Top Logistics & Supply Chain Trends to Watch in 2022

Top Logistics & Supply Chain Trends to Watch in 2022

Emerging technologies. New market entrants. Ever-shifting customer expectations.

Change indeed seems to be the only constant in the world of supply chain and logistics. The industry has witnessed more transformation in the past few years than it has in perhaps the entire previous century. In the face of digitization and evolving customer expectations, companies must adapt to the new market realities in a proactive manner. Especially given the abundance of options available to customers today, it is more vital than ever for firms to constantly evaluate their operations and stay on top of trends in logistics and supply chain in order to remain competitive.

Let’s take a closer look at some of these trends that we can expect to see in 2022!

Trend #1: Omnichannel Supply Chain 

Even if you have never heard of the term itself, the idea of an omnichannel supply chain  — a multifaceted but coordinated effort to move products from end-to-end seamlessly — has been around for years. In an ideal omnichannel scenario, all elements of the supply chain, including resources and channels, are synchronized to bring shoppers a more fulfilling shopping experience. This ultimately allows for the perfect balance between customer satisfaction and inventory management.

Trend #1: Omnichannel Supply Chain

(Image Source: NTT Data Business Solutions)

According to McKinsey, more than half the customers utilize three to five channels each time they make a purchasing decision. Players looking to add e-commerce offerings to their offline business should first consider their unique customers’ needs and identify the top two or three cross-channel customer journeys that can deliver significant value. A customer-centric stance, coupled with a journey-focused approach appears to be the key to building a comprehensive omnichannel experience.

Sephora was among the early adopters of a successful omnichannel strategy. After closing down nearly all its physical outlets in the early-pandemic days, the company rolled out virtual reality (VR) demonstrations and appointment-based consultations to cope with the decline in foot traffic. A key element of Sephora’s omni-retail strategy is its mobile app, which provides customers with a single point of access to everything related to beauty and cosmetics. There is even an artificial intelligence-driven chatbot equivalent to a friendly salesperson to offer beauty advice and personalized recommendations to customers who need the assistance.

Trend #2: Digital Twins Technology

Though the concept of digital twins has existed since the 21st century, it is now at a tipping point where widespread adoption is likely in the near future. A digital twin, in essence, refers to “a computer program that uses real world data to create simulations that can predict how a product or a process will perform.” Together with emerging technologies such as the Internet of things (IoT), artificial intelligence (AI) and cloud computing, digital twins have the potential to revolutionize many modern industries including logistics and supply chain.

Needless to say, the benefits are endless for companies that can afford this innovation. First and foremost, digital twins can enhance shipment protection by finding out how different packaging can affect a product, even before the first delivery leaves the warehouse. Using sensors to collect and transmit multiple data points during an actual shipment, it helps to identify any possible loopholes in the production-to-delivery process. 

Moreover, companies can visualize and evaluate any pending changes to a warehouse layout or rethink the addition of new equipment before making the actual changes. DHL, for instance, is working with food packaging manufacturer Tetra Pak to simulate all activities and machinery using a digital twin at one of their warehouses. They are thus able to study the movement of packages and the functionality of machinery without interfering with current operations.

Trend #3: Smart Warehousing

Smart warehousing is yet another innovation that is reinventing the world of logistics and supply chain. Similar to smart homes, a smart warehouse is equipped with the necessary technologies and infrastructure that work together to increase the productivity and efficiency of operations. With proper planning and deployment, automation in warehouses can help to lower logistics costs by a whopping 40%.

One of the other major benefits of smart warehousing is maintaining inventory accuracy. Implementing an inventory control platform with asset and inventory tags enables automation of stock counting, which in turn allows for real-time, accurate reporting that can be accessed from a remote location. Furthermore, when a significant component of the warehouse management system integrates with automation, it eventually optimizes time by reducing the demand for human labor. These systems working in tandem will increase customer satisfaction while growing brand loyalty by meeting the ever-growing consumer expectations.

Trend #2: Digital Twins Technology(Image Source: DHL)

Founded in 2015, Exotec is a French unicorn that is known for its “Skypods”, their signature offering that utilizes robots to perform basic tasks. Through this solution, regular warehouses can be converted into partially-automated logistics platforms. Rather than constantly moving around, workers can now focus on tasks that require more cognitive work and complex reasoning.

Trend #4: Autonomous Vehicles in Last-Mile Delivery

No longer the stuff of science fiction, unmanned vehicles are paving the way for a drastic disruption in logistics and supply chain. The last-mile delivery sector is fueled by the fast development of e-commerce and customers’ expectations. More and more shoppers are demanding same-day or next-day delivery and they are willing to pay more for these services. 

