How Events in 2021 Influenced Supply Chains for 2022 and Beyond – Part II

In our final blog post of the year, we featured sixteen (16) transformations spawned by events in 2021. We covered the first eight (8) in last week’s post. Here, we cover the next eight (8) for you.

Rather than solely taking a retrospective look at this year’s past events, we wanted to go beyond that by sharing insights into how to prepare for the future.

Here are the next eight transformations, beginning with Number 9.

  • The rise of collaboration. Again, the scope and scale of supply chain disruptions led to combatting disruption through collaboration. That also extended to industry stakeholders and the government as supply chain issues began affecting national security. The government established a supply chain task force that will probably lead to continued collaboration and communication with industry.
  • Leasing of Ships by Shippers. In the latter part of 2021, we saw businesses like COSTCO, Walmart, Home Depot and others lease their own vessels. These retailers did so out of necessity to ensure capacity to deliver their goods in time for peak season. Delayed delivery equals lost sales. Drastic times call for drastic measures. They are probably not limited to 2021 but promise to endure because they provide supply chain flexibility and resilience.
  • Sustainable supply chains. Although this issue might not have been in the news as much as some of these other issues, the trend towards sustainability grew in 2021. This issue refers to achievement of net zero carbon emissions by 2050. Many shippers undertook various ways to reach this goal. Some employed scrubbers to meet short-term goals. Others chose to power new ships with biofuels. And one manufacturer designed a container ship with sails. Meanwhile, Maersk, the world’s largest shipper, plans to reach net zero emissions by 2023. That’s an aggressive schedule and well ahead of every other shipper. As sustainability becomes an increasing concern, competition to match Maersk will increase.
  • Supply chain as a strategic asset. This trend represents a major shift from pre-pandemic times. The government has elevated supply chain as a strategic asset citing national security reasons. As competition heats up between world leaders, one differentiating factor is supply chain effectiveness. That’s also true in private industry. Just look at the issues that dominated 2021. You’ll see supply chain agility and resiliency are critical to survival and key to profitability. The future will go to those companies who think, plan, and execute strategically. Supply chain is now a driver of strategy. It’s moved from the back office to the front office.
  • Extension of service into the Last Mile. Thanks to the rise of eCommerce, last mile delivery has become industry’s latest fascination. As a potential new profit center, last mile delivery has many benefits. It facilitates end-to-end visibility, enhances customer experience, and improves both operational efficiency and carrier productivity. That’s why several shippers and 3PLs are extending their services to last mile delivery. These companies include Maersk, XPO Logistics, and Ryder, to name a few.
  • Emphasis on employee health and safety. Covid-19 made health and safety a frontline issue in 2021. But it won’t stop in 2021, as we saw with the Delta variant and now Omicron. This trend will endure as employers recognize the value of employees. Many factors support this trend. First, there’s the labor shortage across all logistics jobs. Second, competition for employees has heated up because of the labor shortage, and companies poach other companies’ employees. Third, given these two challenges, every business wants to maximize its workforce’s availability to work. If your workforce availability is below a certain percentage, that affects productivity and profits. Finally, keeping employees healthy and safe ensures long-term sustainability, giving your business a competitive edge.
  • Increased focus on supply chain risk management (SCRM). “Risk-on” defined 2021. It seemed risk lurked around every corner. So, SCRM came off the back-burner, as C-suite executives sought ways to cope with risk. The consensus is that risk will increase in the future because of increasing complexity and growing competition. Also, risk is growing in scope, scale, and effect. Plan on continued extreme weather, crippling cyberattacks, and future pandemics. In response, SCRM will only grow in the future because it goes to the heart of survivability and profitability
  • Customer satisfaction vs. cost. Businesses built supply chains in pre-pandemic times to be efficient. Zero waste was the mantra for inventories in warehouses and pipelines. Cost was the overriding factor.  As Covid-19 hobbled lean supply chains that relied on reliable sources and smooth product flows, cost became a secondary factor. Now customer service has replaced cost as a driving supply chain tenet. Hence, inventories will increase probably in size with higher safety stockage levels to ensure customer satisfaction. eCommerce will also reinforce and foster this trend as customers’ expectations rise. This trend doesn’t discount cost as a factor. Instead, it elevates customer satisfaction over cost in a delicate balancing act. Businesses that can achieve cost-effective solutions while optimizing customer experience will thrive.

Stepping into 2022 and Beyond

This post wraps up the sixteen (16) transformations that resulted from events in 2021. These aren’t the only transformations, but they represent the major changes underway. If you focus on these, you have more than enough to keep busy.

American Global Logistics exists to meet or exceed customer expectations. We accomplish that by staying on top of a change. We identify transformations underway to ensure we ride with the trends not against them.

If you’re not sure how to prepare for what 2022 will bring, contact us today. We can help you make sense of the chaos and uncertainty.

Happy Holidays from the AGL Team!