2022 Supply Chain Omnichannel Fulfillment Strategies
Although “supply chain” didn’t make the cut for word of the year, it has become a household word. No one really thought about how products arrived on grocery shelves or at retail stores — until they didn’t. The thought that an item might not be available was unheard of. Today, most people know the role different companies play in the supply chain, whether it’s manufacturers, warehouses, distribution centers, or transportation providers.
No one is taking the supply chain for granted anymore, but people are paying more attention to each company’s role. What does that mean for third-party logistics (3PLs) companies, warehouses, and partners? What are their primary challenges, and how do they address them?
Omnichannel Challenges for Logistics Industry
The logistics industry is faced with a multitude of challenges, but five of the top concerns when developing omnichannel fulfillment strategies for 2022 are:
1. Keeping Transportation Costs Low
As fuel prices increase, so do shipping costs. According to the U.S. Department of Energy, diesel fuel has gone from $3.60 a gallon at the start of 2022 to $4.00 as of February 15. California, which has the highest fuel costs, averages almost $5.00 per gallon. That doesn’t account for the cost of jet fuel. How much container or cargo ships pay depends on where they refuel. Logistics companies will struggle to control costs if prices continue to rise.
2. Maintaining Carrier Capacity
The end of 2021 saw companies such as Target, Home Depot, Walmart, and Costco charter their own shipping vessels to transport goods to less crowded ports for faster distribution. Amazon avoided long port delays because it has been operating as an ocean vendor since 2017. Logistic providers will need to find carriers that can bypass busy ports to ensure timely delivery as part of their omnichannel fulfillment strategies.
3. Finding Reliable Ground Transportation
Logistics companies not only have to worry about rising fuel prices, but they also have to ensure they have reliable truckers. The American Truckers Association says that the U.S. lacks about 80,000 truckers. The lack of drivers may also increase transportation costs. Trying to keep prices down when there’s a labor shortage and rising fuel prices makes for an even more significant challenge.
4. Ensuring Delivery Performance
Most importantly, the logistics industry must maintain consistent performance, regardless of demand. Consumer demand has not shown a downturn, although ongoing inflation may slow consumer buying trends. That may be a short-term benefit for the industry, but slowing consumer demand means slower economic growth for everyone. It is a factor that businesses must keep in mind as they look at their omnichannel fulfillment strategies.
5. Integrating Technology
While trying to keep costs down and maintaining consistent performance, the logistics industry needs to integrate technology into its operations. If businesses don’t have a technology budget, they will fall behind. There are solutions to help manage fleets more efficiently and reroute transport carriers for faster turnaround times. Technology can help reduce fuel usage to help save costs. By collecting data, logistics companies can find ways to extract the most value out of every part of their business.
Overcoming Challenges in 2022
Unfortunately, most of the logistics industry’s challenges are outside its control. The industry cannot control inflation and rising fuel prices. It cannot fix labor shortages. Although companies can partner with companies that deliver consistent and reliable service, there’s no guarantee that the services won’t come at a higher price.
Organizations should focus on what they can control — their operations. Technology is a crucial component for an effective omnichannel fulfillment strategy for 2022.
- Internet of Things (IoT). Placing smart devices throughout a warehouse makes locating products and monitoring environmental conditions easier. Putting devices on trucks, for example, makes it easier to find fuel efficiencies through shorter routes.
- Artificial Intelligence (AI). Combining AI with automation or IoT can help move decisions to the endpoints for better performance and efficiencies.
- Automation. Automation can allow companies to re-allocate resources for better utilization, whether it’s automating a process or deploying a robot.
- Data Analytics. Looking at data using AI can help identify areas where minor improvements can produce significant results. Maybe, it’s routing ground transportation around a last-minute storm that saves time and money.
Integrating technology into operations can result in end-to-end improvements. For example, knowing how to maximize container usage can help improve processes. Flexcon works with clients to deliver solutions that work with their technology to provide more efficient operations, which should be a part of every company’s omnichannel fulfillment strategy.