New Year, Same Supply Chain Mess

The past year will be remembered for a red-hot economy but supply chain bottlenecks that cost sellers an opportunity to gain market share and grow revenues.

For brands selling direct to businesses (B2B) or consumers (B2C), 2022 can't be another lost opportunity. Unfortunately, some things are out of their control — COVID-19, port backups, a lack of warehouse capacity and last-mile delivery driver shortages, to name a few. But with a little foresight, they can accomplish some mitigation to make 2022 their most successful year to date.

Leading industry experts shared some of their thoughts with Modern Shipper on the state of e-commerce and the overall supply chain heading into 2022.

"Businesses should forecast early and often," said Sean Henry, co-founder and CEO of Stord. "In the past, many brands relied on ‘just-in-time' delivery, but that just doesn't work when supply chains are strained. Brands should invest in growing their inventory levels to ensure they have products in stock for their customers, and they should be strategic with their marketing strategy, promoting items that are in stock and easier to restock."

Stord is a technology-focused supply chain company, offering warehousing and other solutions. Henry said tech investments are becoming increasingly essential.

"Brands must invest in technology to improve visibility across their supply chain from port to porch, and warehousing and fulfillment. Investing in this now will pay massive dividends this time next year," he said.

Technology investments

That was a theme echoed by Dave Brunswick, vice president of solutions for Cleo, a B2B commerce integration platform company.

"At the start of the pandemic, we were surprised by how quickly businesses started to look to the future and engineer their business processes for what it might bring," he said. "This has not subsided in 2021, and in fact we've seen the acceleration of digital transformation to support new business models and the agility needed to respond to the rapidly evolving business market. A surprising number of companies across all of the players in supply chain are taking this as an opportunity to reengineer their IT landscapes and prepare for the next supply chain upset and the next era of digital transformation."

Businesses should forecast early and often. In the past, many brands relied on ‘just-in-time' delivery, but that just doesn't work when supply chains are strained. Brands should invest in growing their inventory levels to ensure they have products in stock for their customers, and they should be strategic with their marketing strategy, promoting items that are in stock and easier to restock.
Sean henry, co-founder and ceo of stord

Brunswick said those businesses that have put off an IT transformation could find themselves in survival mode very quickly.

"Part of the transformation has involved a lot more organizations moving infrastructure to the cloud," Brunswick said. "Some organizations have historically resisted this because they have critical on-premise business systems which either have no cloud equivalent, or would be too costly and/or time consuming to move in the short term. In 2022, we'll see more of these organizations adopting a hybrid strategy, moving everything but critical on-premise systems to the cloud to leverage the agility and flexibility cloud service can bring while maintaining core legacy on-premise systems."

The supply chain continues to be ever-increasingly digitized, and that will have implications for everything from the original manufacturer down to the last-mile provider.

"In a post-pandemic world, enterprises are more aware of the dire need for organizations to digitalize to increase velocity and agility," explained Mahesh Rajasekharan, CEO of Cleo, noting that digitization is leading to integrations of various supply chain touchpoints, providing a more cohesive supply chain for shippers.

"The lack of agility and responsiveness in global supply chains as highlighted by the pandemic will make CEOs and boards focus more on the importance of resilient, highly integrated supply chain processes and technology," Rajasekharan said. "Businesses will start focusing on integrating their ecosystems so that their demand chain and supply chain are highly streamlined with core integration technology so that they can intelligently sense and dynamically respond to market disruptions."

Shorter supply chains

Ronen Samuel, CEO of Kornit Digital (KRNT), a digital textile printing company that works with brands like Asos and Boohoo to help localize their manufacturing, said brands need to look at shortening their supply chains, which will minimize risk of COVID disrupting commerce.

"As we saw this year with port and factory closures across the world, offshore production methods are no longer as reliable as they were pre-COVID, and with more experts claiming that COVID is here to stay, it doesn't appear that this COVID-fueled volatility will subside anytime soon," Samuel said. "Disruption is the ‘new normal' and the best way to prepare your business for the disruptions of 2022 is to shorten the length of your supply chain by removing links and producing locally."

Watch: Building an efficient supply chain

Samuel also noted that supply chains remain susceptible to the container, chassis and labor issues that have plagued the West Coast ports this year, leading to an unprecedented backup of containers.

"This will negate the cost savings that drove many brands to outsource production to manufacturing hubs like China and Vietnam," he said. "What's more, thanks to e-commerce giants like Amazon and Walmart, nearly 80% of consumers have grown to expect free shipping when ordering apparel and home goods, and 87% of shoppers don't mind waiting longer (five to seven days) for free shipping. Companies will have to find ways to keep shipping costs at zero cost for consumers or risk losing business."

Delivery expectations

Henry picked up on this point as well, noting that brands need to set delivery expectations that consider the constraints parcel networks face.

"For deliveries to be made on time, brands should look into differentiated last-mile and backup parcel networks such as regional networks, smaller networks, delivery platforms and more to ensure they have flexible solutions that can scale throughout their logistics network when met with supply chain disruptors," Henry said.

Supply chain visibility has never been more important, the experts said, and is of particular importance for shippers moving goods along the e-commerce supply chain.

"Companies that can provide exceptional visibility to their customers regarding product availability, the status of purchase orders, transportation status, proof of delivery, etc. will have a competitive advantage over those that can't meet increasingly high customer expectations," said Rajasekharan. "In 2022, this pressure will require companies to make foundational investments in the cloud, modern integration technology with APIs, and real-time analysis in order to achieve comprehensive visibility. From these investments in visibility and transparency, organizations will be able to build stronger customer and partner relationships. Additionally, they will glean insights from this data that internal operations teams can use to make more intelligent real-time business decisions."

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Benzinga

Benzinga