logistics planning guide Archives

2020 was a historic year from politics to a pandemic, but professionals working in logistics, in particular, faced huge challenges and had to dramatically pivot their strategies. As 2021 kicks off, professionals working in logistics, notably 3PLs and 4PLs, will need to remain flexible as some of the changes from 2020 are here to stay.

To prepare you for what lies ahead, here are 10 supply chain and logistics trends to watch for in 2021.

1. Shorter Contract Terms

As we all witnessed, capacity was incredibly tight throughout the year, giving carriers more negotiating power for higher rates, especially leading up to the holiday season. Contract trucking rates are heavily influenced by spot market movements so instead of conducting an RFP in Q3 or Q4 for the year (which is typically RFP season) and locking in a yearly rate, shippers created shorter contract terms, hoping rates will improve in 2021. While this helps shippers to lock in rates in the short term (and helps them budget), it is still a gamble because rates could remain steady or increase.

This year, I anticipate that this trend will continue. Shippers and carriers want and need more flexibility in this volatile market. Shippers are hoping for lower rates in the future, and carriers want to take advantage of a hot spot market without rejecting previously contracted freight.

2. Tech Investment for Shippers

Unless new technology investments are truly essential to running the business, many shippers will not be investing heavily into new technology until the pandemic is over. While technology will be a good investment in the long run, it’s often a “want” over a “need,” and it takes a lot of human capital, research, and time to invest in the right technology that will pay off for your business. Right now, every professional working within the supply chain has their hands full running the business, so I anticipate less money and time spent on tech investments in 2021.

While shippers may be hitting the pause button, logistics companies, especially 3PLs, have an opportunity right now to leverage their greatest asset: people. What is most important in our current environment is trusted relationships and human touchpoints. The industry is still scrambling to keep up with the demand for a constantly changing global supply chain, and handholding and relationships will go further than flashy new technology. 3PLs can capitalize on this by spending time discussing with carriers and customers how they can solve their current challenges with best-in-class customer service. If your company is leaning on a new technology or making an investment into this area, this is the year to publicize your innovation widely because there will be less technology noise in the marketplace. Have a technology story that got your company through 2020? Now is the time to tell it.

3. Consumer Buying Behavior Will Remain A Top Stat for Logistics

3PLs are tracking consumer behavior closer than ever. Due to the pandemic, consumer buying behavior changed dramatically, disrupting the supply chain in ways not previously seen. Because of consumers’ impact on the supply chain and demand of freight, 3PLs, in particular, will continue to follow key consumer buying behavior data.

Additionally, in 2021 I expect continued steady growth in-home delivery services (from retailers to foodservice) so all eyes will be on final mile demand. This year, we’ll see more online marketplaces and innovation within final mile delivery. With new companies and offerings entering the industry, 3PLs have an opportunity to forge new relationships and add core competencies with these businesses to gain an advantage over their competitors.

4. Spot Market Will Likely Stay Hot in 2021

We might call 2021 the Capacity Games–may the odds be ever in your favor. Carriers are entering 2021 with negotiating power. Amidst one of the most volatile marketplaces in recent memory, the growing disparity between driver supply and truckload demand has resulted in increasing tightness. When this is the case, we expect upward pressure on truckload rates, just as we did throughout the back half of 2020. We may have hit the peak of inflated spot rates, but with the pandemic still raging, carriers have the upper hand on rates and may decide to take fewer contracts this year to reap the benefits of the spot market. When some form of normalcy does return, we will see another round of shifting capacity and supply chain volatility; 3PLs that can navigate the chaos and guide their customers through it are going to come out on top with relationships and case studies that will speak volumes.

If you’re a shipper or a 3PL, this means you have to think about the whole carrier experience beyond just rates. Carriers want to get paid quickly and treated well, so if the facility they are servicing is difficult to navigate or doesn’t offer any driver amenities, your freight is far less desirable compared to previous years. To entice carriers, shippers and brokers need to be creative, reliable and more than anything, flexible.

5. Carriers Focus On Diversifying Their Book of Business

Prior to the pandemic, most carriers specialized in one or a handful of specific industries. This was a sound strategy because specialization allowed carriers to set themselves apart from the competition by tailoring their vehicles, routes and service to the needs of shippers (who all have different needs, depending on their industry). COVID disrupted this strategy. When the pandemic struck, certain industries completely shut down. From automotive to restaurant services, carriers can no longer focus on one niche industry as the pandemic showed how having all of your eggs in one basket is ripe with risk in these times.

This year, I anticipate more carriers will diversify the industries they support. 3PLs have an opportunity to help and should look for opportunities to offer freight to their trusted carriers who previously may not have considered that type of freight before. By partnering closely with carriers to educate them on the needs of that particular freight and help them enter a new industry, 3PLs will be able to solidify their carrier relationships while also problem-solving for shippers who are desperate for capacity.

