4 Things to Know About Supply Chains In 2024
Trend 1: Omnichannel consumers settled into a new normal.
“2023 was a year of resetting expectations as online sales plateaued, or even declined, as consumers gravitated back to the brick-and-mortar stores they missed during the pandemic. The pendulum swung heavily from virtual and online interactions to in-person ones in the retail sector. Across the board though, there was a dramatic increase in people getting out and about. Airlines for example saw sales volumes return to, and in many cases surpass, pre-pandemic levels.
As in all situations where consumer behavior is marked by dramatic and fast shifts, the question on most retailers’ minds was ‘what exactly will the new normal look like?’” At the start of the year, most reflected on what they had learned about consumer shopping behavior and asked themselves how they could predict what e-commerce levels would look like going forward. As the year progressed, there was a growing consensus that we had reached a more normal, balanced state – one where it is clear that most people are omnichannel shoppers.”
Trend 2: Materials handling operations are working smarter than ever.
“The pandemic challenged warehouses to effectively achieve dramatically higher throughput in the midst of a severe shortage of labor, and often without access to the parts and components needed to keep systems in optimal shape. This of course all occurred while running systems harder and faster than ever before. It was a tough learning experience for many.
In 2023, many warehouses built on the hard lessons they learned and in general were more effective not only at embracing new disciplines like predictive maintenance, but also at working smarter. For example, we saw organizations making sure they have necessary components in stock while also trying to lessen the demands placed on their facilities. Many retailers also asked themselves how many days of inventory they need to keep on hand, with many choosing to keep more fast-moving products available and accessible from in-store storage – something that can require the altering of store footprints. Brands also took a hard look at how much inventory they want to keep in their distribution centers and warehouses – a strategic question that should be carefully explored while considering numerous factors, including the potential for shortages.”
Trend 3: The shortage of labor remains the elephant in the room and a catalyst for investments in automation.
“The ongoing shortage of labor was a universal challenge across materials handling operations in 2023. Warehouses and distribution centers of all sizes, and in every geography continued to grapple with how to attract new talent and retain existing employees.
Not surprisingly there was a corresponding trend of increased investment in automation as a labor solution, particularly in areas like item picking that are prone to employee churn. Interest in, and demand for robotic item picking and flexible automated storage and retrieval systems (AS/RS) continued to grow, although the industry did not see the exponential increases in adoption one might expect given the rapid pace of innovation and technological advancement occurring today. In the beginning of the year many organizations instead paused to reflect on consumer shopping behaviors and what e-commerce volume would look like. Today, with the market normalizing, investment in automation is again accelerating.”
Trend 4: Employees at every level are embracing the use of robots.
“Employees, from distribution center executives to employees on the warehouse floor, are embracing robotics. Employees are now seeing how robots can offload the most difficult, repetitive, labor intensive and injury prone tasks. Additionally, as more employees become adept at maintaining and optimizing their use, the costs associated with robotics will continue to decrease. This is encouraging organizations to capitalize on the value robotics delivers while upleveling their employees. As a result, robots are increasingly viewed as another tool, similar to advancements in automation now taken for granted like conveyors and automated storage and retrieval systems.”
Prediction 1: 2024 will be the year for omnichannel sales and the flexibility and performance they require.
“As we near 2024 and find ourselves in a new normal where the shifts in consumer behavior are not as extreme, retailers are looking at all of the insights they gained on shoppers and fulfillment practices over the past several years. Whereas the slowdown in e-commerce sales prompted many brands to reflect and proceed with caution, the normalization we are seeing now has prompted many to again invest in their materials handling operations. This time with an important caveat: The focus is no longer solely on brick-and-mortar or e-commerce operations. Instead, retailers are looking at omnichannel approaches that inherently make their businesses more flexible and agile. You could say that 2024 will be the year for omnichannel. More brands will invest in retail automation, but the emphasis will be on performance and flexibility across their brick-and-mortar and online operations.”
Prediction 2: Greenfield construction of warehouses will accelerate in 2024.
“Going into 2023 most predicted that the scarcity of warehouse space would be a gating factor for retailers and materials handling operations nationwide. The good news is inventory levels of warehouse space are increasing and we’re seeing greenfield construction in areas where many did not expect it, including populated areas on the West Coast and in the Northeast. Many fulfillment and materials handling operations will continue to ‘build up’ to attain more storage, particularly in urban areas where real estate costs remain high, but the dramatic shortage of warehouse space most expected to constrain the market did not occur.”
Prediction 3: Robotics will achieve mainstream adoption in 2024.
“Next year we will see a dramatic increase in the number of businesses deploying robots in their distribution centers and warehouses, particularly in item picking where gains in vision software and advancements in end effectors now deliver a return on investment most organizations can’t ignore. This is particularly beneficial when there is a shortage of labor for such roles. In 2024 we will also see more robots doing repetitive tasks like case picking and palletizing. Robotics-as-a-Service will also increase, as many warehouses look to deploy robotics either to explore the benefits they offer firsthand, or to address increased throughput needs.”
Prediction 4: Smaller warehouses will begin their robotics journey with automated vehicles.
“We will see increased use of autonomous vehicles in 2024 as more warehouses look at how they can help offload highly repetitive tasks that are not only hard to fill, but all too often are the source of many workplace injuries. For many smaller warehouses, automated vehicles – which can be deployed in many facilities with minimal upgrades – will mark their first major foray into robotics. This will be particularly true in distribution centers where the same products are consistently being moved in the same path.”