Unlike in the past, drones and autonomous robots today are increasingly affordable and easily accessible to consumers worldwide. This is partially due to companies like Flytrex that are specialized in building drones that “can be operated with minimal input and at low price.” When it comes to small packages, drones are a better option since they can help to automate the delivery process while simultaneously minimizing the costs of transporting goods over short distances. When paired with an efficient transportation automation system, last-mile delivery using drones could benefit businesses and consumers alike.

Alibaba is one prominent example of a company that has achieved great success in the autonomous vehicle industry. The Chinese e-commerce giant has 200 operating robots and has reached more than 200,000 customers in 52 cities across 22 Chinese provinces. With a proprietary multi-sensor fusion solution and AutoDrive, their robot “Xiaomanlv” is powered by a machine-learning algorithm that can simulate over 10,000 possible scenarios, such as extreme weather conditions and poor visibility at night.

Trend #5: Reverse Logistics 

Reverse logistics is a type of supply chain management that moves goods backward through the supply chain from end-customers to distributors or manufacturers. The term, which is often thought of as only referring to returns, actually encompasses other processes including recycling, repair, reclamation of raw materials, refurbishment, and reselling. Last year, the global reverse logistics market reached a value of US$ 563.2 billion and is forecasted to hit US$ 812.6 billion by 2027.

Trend #5: Reverse Logistics

(Image Source: Oracle)

Reverse logistics is becoming an integral part of the circular economy, an effort towards a sustainable supply chain of e-commerce that represents companies’ commitment to corporate social responsibilities (CSR). In online retailing, at least 30% of all products ordered are returned, compared to only 8.89% bought in brick-and-mortar shops. This number shows that the returns process is very important for a holistic and satisfying shopping experience for e-commerce customers and for reducing waste.

Kohl’s is well-known for having a uniquely generous returns policy. For most retailers, there are strict requirements to be fulfilled before granting a full refund (or whatever promised amount) of the purchase. For Kohl’s, however, they allow customers to “return most merchandise purchased in-store and Kohls.com for up to 180 days after the original purchase date, with or without receipt.” With a good reverse logistics program in place, companies like Kohl’s no longer have to leave money on the table while also benefiting from high customer retention rates.

Trend #6: Digital Freight Matching 

In the U.S, over 70% of goods are delivered by trucks across the countries so the national economy depends heavily on the effectiveness of this transportation business. Digital freight matching (DFM) is a technology that can resolve this problem of efficiency. DFM helps match carriers with shippers who want to get goods from A to B as effectively as possible. In simpler terms, DFM platforms are like Uber for carriers and shippers. 

DFM platforms provide a load board, where shippers post information about the freight they need including weight, rate, distance, pickup, and delivery locations. Carriers will review the board and commit to loads if they have matched trucks available. 

Just 5 years ago, most DFM platforms were still early age startups. In recent years, from 2019-to 2020, over $1 billion in investments in the U.S were versed into DFM companies, not including internal investment from legacy freight brokers. The significant number proves that DFM is a trend and holds great potential. Key players in the DFM sector include Convoy, PostBidShip, Uber Freight, uShip, DAT, Truckstop and 3PL. Each platform has slightly different features and holds distinctive advantages in the field. 

Trend #7: 3D Printing Streamlining Supply chain

3D Printing has created hype in the supply chain with its innovative, transformative features. It is not an exaggeration to say that 3D printing or additive printing is the key sourcing technology of the future. The mechanics of 3D printing is similar to normal inkjet printing but instead of applying ink to paper, 3D printers inject materials in successive patterns to build a 3-dimensional object. 

There are different approaches and technologies in 3D printing but all in all, it facilitates creating and customizing complex designs. GE Aviation, for example, uses 3D printing to manufacture nozzle tips for LEAP engines, which are frequently used in commercial aviation. The technology allows these tips to be made with just one piece, as opposed to the usual 20 pieces.

The speed in creation, the economical advantage of not having to create individual molds are crucial aspects that accelerate the adoption of this technology in various fields. The 3D process is software-driven so it erases the impact of time and geography. Product designers can simply send a file to a printer, as close as possible to the end customer.  These advantages are even more necessary when the supply chains saw numerous difficulties and problems in the pandemic period and post-pandemic period.

Looking to 2022 & Beyond

With so many innovative breakthroughs on the horizon, we are excited to see what 2022 has in store for the world of logistics and supply chain.

Which trends are you looking forward to the most in 2022?

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