“Broken” supply chains are front page news. As mainstream media outlets like Reuters, the BBC and the New York Times continue their coverage, it’s clear that transportation and logistics are in the spotlight like never before.
Our industry faced unprecedented challenges throughout the Covid-19 pandemic and its ongoing recovery. This blog takes a look at the most crucial challenges on the horizon for 2022.
With each challenge we offer a solution. We base our strategic advice on the latest thought leadership, practical wisdom from our collaboration with clients and 30+ years of logistics expertise.
1: Planning for shortages in capacity & labor
Capacity shortages for container shipping show no sign of stopping for 2022. A labor shortage has only intensified the challenge. “You can put more containers on a chassis,” writes Matt Elenjickal, CEO of FourKites, in a recent article. “But if there aren’t enough people to move the goods, it’s of no use.”
Labor shortages go beyond workers at ports. Truck drivers are retiring at unprecedented rates, making carrier sourcing more difficult than ever.
Labor issues persist higher up on the organizational chart. “Trouble staffing key positions within procurement and supply chain ops will force leaders to lean heavily on technologies and automation to create cohesion,” writes Dr. Muddassir Ahmed in an article for SCMDOJO.
Dr. Ahmed points out exactly the kind of solution we recommend. The right digital tool for freight procurement can help companies enormously in the struggle with capacity and labor shortages. Here’s how:
- Capacity: If you’re scrambling to find carrier capacity, you need a reliable, purpose-built tool to give you the highest level of visibility and automation possible. That’s a great description of TenderEasy. No, TenderEasy can’t summon a shipping container out of thin air. But what it can do is ensure that your procurement team can make the process of finding capacity (building better RFQs, benchmarking rates) as smooth as possible.
- Labor: When your freight procurement program is automated and fully optimized, it frees up extra time for your team to do more important work. In 2022, that means training the next generation of procurement professionals. The end result is a leaner team with the expertise necessary to future-proof the procurement process.
As for carrier access, Alpega TMS is unique on the market in offering access to 85,000+ pre-qualified carriers through our Freight Exchange network. It’s something our clients appreciate – especially in 2022.
2: Saving money as freight costs rise
Rising freight costs are partly an effect of the carrier and capacity shortages already mentioned. According to several freight benchmarking services, this trend is likely to continue in 2022.
In the past year, freight costs rose across all modes, in many cases increasing more than 20%.
High fuel prices didn’t help the situation. Nor did a lack of truck drivers. Nor did inflation.
If supply chain managers can figure out a way to cut costs in the supply chain, they can give themselves a significant advantage against the market (for instance, they’ll be able to undercut competitors that raised prices due to inflation).
The solution to the challenge of rising freight costs starts with the freight procurement process. Companies are controlling their bottom line by getting the best rates on freight – and the data to prove it.
But cutting costs goes beyond procurement. Supply chain stakeholders can save costs across the entire end-to-end transportation cycle. For instance, Alpega TMS can help companies save up to 25% on freight costs, but we can also save the same companies up to 87% on process costs. For more on cost control, we invite you to watch this on-demand webinar.
3: Managing increasingly complex networks
Closely related to the challenge of rising costs is rising network complexity.
With complex networks come complex challenges. Costs grow, and without concurrent growth in visibility, those costs can be hard to identify, let alone reduce. Stakeholders seeking to build agility and resilience in complex supply chains face related struggles with transparency.
To get a sense of the impact of network complexity, Gartner® Supply Chain Technology User Wants and Needs Survey, 2020, found that “supply chain complexity is the No. 1 external challenge for respondents.”* This challenge remains a priority in 2022.
Solutions start with digitalization.
Digital solutions for end-to-end transportation management can transform disjointed networks into connected ecosystems. “By 2025, 52% of supply chain organizations are planning to digitally orchestrate the end-to-end value chain from the customer upstream to suppliers by creating a digital ecosystem,” Gartner® predicts.**
Alpega TMS can help make this happen. When your transportation network functions as an ecosystem, you get the transparency you need – and faster access to the data that drives improvements across all nodes of your network.
Companies should also note the role of reshoring and restructuring of complex networks as part of their strategy. But this too is an easier process with the latest tools for network transparency.
4: Putting ESG plans into action
Just as broken supply chains have dominated recent headlines, so has the impact of climate change and the evolution of collaborative plans to thwart it. The past year marked both the release of the IPCC ‘Code Red’ report and the COP26 conference, both of which signaled that:
A) The problem is critical
B) Stricter regulations are on the way
Companies that may have been slower to adopt environmentally sustainable practices will need to ramp up their efforts or face real consequences as more carbon taxation initiatives launch.
But regulatory pressures are only part of the picture. According to Gartner, companies “report pressure to invest in the sustainability strategy is coming from customers (63%), investors (48%) and regulators (46%) in areas including GHG emissions reduction and packaging waste.”***
2022, we predict, is when leading companies will shift ESG goals to ESG action. Through the lens of transportation and logistics, this means implementing the following solutions as quickly as possible:
- Reducing empty miles
- Measuring and reducing GHG emissions
- Adopting reusable packaging strategies
Leaders in sustainable transportation are already relying on Alpega TMS and our Reusable Packaging Management tool to put these solutions into action. More than that, we’re committed to further developing our solutions to make GHG reductions as easy as possible.
Lastly, it’s important to recognize that “Environment” is only one part of “ESG”; as companies ramp up their initiatives, the “Social” and “Governance” aspects of supply chain management are likely to play a greater role.
5: Responding to growing consumer pressures and the media spotlight
This blog began by pointing out how much attention the mainstream media paid to supply chain in 2021. The establishment of a bureau for supply chain coverage at the New York Times is just one indication: supply chain is in the spotlight.
It’s not so much that supply chains are “broken” (or as broken as many articles claim); it’s because consumers have noticed. When kids don’t get their Christmas toys on time, they start making noise.
The ramifications of consumer pressure on supply chains will bear increased consideration for 2022.
Consumer pressure already has a great influence on retail and FMCG supply chains. And last year we took a look at how increased consumer demands were reshaping supply chains for the pharmaceutical industry (part of this ebook). For 2022, we predict this trend will continue for other industry verticals.
Consumers are getting used to delivery speed and service convenience that can match Amazon. Supply chains further removed from ecommerce are likely to feel the pressure of this speed/convenience effect. To meet consumer demands will require agile thinking and, in many cases, supply chain restructuring.
The solution to this challenge will vary by industry vertical. However, we remain confident that the role of technology is crucial in building agility and control as supply chains restructure to serve consumer demands.
If this blog got you thinking about your particular logistics challenges, we would value the chance to continue the discussion. Please get in touch with an Alpega TMS expert.
*Source: Gartner “Predicts 2022: Supply Chain Technology,” Dwight Klappich 17 November 2021. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission.
**Source: Gartner “Predicts 2022: Supply Chain Strategy,” Simon Bailey, 16 November 2021. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission.