We made it through 2022. Despite brands and retailers struggling with inventory and demand planning woes to labor challenges creating a talent war, 2022 was a year of growth for the supply chain industry.
Enter 2023 – a year of innovation and progress.
As we greet the new year, the warehousing and logistics industries have an excellent opportunity to capitalize on emerging technology to help streamline operations and reduce costs.
What are these technologies and how can they help move the supply chain forward? This article answers those questions and explores how these trends and technologies can be game-changers in the warehousing and supply chain space.
The supply chain, especially freight, is a logical place for electrification and automated self-driving to take hold due to the industry's nature of long-haul, repetitive highway miles. But even in these simplified use cases, the journey is still not straightforward.
In 2022, we saw startups and enterprises pushing to adopt E.V.s in the supply chain. For example, General Motors-owned self-driving startup, Cruise, announced plans to develop its own processors in-house by 2025, and Waymo — formerly the Google self-driving car project — announced plans to test autonomous trucks on public freeways across Phoenix and the I-45 corridor between Dallas and Houston.
We expect more tests in 2023 and a growing amount of freight to be handled via autonomous electric trucks within the next five years.
Amid market disruption and looming economic uncertainty, retail brands must be scrappy and smarter with their inventory management. One helpful trend is unlocking inventory that was previously only available to a portion of the market by optimizing where you’re storing inventory and fulfilling orders.
Fulfilling e-commerce orders from alternative locations – such as retail stores or micro-fulfillment centers that are closer to customers – helps brands and retailers fulfill more orders quickly, better capture customer demand and save on shipping costs. Inventory that was previously only available at a store location to a localized market can now be used to capture demand across the internet.
The movement of repurposing real estate that would otherwise sit empty is continuing. For example, retailers are setting up fulfillment centers in abandoned malls and old storefronts. New technology and point robotic systems are being designed, and massive conveyor systems to automate these repurposed fulfillment centers are being implemented.
This movement has several benefits, including getting fulfillment centers closer to customers, helping to meet customer demands for quick delivery, as well as uplifting surrounding areas around these repurposed malls.
Retail companies, big and small, are continuing to expand into omnichannel fulfillment. For example, Macy’s is implementing mini-distribution centers in some stores. Target is adding larger store formats with more backroom fulfillment to beef up their BOPIS (Buy Online, Pick Up in Store) capabilities – all to give their customers more flexibility.
There is a promising opportunity for brands to expand their omnichannel supply chain operations to include Buy Online, Ship from Store and the increasingly popular Buy in Store, Ship to Door.
This strategy is common in specific industries, such as large furniture items, but it’s starting to pop up everywhere. One trend for apparel brands is transforming stores into experience centers where customers can try on clothes, and their purchases get shipped to their homes. Stores can hold far less inventory and service more customer demand with this approach.
Globalization of your supply chain can reduce manufacturing costs, but organizations see the value in near-shoring, also called re-shoring, because they don’t have to ship their product across oceans. Shipping sea freight from China takes about 15 days to reach the U.S. West Coast and about 25 days to reach the East Coast. And then, brands have to wait for the ship to be unloaded and for the product to arrive at their distribution centers.
This past year, near-shoring operations in Mexico saw an investment of $17.2 billion, 25.5% more than it did during the same timeframe in 2021. When organizations shift to near-shoring operations, they slash their product ship and dwell times, helping them fulfill orders faster.
The increase in localization and micro-fulfillment trends can also help companies reduce their carbon footprint. When products are housed in fulfillment centers closer to their final destinations, companies will use fewer carbon emissions as they more efficiently find ways to ship and pack products.
Consumers are also more demanding of sustainable business practices. Millennials and Gen Z are choosing brands based on their carbon footprints, so companies are investigating their carbon impact to influence strategic supply chain decisions, such as where goods are produced and stored in relation to their customers.
Brands and retailers must have an accurate view of their total inventory posit to position products strategically and fulfill demand. More than just on-hand inventory, pulling together on-order inventory, in-transit and shipped-but-not-yet-received inventory can unlock insights previously lost in their data.
This holistic view of inventory can only be achieved by integrating data from all partners, including shippers, co-packers, fulfillment partners, transportation partners and e-commerce marketplaces. There now exists a family of software solutions collectively called supply chain control towers that can help facilitate this integration and visibility, and their use will only increase as data sources continue to proliferate.
Over the last few years, the supply chain industry has realized how vital it is to know who your supplier’s suppliers are. Brands need to have visibility into the company that produces their products’ raw materials and the company that manufactures them. This data visibility into different supplier tiers helps organizations better protect against potential disruptions to their supply chain.
For example, let’s say a tsunami hits the only area where your product’s raw material is farmed. In that case, there might be insufficient raw material left to salvage, meaning your manufacturer might not have enough material to create your product. Meaning, you won’t be able to fulfill your customer demand.
When you have visibility into your suppliers’ suppliers, you can strategically position multiple suppliers in different locations to protect against these disruptions.
Supply chain systems produce asinine amounts of data. When you start adding IoT devices and robotic systems into your warehouse and supply chain operations, you will only increase the amount of data your warehouse is producing.
You can make sense of this data and correlate it with your operational performance to find insights. For example, you can identify trends to help you drive faster fulfillment times. Based on all your data, you can see a trend that there’s usually a surge in demand around lunchtime, which means your operations team picks, packs and ships more products before the day shift ends, leaving the night shift with fewer orders to fulfill.
As fluctuating consumer demand and market volatility continue, supply chain organizations are seeing an increased need for flexible systems to support their operations in these trying times.
Brands have been struggling with managing inventory levels as they settled after over-purchasing throughout the COVID pandemic. They have a massive amount of inventory that consumers don’t want, so they’re stuck with products that are not selling. To help retailers and brands deal with this challenge, they have increased their focus on demand planning and forecasting to help prevent further over-purchasing.
While the tight labor market is not moving the supply chain industry forward, you can’t ignore its impact. Companies are struggling to hire enough people, so they’re turning toward flex labor solutions and other innovative practices – such as automation – to ensure they can keep up with customer demand with a smaller workforce.
As we innovate and grow our supply chains in 2023, these emerging technologies and mindset shifts can help you fulfill more customer demand faster.
We’re curious to see how the headlines and our predictions shake out this year. Subscribe to our editorial coverage so that you can stay up to date.