Logistics Imperatives to Manage Uncertainty and Disruptions in 2022: Part 1
This is Part 1 of a multi-part series addressing logistics imperatives necessary to manage uncertainly and disruptions heading into 2022.
There’s just no telling what the new year will bring in terms of emerging logistics challenges. After experiencing an incredibly challenging two years in the global logistics industry, I think we can let go of any expectation that the supply chain landscape will ever return to “normal.”
Disruptions are continuing to affect our everyday life: raw materials and component shortages, labor shortfalls, port closures, rising fuel costs, rising merchandise costs, and other forces will continue to exert enormous pressures on global supply chains in 2022. Extreme uncertainty on both the demand and the supply sides will continue for the foreseeable future for many industries. Cost and cash to serve, are rising continually.
Once again, it will be incumbent on logistics teams to deliver better, faster service, at a lower cost, to get products to market in the face of these continuing issues. There are three certain imperatives for logistics teams, based on our shared experience over the past two years:
- Logistics teams need to become better at sensing and responding to disruptions and to leverage technologies to handle corrective actions.
- Faced with continued labor shortages, companies must maximize their limited human resources but avoid exploiting this asset.
- As the world embraces more ambitious sustainability goals, logistics providers must minimize their environmental impacts.
How can logistics teams hope to focus on these priorities, when too often they are struggling just to complete daily tasks and deliver on time? The same advanced technologies that can help companies attain these long-term strategic goals also enable logistics teams to operate faster, smarter, more agilely and more profitably every day.
The following is a discussion of each of these competitive imperatives for 2022, and a look at the role of technology in helping logistics teams achieve these objectives.
Early Identification of Disruptions Drives a Faster, Unified Response
Certainly, no company could have foreseen the shutdown of the global economy in the early months of 2020 — or the continuing effects of the COVID-19 pandemic, such as port closures, throughout 2021. But at Blue Yonder, we noticed an interesting phenomenon.
Those customers who were quick to recognize new conditions, and respond with innovative strategies, have fared far better in the face of continuing uncertainty than companies taking a more reactive stance. We watched as customers adopted new warehousing and transportation processes, new delivery modes, new technology tools and even entirely new network models that helped them succeed in the constantly changing “next normal” state that characterized 2020 and 2021.
How can logistics organizations build in early-warning systems that enable them to act with speed and innovation when the unexpected happens? Part of the answer lies in making a cultural change. Logistics teams need to eliminate their functional siloes and narrow objectives — instead focusing on shared goals, seamless workflows across functions and end-to-end supply chain excellence. Logistics professionals needs to shift from a tactical focus on the disparate activities of order, warehouse and transportation management to a more strategic perspective that considers the performance of the holistic supply chain. This broad view allows the logistics team to react in an orchestrated, synchronized way at the earliest sign of disruption.
The 2021 State of Supply Chain Execution Report, conducted by Reuters Events Supply Chain in partnership with Blue Yonder, revealed that 63% of manufacturers and retailers, and 60% of logistics providers, believe their efforts to create end-to-end visibility are yielding the single greatest return on investment of all their execution strategies today. However, a recent Forbes article pointed out that, while 92% of executives believe supply chain visibility is critical, only 27% of their companies have achieved it.
Advanced technology, including artificial intelligence (AI), is crucial to enabling this cultural transformation. Functional teams can’t work in concert unless they are sharing the same data, the same end-to-end view, and the same objective of profitably and quickly getting products to the customer. As logistics teams are unified on a common technology platform, they can all be alerted when AI engines recognize the first signs of a deviation — and they can all play a role in bringing the supply chain back on track. While AI often triggers an autonomous execution-based response, functional managers continue to play a key role by taking innovative actions, like creating an alternative network design, that re-set logistics operations for continued success.
When there’s a plant shutdown, a port closure or a missed supplier delivery, that’s everyone’s problem — not just a problem for one team. Recognizing the issue as early as possible, and bringing the resources and attention of the entire logistics team to bear, is the smartest way to mitigate the ongoing uncertainty that’s sure to occur in 2022.
Managing Labor Shortages Means Working Smarter, Not Harder
It’s certainly no secret that the global logistics industry, like many other industries, is closing out 2021 in the midst of a true labor crisis. According to the U.S. Bureau of Labor Statistics, the pandemic resulted in a loss of 6% of the pre-COVID-19 truck transportation workforce of about 1.52 million employees. While some recovery has been made, employment levels are still short of February 2020 levels by 33,000 jobs.
Headlines are filled with dire predictions about how 2022 will be characterized by continued shortages of drivers, warehouse associates and other critical logistics professionals.
The 2021 State of Supply Chain Execution Report also found that 63% of retailers and manufacturers have been affected by the availability of labor over the past year. The most common way companies are attempting to optimize their human resources is via the deployment of warehouse and labor management solutions.
But perhaps the most promising way to maximize the contributions of the workforce is to leverage advanced technology, including AI, to allow human employees to work smarter, not harder. While only 25% of respondents are using warehouse robotics, Blue Yonder expects the trend to continue rising. Robotics and task automation make the most of limited human resources, while also freeing available employees to focus on strategic work instead of manual labor. Integrated labor management addresses employee engagement and retention, systematic performance management, and forecast of workforce requirements to facilitate longer-term planning.
In Part 2, we will continue to explore how to better manage labor shortage and improve sustainability.