6. Reefer Capacity Will Be Tough To Come By

People are still working from home. COVID numbers are at an all-time high, and many cities/states are under curfews and restrictions to discourage people from leaving their homes. But people still have to eat. Groceries stores and food delivery will continue to be in high demand, translating to huge demands on reefer capacity. Add to this the reefer capacity needed to effectively distribute the vaccine and the grip on capacity tightens. This isn’t news. This has been the case since March 2020, but it’s only going to continue.

3PLs have to remain nimble and creative to source reefer capacity and make sure the service they offer those carriers is top-notch to ensure those carriers will continue to partner with them. 3PLs who are able to keep reefer carriers moving and maximize the efficiency of their assets will be the ones who benefit on both sides of the customer/carrier relationship.

7. Regional Distribution

Because of the supply disruptions in 2020, there was a renewed focus on regional distribution. Amazon led the way during COVID, relying on their regional distribution network when drivers were hesitant to drive long hauls far from home. This will continue to be a go-to strategy for many shippers, and I anticipate we will see many retailers investing more into their regional distribution strategy. This shift will create two demands: final mile and long haul. 3PLs that are able to competitively source and seamlessly provide these two modes to their customers at varying degrees of volume will be the heroes of 2021.

8. Opportunities for Mid-Size to Small Carriers To Get Access To New Customers

With the COVID vaccine distribution, many large carriers, seasoned in pharmaceutical freight, have been tapped to move this critical freight which means they will not be able to fulfill previous contracts. So, who is going to move that freight? Mid-size to smaller carriers have an opportunity right now to get in with the companies left in a lurch.

This may not be the strategy for every carrier, but with so much capacity going to the vaccine (as well as all the implementation needed to distribute a vaccine), carriers have an opportunity to service freight previously unavailable to them.

3PLs, keep this in mind. Follow which large carriers are transporting the vaccine and take advantage of opportunities to follow up with their known customers who may be hurting for capacity. While historically technology, integration, volume commitments, etc. were barriers for mid-size to small fleets in providing service to large shippers, 3PL relationships should be providing access to these large customers as need for capacity widens.

9. Relationships Continue to Be King

As isolated as many of us have been in 2020, relationships and personal connections mean more than anything. Both individuals and companies want to work with people they know and trust and can rely on to deliver in a time of need. Logistics is truly a people business. No matter what role you play in the supply chain, if you focus on building and deepening your professional relationships, you are investing in your future.

10. Greater Focus on the Value of Drivers/Carriers

I’m hopeful 2021 will be the year that drivers/carriers will finally get the full respect they deserve. From keeping our grocery stores stocked to distributing the COVID vaccine, carriers/drivers have been on the frontlines of this pandemic. The past few years, the industry has talked about a driver shortage with the narrative focused on a lack of talent entering the industry. But if we take a step back, the problem isn’t people’s interest, it’s because these essential, frontline workers deserve a better wage.

If we truly want to solve the driver shortage and respect the people who have been front and center in this pandemic, the industry must reward carriers/drivers with better pay, benefits, and support.

As we continue to progress into 2021, it’s clear that many of the supply chain impacts from 2020 are here to stay. Flexibility and a commitment to relationship building should be a priority for any logistics company looking to navigate the challenges ahead.

_____________________________________________________________________

Aaron Galer serves as senior vice president of Strategic Accounts at Arrive Logistics, “a carrier and customer-centric” logistics company that is headquartered in Austin, Texas, and has offices in Chicago and Chattanooga, Tennessee. Aaron is focused on growing and strengthening partnerships with Arrive’s enterprise shippers and carriers as well as tailoring unique solutions specific to their needs, industry and logistics challenges. He also serves as an internal resource to the entire Arrive team. Prior to joining Arrive, Aaron helped launch the Amazon Freight program and has nearly a decade of logistics experience with Fortune 500 companies including Expeditors and Starbucks. His past responsibilities include building and overseeing transportation teams that manage large transportation spends and developing technology for large shippers. Aaron is active in the supply chain communities in the Greater Grand Rapids and Greater Seattle areas; he holds certifications in Lean Six Sigma and with ASCM and has a degree in Supply Chain Management from Michigan State University.

Ensuring that every item is in the right place at the right time can be quite difficult- there’s just so much work that needs to be done! If your business is middle-sized to big-sized, this task will be even harder.

But even if your company is small, you must still keep track of the planning process, including item movement and placement. If your cargo reaches its point of consumption in due time, and your point of origin equipment is ready to ship, your company’s logistics runs well. If not- time and money are quickly lost, and the company could take a hit.

You must therefore plan your resources well and learn how to move things around efficiently. Your warehouse facilities are important, but so are inventory planning, resource management, and supply coordination; not to mention transportation and customer response. These factors must be taken into account very carefully.

