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Top 5 Emerging Logistics and Supply Chain Trends in 2022

Logistics and supply chain form a closely interconnected system, which is an essential prerequisite for any business, with the potential to make or mar its prospects, depending on how efficiently it works. The supply chain is a network of companies an enterprise forms to source raw materials, and then deliver finished products. Logistics is the network that physically handles the products. No matter how carefully a company builds its supply chain, in the absence of an effective and well managed logistics network – the planning, storage, transportation, on-time delivery and inventory management – any weak link in this chain can snap the carefully built relationships and impact business adversely. The Covid-19 pandemic brought home this reality like never before and led to a massive rethink about the entire operations, shaping new trends, while demolishing many an old order.

The Present Scenario

Traditionally, most enterprises treated supply chains as part of the manufacturing process to get the raw materials or components to make a product and then deliver it to the customer. Logistics is something that was either managed with in-house resources or outsourced to external service providers. Earlier many companies depended on a single supplier to fulfill all their requirements to keep things simple. Gradually, realizing how expensive, inefficient and unreliable this could become in crisis time, companies began cultivating multiple suppliers, which introduced an element of competition that brought the prices down and also ensured continuity in case any supplier failed to deliver.

Top Trends to Consider

With wisdom distilled from experience, tempered by adversities and facilitated by emerging technologies, the business of logistics and supply chain is continuously evolving into a more customer friendly avatar. The top trends that are shaping this transformation may are summed up in the following paragraphs.

 

Greater Adoption of Digitization and Technology

The rapid strides made in digitalization post the democratization of the internet have brought the much needed transparency to supply chains and even logistics processes. The digital transformation of an enterprise begins with digitization of processes which means all the documentation is now online, which speeds up processes by eliminating the paper chase. This also breaks the departmental silos with information available to all stakeholders instantly. Anything that moves is tracked, and something that does not move is quickly detected. Use of IoT devices and data storage in the cloud has facilitated this real time insight powered decision making. No longer is a stack of paper going to hide inefficiencies in the system.

Increased Focus on Sustainability

With growing environmental awareness and consequent regulatory measures, supply chains are now undergoing further refinement with a lot more responsibility and accountability built in the process to make it sustainable. A sustainable supply chain takes into consideration ethical aspects and environmental issues in terms of the origins of raw materials, mining practices, exploitation of labour, pollution control measures and use of renewable energy, optimization of transportation – especially the last mile delivery, and even the recyclability of materials. This also helps in the long run to increase the efficiency of buildings, vehicles and machinery, also saving costs and helping clean the environment. With the governments of over 110 countries having pledged to work towards carbon neutrality by 2050, sustainability of supply chains is going to be a critical factor in redeeming this pledge.

Decentralization of Logistics Technology

Traditionally, enterprises have followed a centralized supply chain with a central headquarters and warehouse, both at a single location. From an administrative standpoint, this made eminent sense and brought many advantages like greater operational control, limited operational costs and easier to make changes and improvements. It is also preferred by suppliers and worked well in the pre-internet era when modes of communications were rather limited.

A decentralized supply chain on the other hand has operations spread at different locations with small offices and warehouses that are closer to their customers, while retaining overall control from the HQ. With faster communications and greater coordination between the main offices and regional centers, decentralized supply chains offer advantages like lower costs at the local level, provide better customer service and above all reduce potential disaster risk in times of calamities. Decentralized logistics is also served well by Blockchain-based solutions.

Enhanced Utilization of Automation and Robotics

Digitalization has led to more automation in supply chain activities especially in those economies suffering from labour shortages. The trend had started much before the pandemic, which further accelerated the process, with robotics also joining the fray. According to the MHI Annual Industry Report 2022, this year supply chain technology and automation will move from evolutionary levels of adoption and investment to revolutionary levels. The previous edition of the report had indicated the adoption rate for robotics and automation increased more than any other supply-chain technology. Robots have become less expensive and more convenient to use, while also making supply chains more efficient and safe. Robots mounted on AGVs and autonomous mobile robots (AMRs) have found many applications in warehouses from packaging and palletizing operations. On the other extreme, ecommerce companies will not be able to manage their warehouse operations with robots. Gartner predicts that by 2026, 75% of large enterprises will have adopted some form of intralogistics smart robots in their warehouse operations.

Omnichannel Distribution and Focus on Customer Experience

If the internet created the Multichannel supply chain model by providing various options to purchase goods, growing consumer expectations have now led to the rise of Omnichannel distribution model. So what is the difference? Basically both Multichannel and Omnichannel models offer multiple options, but the former operates in silos where the customer can either shop online or go to the store, while the latter integrates all options which can be availed from a single interface providing a superior customer experience. Unlike the Multichannel model where products ordered online are shipped only to the consumer’s address, Omnichannel Model provides options for delivery address too. This is especially relevant in the post pandemic times as customer habits have changed and deliveries are expected in the shortest possible time.

However, as an emerging model, Omnichannel is putting a lot of demands on supply chains which are at times struggling to meet the rising customer expectations. This demands streamlining of the fulfillment process as well as better inventory management with visibility throughout the process, and the resilience to face dissatisfied customers and cancelled orders. On their part, companies may have to tweak their strategies to include cross-channel platforms and shared services between different stakeholders by putting the customer first.

Conclusion

Post pandemic, global supply chains are going through a transition period adapting to changing customer demands and expectations on the one hand, and creating alternate delivery models and better logistics networks on the other. Under these circumstances, optimizing the processes to deliver better customer experience by adopting the emerging trends backed by proven technologies is the way forward.

If you are looking for a reliable supplier for your engineering organization, do reach out to us at rfq@essnps.com and our team shall connect with you soon!