022.
Digital and blockchain will be key for supply chains in 2022
Once again, transformation will be critical in 2022. The logistics and supply chain industry must manage multiple customer channels, fulfilment models, payment options, government customs and VAT, and even facilities seamlessly, in a more interconnected but decentralised way.
This level of synergy between the traditional and digital systems – and the processes and training required to manage them – will require significant transformation.
Customers expect better tracker and faster shipping whilst keeping prices low and improving sustainability by reducing carbon credits. This will place pressure on every supply chain step to adopt digital twin technology.
For any sized business to compete, especially against large enterprises, they will have to collaborate and work together on a new supply chain ecosystem.
Reimagining the entire supply chain system will solve existing inefficiencies and open up new possibilities for all in 2022.
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