Supply chain disruptions continue to wreak havoc on everything from holiday gift shopping to rising prices for basic commodities. However, the future still seems hazy, because factors such as covid-19 variant and climate change are still a continuous destroyer.
Pandemic related factory closures, national closures, demand fluctuations and labor shortages have put supply chains and delivery times in trouble in various industries, especially those that rely on supplies from China and other parts of East Asia. As supply chain volatility continues into the new year, many companies are making changes to prepare for future disruptions, leading to greater trends, such as greater integration efforts, automation, sustainable development initiatives, etc.
Merger intensification
In order to strengthen their resources and reduce competition, many companies are choosing to integrate, and this trend is likely to increase in 2022. In the field of logistics, mergers and acquisitions will be more common than ever, because large industry enterprises acquire small enterprises, and small enterprises become stronger after merger.
We will start to see a third-party logistics business with one to three warehouses, rather than more than 50 warehouses, as they acquire real estate and geographical areas. Who has the widest coverage of regions and technologies and can transport goods at a lightning speed will gain a competitive advantage.
Growth of automation
In 2022, the industry will see the rapid adoption of robotics, which will equip warehouses with the technology needed to keep up with the high requirements of e-commerce and global supply chain transformation. Given the increasing complexity of supply chain and consumer demand, adding machine intelligence to the solution will help planners better solve the changing supply chain equations.
With the development of warehousing industry and the development of green warehouse, the company will increasingly adopt the latest warehouse technology, including wearable devices, to track productivity and improve scanning efficiency. In addition, as more capital is invested in automation technology to reduce material handling costs, hybrid modes that allow robots to work with humans will continue to proliferate.
Increased logistics costs
2021 witnessed the outbreak of logistics costs. As online consumer shopping, inflation and energy costs continue to drive up prices, we can expect more cost growth in 2022. In 2021, truck transportation costs increased by 36% year-on-year, driven by pandemic consumer demand and bottleneck materials and ports. As long as these challenges continue, the truck transportation industry is expected to increase by another 30% in 2022, and consumer prices may increase by more than 10%.
Return to work
The pandemic in 2021 hit all industries, but it hit warehousing and material handling in particular. Although recruitment and retention rates have declined this year, job seekers are likely to return to the warehouse as more and more companies provide competitive wages, work skills and benefits for warehouse workers. As logistics workers spend time studying which companies have better welfare, corporate culture and work life balance, we will see the re emergence of employees entering the labor market. A full recovery may not happen immediately, but the industry is ready to rebound after the holiday, especially as the number of people applying for unemployment benefits recently reached its lowest level in 50 years. I hope it can only rise from here.
Go green
Climate change advocacy groups and consumers are increasingly responsible for the environment and have been promoting supply chains to reduce damage to the environment. With the rise of green consumerism, it is expected that more companies will implement eco-friendly supply chain processes in the next few years.
In the United States, electricity and transportation are the main sources of greenhouse gas emissions, so green logistics is rapidly gaining favor among companies. Eco friendly warehouses have advanced energy management systems that use timers and meters to monitor the use of electricity, heat, water and natural gas in all facilities, helping to prevent excessive waste of resources.
Electric and solar vehicles are also becoming more common because they can help reduce the overall carbon footprint of the supply chain. Similarly, climate smart supply chain planning will be affected because environmental changes brought about by climate change affect the availability of materials and resources and cause potential interference to the supply chain. Companies will have to consider these factors and look for other resources when necessary.
Turn to circular supply chain
Although this will take many years to implement on a large scale, 2022 can see the circular supply chain, that is, manufacturers refurbish waste products for resale, which begins to erode the linear supply chain. In order to cope with the rising cost of raw materials and their unstable supply, many companies choose to decompose their products and turn them back into raw materials. Although there is always an initial cost to implement a new process, in the long run, cycling the supply chain in this way can help reduce costs and achieve long-term savings. With a circular supply chain, companies can spend less money on raw materials, which in turn reduces the risk of price fluctuations. In addition, circular supply chains create less waste and help companies reduce their overall impact on the environment.
Stricter government regulations on recycling and waste disposal may also encourage enterprises to consider adopting circular supply chains. Enterprises adopting sustainable development practices will be encouraged, not only from the government, but also from consumers, most of whom like environmentally friendly products.
The good news is that the disruption caused by the pandemic has forced the industry to innovate faster than ever, and companies are increasingly deploying new software, tools and machine intelligence to better manage short-term volatility. From the role of human plus machine intelligence - or enhanced intelligence - to more and more eco-friendly initiatives, 2022 is taking on a different look from the past few years.
