The previous few years have been both historically significant and challenging in the field of logistics and supply chain management. We are still dealing with unprecedented demand, fleets are doing the best they can with limited employees, and the existing infrastructure is backed up, creating delays and price rises. This is despite the fact that we are getting closer to the year 2022.
We wish we could tell you that after the holidays are over, we’ll have turned the corner, but the reality is that it is more likely that the situation will become worse before it gets better in the future. We wish we could tell you that once the holidays are over, we’ll have turned the corner. On the other hand, the good news is that many companies have not yet utilized their available capacity to its fullest extent. If you take the right steps, you can position your company to be successful in spite of the many challenges it will have to overcome.
If you pay attention to these five trends in 2022, you will have the potential to improve your business’s output and operations while reducing expenses.
1. Get yourself ready for a protracted lack of available workers.
Because of the current driver shortage, everyone is figuring out how to get more done with fewer resources, which will continue to result in delays for firms who are attempting to expand their fleets or increase their capacity. The National Transportation Institute believes that throughout the next ten years, almost one quarter of the workforce in the trucking business will reach retirement age, which will account for 54 percent of the driver shortage (NTI).
There are repercussions for more people than just motorists. It is possible that stevedore workers will go on strike in the months to come, especially given the large number of cargo ships that are currently anchored off the coast of Long Beach. Supply chain professionals, who are frequently considered as the experts who can guide firms through the current economic crisis, continue to be in high demand. This need can be attributed to the fact that supply chain specialists continue to be in high demand.
Because competition for skilled workers is so fierce right now, you should do everything in your power to guarantee that the members of your staff are well taken care of. When it comes to fleet owners, you should make sure that your drivers are handled with respect, and when it comes to brokers, you should make sure that your partners are treated with kindness and respect.
Additionally, you should be looking for ways to maximize the use of the time and resources that are at your disposal. While it’s possible that increasing your workforce will be necessary to meet demand and expand your business, it’s also possible that you’ll be able to find ways to cut down on the amount of time spent by your drivers and make use of technology to free up workers in the supply chain so they can focus on more important responsibilities.
2. The capacity bottleneck will be a challenge for the foreseeable future.
At the moment, there is an overwhelming amount of demand, but there is not even close to enough capacity that is available, which has created a perfect storm that has been building up for years and has only been made worse by the increase in shipping volumes as a result of COVID-19 legislation.
It is likely that rental prices per ship may reach $200,000 per day, and some businesses are ready to pay a premium to transport their goods by air. For example, in the year 2020, Apple booked 200 private planes to distribute their products, which was a new high for the company. As a direct consequence of this, it will take some time for capacity to catch up with demand. In the meanwhile, businesses will need to make the most of the capacity they do have by carefully monitoring asset use and establishing shipment priorities.
3. There will be an increase in the number of mergers and acquisitions.
Shippers and manufacturers all around the world are investing in visibility through means of mergers and acquisitions, and the value of agreements in the first half of 2021 increased by 86 percent year over year. UPS recently acquired Roadie as a result of its technology and capacity to extend the current UPS network. At the same time, Panasonic acquired Blue Yonder, which is an artificial intelligence-driven supply chain management solution that functions from end to end. Both of these acquisitions were made in the past few months.
In light of the scarcity of both talent and capacity, situational awareness may help discover opportunities to boost capacity while simultaneously controlling expansion in a manner that is sustainable. In the modern business world, visibility is widely acknowledged as a strategic instrument for enhancing efficiency and utilization, and we can anticipate that during the year 2022, a greater number of firms will acquire the competencies necessary for visibility.
4. Investments in infrastructure have the ability to pave the way for future progress.
In order to ease a substantial amount of the capacity bottleneck, our supply chain infrastructure needs to be expanded, and if we could build more ships, trains, aircraft, and ports overnight, this would be a huge step in the right direction.
There is no silver bullet, and it will take some time for us to catch up to the level of infrastructure that is necessary for our success. We will be able to start increasing capacity as soon as we break through the stalemate in Congress and put the infrastructure plan into action, assuming, of course, that this can be accomplished. Up until that point, we will keep looking for methods to enhance our efficiency so that we can accomplish more with the same amount of resources.
5. The fifth item to bring up is the issue of inflation.
Understanding what happens when constant demand is met with a supply that cannot be maintained requires neither the training nor the experience of an economist. We are moving closer and closer to an era of inflation, despite the fact that the majority of CEOs do not want to accept it. The cost of goods and services has already started to grow, and it is only a matter of time before companies start passing these price hikes on to their end consumers. Executives have a responsibility to be ready not just for the increases in expenses but also for the repercussions that will be caused by those increases.
In the year 2022, the attention will primarily be on the bottom line. The following is a list of things that executives in charge of the supply chain need to take into consideration in order to maintain low procurement costs without compromising the value stream: Once again, technological advancement is the key to finding a solution to this issue. The leaders of the supply chain need to make investments in new technologies over the course of the coming year in order to deploy data insights that will lead to cost reductions. The effects of inflationary costs will inevitably be felt by customers, but businesses may be able to mitigate some of these effects by reducing or eliminating costs that aren’t absolutely required. Investing in smarter procurement practices will be essential for achieving and maintaining a low COGS rate beyond the year 2022.