With the holidays knocking on our door, I can see why so many business managers are starting to freak out. The holiday season is hectic. A company’s resources can quickly change, so it’s time to develop a logistics guide and stick to it. Here’s how to prepare your supply chain for this season.

Help your customers buy early

This season is different from any other holiday season we’ve been through. That’s because the Coronavirus pandemic has changed things around for good. This year, we won’t see too many last-minute decisions among customers. Most clients already pre-ordered their Christmas gifts on Black Friday, while others did it all the way back in October. Since stores are not open to the public anymore (not everywhere in the world at least), and there’s a fear attached to in-shop purchasing, a higher number of customers decided to get their gifts online; and so, transportation can get messy if it doesn’t work right.

However, if your customers are not ordering online yet, here is what you can do to persuade them to buy now. The longer they wait, the messier your logistics process will get. Here’s what you can do.

-Present the product’s benefits in more detail. Don’t stop at only listing the product’s features. Get access to a Virtual Assistant Platform to automate your listing processes and get your personal tasks done in no time.

-Use vivid language, but don’t go overboard with it. Express what you mean in a simple yet motivating way. For example, instead of saying, This car protects people in case of an accident, you could say, If you’re driving this car, you’ll walk away unharmed in case of an accident.

-Do not use jargon, not everyone gets it, and you might lose clients because of this. I

-Customers don’t hold specific data in their minds for too long, so make it short. Present your product’s benefits in a concise way. You could even summarize your product’s strengths; for example, instead of saying, Here are 12 reasons to buy this product, change it to, Keep these two things in mind.

-Highlight your company’s benefits from a logistics perspective. If you collaborate with Amazon, for example, expose the transportation benefits that your company is offering. What differentiates you from your competition in terms of logistics?

Optimize your inventory accordingly

If you haven’t done this by now, get to work. This year, your inventory must be well-organized. So, start optimizing it.

-Measure your results by using the right KPIs such as stock rotations and customer availability rate.

-Use the classical ABC analysis to track your product quantity and measure quality- pair it with a PARETO analysis.

-Use chatbots to promote your content on social media and track those results as well.

-Make an inventory vs. sales cost analysis to examine if your products sell well, and which ones should be taken out of your inventory.

-Reduce the MOQ or the Minimum Order Quantity. Do not produce more than you can sell, this will add to your overstock. Instead, negotiate with the supplier or change it, if they don’t agree with your requirements and do not satisfy your needs.

-Develop a more centralized inventory, especially if you have more than one warehouse, store, or factory. Estimate your transportation costs accordingly and include specific analyses on financial, logistical, promotion, destruction, or productivity costs. Be sure to include everything in your inventory.

Be prepared for this year’s shipping costs

During the COVID-19 pandemic, things have changed for the worse. The transportation costs will most likely increase as the holiday season gets closer. Some transportation companies offer little to no help to small businesses; others are kind enough to work with the managers. Your best option would be to hire a mix of carriers and choose the one you like the best.

You could look at regional carriers first since their costs are usually lower. Check out their services, and if you’re not satisfied, change the company. Another important thing to look at is the last-mile delivery costs. Choosing a local or even a national company will help you out financially.

Get the necessary support

And here’s the last thing we’ll be discussing today- getting the necessary help. If you’re not doing well and don’t know where to start, seeking support should be something to prioritize. You could develop new partnerships and engage with new elements. Think about what changes you could benefit from.

Could you be working with superior technology? Could you offer your staff a more flexible schedule? What other valuable assets could you be bringing to the company? How could you change it for the better? What part of your logistics process could actually improve?

Preparing your company for this holiday season will be nothing but ordinary. However, you must learn how to predict 2021 trends and bring your logistics process to a new level. Do not leave things for the last minute, start preparing now. If you realized that you need support, go get it. If you realized that you could change some things to save your business, go do them.

Conclusion

You could be needing eCommerce support or new delivery options. Maybe your KPIs aren’t functional. Maybe your customer’s orders are not in place at the right time. Maybe you are not working with a cost-effective delivery company that gets your goods safely from the warehouse to the customer. Maybe something must change- but you don’t know what.

If that is the case, follow the guideline above, and add whatever you see necessary to it. You will have a great holiday season from a logistics perspective if you can set everything up for success ahead of time. Prepare, work hard, and accomplish. Make this your 2021 goal.

___________________________________________________________________

This guest post is contributed by Kurt Walker who is a blogger and college paper writer. In the course of his studies, he developed an interest in innovative technology and likes to keep business owners informed about the latest technology to use to transform their operations. He writes for companies Edu Birdie, XpertWriters, ResumeWriterReviews, and uk.bestessays.com on various academic and business topics.

GLOBAL TRADE’S ANNUAL LOGISTICS PLANNING GUIDE PUTS YOU IN THE POWER POSITION AGAIN

most viewed today