As the new year is rapidly approaching, we’re all anxious to see what kind of distribution and fulfillment trends the new year will bring. With the increased demand, difficult labor market, tight capacity, and port congestion that we’ve experienced throughout 2021, many people have found themselves wondering if this is the new normal, or if we will see improvements moving forward. We asked our experienced team members two questions about what they are predicting for distribution and fulfillment trends in 2022.
1. What are the top trends in distribution and fulfillment you predict for 2022?
“The trend for 2022 is going to be supply, or the lack thereof. It will be the most challenging trend of the year from my vantage point. Supply of people, supply of resources, supply of buildings, etc. We’re at an all-time low for all of it and it seems as if this is going to continue next year. This is going to continue to drive pricing up throughout the entire supply chain and in turn could lead to a lot of bad decisions in terms of companies making short term choices that may overleverage their organizations, including carrying more inventory, paying rates at a loss just to get freight moving, and more.”
Ryan Martin, President of Asset Operations
“The trend for 2022 is going to be supply, or the lack thereof. It will be the most challenging trend of the year from my vantage point. Supply of people, supply of resources, supply of buildings, etc. We’re at an all-time low for all of it and it seems as if this is going to continue through next year.”
“First and foremost (and somewhat unfortunately), we will see the unprecedented uncertainty and significant constraints across the global supply chain persist well into the year. Similarly, well-known national issues like the congestion in ports, shortage of chassis, and the lack of available warehouse space to meet rising demands will remain significant well into 2022. Beyond that, the challenges seen in the labor market in 2021 are also likely to carry well into next year. Retaining, hiring, and developing talent will be at the forefront of decision-making for any company that is serious about growing (or even maintaining) its ability to deliver on customer expectations and maintain customer satisfaction in 2022. Finally, growing lead times on equipment and critical infrastructure pieces will continue to challenge the warehousing sector, limiting the ability to scale quickly if needed.
More optimistically, we should begin to see what the long-term turnaround within the industry looks like as 2022 progresses. Investments in new infrastructure and technology will take time to come to fruition but seeing them take shape over the course of 2022 will provide a glimpse into what the future of the distribution and fulfillment space will look like in the years to come. Improved technology will be implemented across the supply chain, and the distribution and fulfillment segment will be no exception. Technology that streamlines order handling, improves quality of life for employees and customers alike, and reduces handling costs will be an essential means of evolving to tackle the surging demand anticipated in the 3PL sector. When all is said and done, I do believe that the transformational change forced onto the supply chain by the pandemic will dramatically increase its resiliency and expand its capabilities moving forward – it will just take some patience to get there!”
Zak Urrutia, Senior Director of Operations, Distribution Services
“I think the biggest fulfillment and distribution trend in 2022 will be risk mitigation. This will become a standard cost element on Profit & Loss reports—it is no longer a black swan. We will see ongoing risk mitigation on very tactical levels to ensure preparedness in the eventuality of future supply chain disruptions.”
Kasia Wenker, Director of Supply Chain Solutions
“I expect to see supply chain leaders in just about every industry work hard to build redundancy into their business from a distribution and fulfillment perspective.”
“I expect to see supply chain management leaders in just about every industry work hard to build redundancy into their business from a distribution and fulfillment operation perspective. Whether it is where raw materials/supplies are purchased, products are manufactured, and inventories held prior to final distribution to customers, the challenges of 2020 and 2021 are forcing companies to rethink operational flows that may have been static for many years. Ultimately, the successful businesses will innovate and upgrade their stakeholder’s experience which will benefit them in the long run.”
Scott Pruneau, CEO
“In 2022, we will see companies increase their security requirements to protect consumer data. As a result of so much online shopping, there has been a surge in fraud. To combat this, many larger companies are implementing much tighter security requirements. For example, to ensure Personally Identifiable Information is protected, everything is encrypted throughout every step of the process, and it needs to be wiped as soon as it’s not needed anymore. In 2022, we are likely to see many more companies implement similar security protocols. This will create a need for more data security professions to handle the complexities that are arising with increased security for companies across the supply chain industry.”
