Driving Force Behind Logistics & Supply Chain Trends in 2021

In the last few months, the global pandemic has affected almost all aspects of the world economy. One industry that has seen particularly noticeable changes over the past few months is e-commerce. As self-isolated consumers turned to online shopping, it has created immense pressure on the supply chain logistics industry to keep up with the increasing demand. 

As a result, logistics companies are stepping up with innovative strategies to respond to these rapidly shifting logistics trends in 2021. From automated warehousing technology to last-mile delivery solutions, here are the top 9 emerging trends in the supply chain logistics Industry you need to know in 2021.

In this article, read about:

  • Blockchain
  • Reverse Logistics
  • Digital Training
  • Gamification
  • Elastic Logistics
  • Warehouse Automation
  • Last-Mile Delivery
  • Risk Management Framework
  • Lean Logistics
  • What Does it Mean for Logistics Companies?
  1. Blockchain

In 2019, worldwide spending on blockchain solutions was at 2.7 billion; before 2022, this number is expected to climb all the way to 11.7 billion . Blockchain has been one of the most steadily increasing industry-reshaping global logistics trends through the last few years, and its rise shows no signs of stopping.

  1. Reverse Logistics

Related to the rise in e-commerce is the need for good reverse logistics management in 2021. Reverse logistics includes all the value-added services that companies provide after the point of sale. This includes post-sale services such as returns, refurbishment, repairs, reselling, and recycling services . The reverse logistics supply chain is expected to be worth US$ 603.9 billion by 2025, with a CAGR of 4.6{d6efc2d34d1e900f497fc96d474c98aaa47fd974be8ffc1702a76d8f373bbce4} between 2018 and 2025.

  1. Digital Training Solutions

Though the beginning of the novel coronavirus pandemic raised concerns about disruptions in supply chains, the associated e-commerce created unprecedented new demands. For example, Amazon hired 175,000 temporary workers at the beginning of the pandemic and has hired 2,800 new workers every day since July 2020 

To cope, Amazon embraced digital training methods to handle the major onboarding challenges this 2020 hiring spree posed. The e-commerce giant employs 1,000 technology professionals who create digital tools to automate the recruiting, hiring, and training processes . As more millennials enter the workforce, they bring their technological habits along with them. Modern warehouse workers are used to the interactivity and ease-of-use they associate with their cell phones and other devices, and respond well to digital training . 

  1. Gamification

In 2021, engaging your workforce through interactive and motivating productivity boosters like gamification is a great way to enhance warehouse worker training and boost productivity .Gamification offers employees stimulating skills practice with real-time feedback that inspires and guides them towards improved performance. It makes the work into a kind of video game or digital challenge that the workers can interact with to understand and build up their skill level. Additionally, gamification can be integrated into real warehouse processes and digital tools to track employees’ speed, accuracy, and progress over time. Gamification techniques can even reward workers with positive reinforcement like virtual badges, automated messages of encouragement, and easy-to-understand feedback about their performance. Two major benefits of gamification are: 

  • Constant real-time evaluation of skills, knowledge, and productivity ensures workers and management have easy access to hard data tracking the worker’s performance. This means there are fewer surprises during employee review periods and leaders can intervene early and often to ensure employees have the training they need to succeed.
  • Gamification fosters healthy competition for the ‘top spots’ and makes repetitive tasks more fun and interactive. Amazon found that with gamification of work tasks, workers can take pride in the bragging rights they earn through good performance and see where they can still improve Seeing these connections helps employees visualize how their role contributes to the success of their team, warehouse, and the company overall. 
  1. Elastic Logistics

In the industry 4.0 era, responsiveness to unexpected consumer demands can make or break a supply chain strategy. As a result, 2021 supply chains need to be ready to expand or shrink capacity depending on an ever-changing demand of industry variables .This practice is called “elastic logistics,” and it is one of the most crucial logistics and supply chain management trends in 2021.

Elastic logistics highlights the benefit of using 3PL companies to react quickly to high-volume periods, since many 3PL companies use highly elastic temporary workforces to meet rising and falling production needs. With a projected worth of US$1,789.94 billion by 2027, 3PL companies have the flexible infrastructure and labor capacity to quickly take on warehousing and processing needs for online retailers .

  1. Warehouse Automation 

A 2019 report predicted the warehouse automation market will grow at a CAGR of 12.6{d6efc2d34d1e900f497fc96d474c98aaa47fd974be8ffc1702a76d8f373bbce4} over the next five years, making automation one of the leading trends in supply chains in the foreseeable future .Moreover, over 70{d6efc2d34d1e900f497fc96d474c98aaa47fd974be8ffc1702a76d8f373bbce4} of blue-collar executives feel technology is the most significant factor impacting the future .

