C ustomer demand follows roughly similar patterns in most years, making it possible to project supply and demand with some condence. “But 2022 is perplexing,” says David Cox, president of Polaris Transportation Group. “It shouldn’t be as busy as it is right now, and it’s not clear where the rest of the year will go.” Ination, potential interest rate hikes, and global uncertainty make it difcult to gauge what’s going to happen. “I’m very cautious right now,” he adds.
providers, starting from the time an order is placed, says Jill Sloand, senior consultant with
most impacted by the pandemic were international transportation and logistics (43%), sourcing and procurement (30%), and manufacturing (24%). Due both to supply chain disruptions, as well as consolidation in the logistics sector, the traditionally transactional nature of the relationship between logistics providers and shippers has shifted. “The value of collaborative long- term partnerships with mutually rewarding outcomes have become popularized,” Beckett says. TURNING TO TECHNOLOGY TOOLS Logistics providers’ actions have also been ignited by the growth in shippers engaging stand-alone technology rms to integrate their logistics platforms and digitize logistics activities, Beckett says. That has prompted 3PLs to invest in and make available enhanced tools for end-to-end shipment visibility, sustainability, and predictive analytics. The current changes are forcing both shippers and carriers to be more transparent, with carriers providing data on capacity, and shippers, information on volume demands, says Spencer Shute, principal consultant with Proxima. The more logistics providers have access to this information, the better they can manage their network, reduce in-house labor spent on tracking and tracing, and provide timely status updates. In addition to transparency, reliable and rapid communication is essential to navigating challenges. Shippers need seamless, ongoing communication with their logistics
Many third-party logistics (3PL) providers have been implementing a range of solutions to help them collaborate with their clients to navigate an uncertain business environment and address challenges like product shortages and delayed shipments. Logistics providers “need to understand the changing needs of the shipping community and be agile to adapt their value-added services accordingly,” says Matthew Beckett, senior director analyst with Gartner’s supply chain practice. What’s sometimes known as the “bullwhip effect” has had even more opportunity to wreak havoc on many supply chains. The term refers to the phenomenon in which a relatively small shift in retail demand is magnied as it moves through the supply chain. Say a store normally sells 100 T-shirts each day, but the owner knows an upcoming local festival will bump sales to 110 each day. She orders 120 shirts for each day of the festival, just to be safe. The distributor, in turn, orders 130 for each day from the manufacturer, also to be safe. The manufacturer then increases production to 140 T-shirts per day. PANDEMIC’S IMPACT While the bullwhip effect has always been a challenge, its impact became more pronounced recently, as businesses have faced sudden shifts in demand, labor and container shortages, a jump in e-commerce, and factory shutdowns. Shippers responding to the 2022 Third- Party Logistics study, conducted by NTT DATA and Pennsylvania State University, indicated the areas
Tompkins Solutions, a subsidiary of Tompkins International. Real-time communication allows shippers and logistics providers to address any problems before they grow bigger and more complicated. AUTOMATION GETS COOKING Even as delays constrain many supply chains, advancing technology has improved the speed and efciency with which many logistics providers can ll orders, Sloand says. That’s helping them reduce costs and operate more efciently. For instance, automation allows for denser storage options, so the same operation can run in a smaller footprint. That can help companies struggling to secure additional space in today’s demanding real estate market. Advances in automated equipment have also boosted internal processing efciencies from put-away through pack-out, helping to mitigate the labor shortage. The increased capacity gained from automation also allows logistics providers to offer clients additional, advanced operations. “Logistics providers are no longer seen only as the manual operations to move goods, but now as service and technology providers,” Sloand says. As e-commerce continues to grow, logistics providers will need to remain efcient and up-to-date with technology, Sloand says. Among the top technologies in which 3PLs are investing, according to the 2022 Third-Party Logistics study, are high-density storage pickers and palletizers, autonomous forklifts, and wearables.
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