Rick Ross, Corporate IT Director
“In 2022, we will see companies increase their security requirements to protect consumer data. As a result of so much online shopping, there has been a surge in fraud. To combat this, many larger companies are implementing much tighter security requirements.”
“I hate to be a pessimist (and that’s against my nature), but until we see a real decline in demand, we’re going to continue to see shortages in the labor market and capacity negatively impacting every aspect of the supply chain throughout 2022. There are new trucks and trailers being built, there are more new drivers coming into the workforce, there are more warehouses being built across the country… but it’s going to take a while for any of that to make a positive impact on capacity. On the plus side, there are more people focused on these issues than ever before, and I think this is a case where adversity will lead to innovation. As an industry, we will be better in the future because of what we’re experiencing now. You can already see some improvements at the ports of Los Angeles and Long Beach with ocean carriers and shippers working together to reduce the number of aging containers on the docks by 33% in just the last few weeks in November. That’s progress!”
Patrick McFarland, Director of Marketing
“I expect the increased attention and emphasis on labor recruiting and retention will carry into 2022. Competition to secure top talent will continue to build—specifically in the distribution and fulfillment space as the demand to move product from supplier to customer continues to trend upwards. Leadership teams will continue to focus on associate engagement programs and providing rewarding work experiences for their workforce. Along with attention on recruiting and workforce retention, internal talent development will be critical in maintaining consistency in distribution leadership effectiveness.”
Mike Green, General Manager – Indianapolis
2. What is something crazy we might see in distribution and fulfillment trends in 2022?
“I’m going to take the optimist’s high road here and say – glimpses of stability! It won’t happen early in the year, but with a focus on doing what’s possible in the short-term to build for sustainability in the long-term, I’m looking forward to seeing “what’s next” in our industry.”
Zak Urrutia, Senior Director of Operations, Distribution Services
“History repeating itself. The supply chain in the US has changed over the past decade and moved to smaller and more agile fulfillment centers to both zone-skip to save on transportation costs in terms of final mile delivery and improve the customer experience. We also saw a trend of moving away from large buildings of vendor-managed inventory in the US due to the speed of the overall supply chain as all the added touchpoints and space created additional cost. With the uncertainty of the ports and overall product availability, companies are starting to go back to holding more inventory and pushing more vendor-managed inventory in the US. We have seen more and more of this over the past year and it looks like it will continue to be the trend as you can’t sell what you don’t have and right now everyone is chasing freight no matter the industry.”
Ryan Martin, President of Asset Operations
“I’m going to take the optimist’s high road here and say – glimpses of stability! It won’t happen early in the year, but with a focus on doing what’s possible in the short-term to build for sustainability in the long-term, I’m looking forward to seeing “what’s next” in our industry.”
“The crazy thing that is coming our way is that we are on the cusp of great innovation in consumer purchasing journey and order fulfillment expectations. We are seeing a massive consumer-driven push towards ecom blending retail towards one massive digital world—which means all ordering and delivery functions will have to blend into that world quickly in order to stand out from the competition.”
Kasia Wenker, Director of Supply Chain Solutions
“We are seeing a massive consumer-driven push towards ecom blending retail towards one massive digital world—which means all ordering and delivery functions will have to blend into that world quickly in order to stand out from the competition.”
“Well, I’d like to say final-mile drone deliveries and middle-mile autonomous trucking… but I’m still waiting for my hoverboard and flying car, so I’ll believe it when I see it. The craziest thing we might see in 2022—could be a return to a non-peak season which will allow all of us to catch our breath and get caught up on the backlog of demand. Fingers crossed!”
Patrick McFarland, Director of Marketing
“Predicting sales trends will become increasingly more difficult as it can be extremely sporadic. Everything happens so fast because a product can go viral, and people can buy it as fast as clicking a button. Businesses can see tons of orders for things out of the blue that no one predicted. It’s more important than ever that all of your systems can handle those fluctuations.”
Rick Ross, Corporate IT Director
Take on 2022 with ITS Logistics distribution and fulfillment services
While no one can say for sure what 2022 will bring, the ITS distribution and fulfillment team is here to help you succeed. With years of industry experience and the expertise to ensure customers are set up for success—our team has you covered. Learn how we can help you meet your distribution and fulfillment goals today.