Warehouses are cutting costs by boosting their productivity and efficiency with pick and place technologies like robotic arms, automated guided vehicles (AGVs), and automated storage and retrieval (ASRS) . Looking again at Amazon, the company is investing heavily in automation. It will likely save around $18 billion in warehousing operating costs in 2021, despite record hiring in 2020 (Hall, 2020). Beyond the warehouse, automated vehicles will become more popular for on-demand businesses, reducing overall delivery costs by up to 40{d6efc2d34d1e900f497fc96d474c98aaa47fd974be8ffc1702a76d8f373bbce4} .

  1. Last Mile Delivery

The World Economic Forum anticipates that by 2030, 60{d6efc2d34d1e900f497fc96d474c98aaa47fd974be8ffc1702a76d8f373bbce4} of the earth’s population will live in cities (World Economic Forum, 2020). This number is set to increase to 70{d6efc2d34d1e900f497fc96d474c98aaa47fd974be8ffc1702a76d8f373bbce4} by 2050 .

Coupled with growing e-commerce needs, expanding urbanization means that a major transportation and logistics industry trend will be last-mile delivery initiatives . Last-mile delivery costs account for more than half of companies’ overall logistics costs.

Traffic congestion in city centers caused by the increase in last-mile delivery initiatives in logistics is an environmental issue that companies must deal with. According to a study by research and consultancy firm Forrester, a fifth of businesses across the world will use commercial drones to automate business operations in 2021. Additionally, temperature-controlled smart lockers offer customers flexibility by reducing delays and costs associated with returned deliveries due to unavailability. This last mile initiative is especially useful for perishable goods like food and medicine.

  1. Risk Management Framework

Risk management is a big topic for logistics and supply chain management trends in 2021 is a big topic. PGR found that the top three risks being planned for in 2020 were: 

  1. In-house production or operations risks (60{d6efc2d34d1e900f497fc96d474c98aaa47fd974be8ffc1702a76d8f373bbce4})
  2. Logistics risks (57{d6efc2d34d1e900f497fc96d474c98aaa47fd974be8ffc1702a76d8f373bbce4}) 
  3. Supplier risks (47{d6efc2d34d1e900f497fc96d474c98aaa47fd974be8ffc1702a76d8f373bbce4})

In 2019, the percentages were higher for logistics risk (69{d6efc2d34d1e900f497fc96d474c98aaa47fd974be8ffc1702a76d8f373bbce4}) and supplier risks (62{d6efc2d34d1e900f497fc96d474c98aaa47fd974be8ffc1702a76d8f373bbce4}). The same report found that “economic and financial volatility as a risk factor” declined from 34{d6efc2d34d1e900f497fc96d474c98aaa47fd974be8ffc1702a76d8f373bbce4} in 2019 to 30{d6efc2d34d1e900f497fc96d474c98aaa47fd974be8ffc1702a76d8f373bbce4} in 2020, equal to its 2018 level. However, the effects of the pandemic are still being evaluated. This number will likely increase by 2021, with many companies working to minimize economic risk factors sensitive to large-scale disruptions like COVID-19. 

Areas where companies report/reported risk management concerns for the coming year between 2018 and 2020 are represented below. 

  1. Lean Logistics

The backbone of the biggest logistics and supply chain trends in 2021 is constant improvement. This approach is best implemented by adopting lean logistics as the core of your warehouses or supply chain operations. Lean logistics is a highly reactive management philosophy based on empowering workers and optimizing processes. Leaders regularly engage with workers and warehouse floor operations to encourage constant, open dialogue about how to reduce waste and boost efficiency. As a result, leaders can evaluate increasingly standardized output to discover where they can make positive changes that lead to lower operating costs and happier customers and employees. 

What Does it Mean for Logistics Companies?

Industry experts agree that an increase in freight and warehousing demand coupled with technological data advancements means that 2021 holds immense promise for logistics expansion. At the same time, the continued economic disturbances left in the wake of 2020 will cause logistics professionals to face tough decisions in the coming year.

These changes and challenges will impact the supply chain at all levels of distribution. For warehouses and blue-collar workers, this means empowerment through comprehensive training that will prepare them to rise to the challenges that the new year brings. Make sure you have the best-in-class digital training so you can equip your team with the tools they need to respond flexibly to the future of logistics in 2021.

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