2022 Predictions from the Pros
At the end of each year, Schematic Ventures gathers a group of senior supply chain professionals from the Schematic portfolio to share their thoughts on the industry's defining trends.
With top executives, entrepreneurs and operators touching every aspect of supply chain, the Schematic Ventures "Predictions from the Pros" is your guidebook to navigating the unpredictable year ahead.
The freight and supply chain economy will continue to surge, although in more predictable patterns than 2021. Capacity will remain extremely tight and rates will continue to remain high as we continue to fight through port related congestion and increased domestic ORD pressure from the infrastructure bill.
2022 will be the year that data science wins. Supply chain service providers who can surface instantly actionable insights from data ingested in real-time will have a better understanding of micro trends like mode-shifts and capacity rebalancing
Continued reduction in the average length of haul, shifting bottlenecks, and labor shortages will create high demand for premium fast response service providers. As a result tech adoption will improve and freight tech enterprise valuation will continue to rise.
The percentage of costs associated with supply chain for product sales will increase double digits over the next 24 months, further emphasizing the need to invest in a revitalized supply chain. In the short term, that investment will put tremendous pressure on 3PL(s) to support significant changes to expected volume, density, and level of service. For those organizations with the ability to adapt, this will result in increased market share and increased margins. Small and medium-sized businesses will similarly recognize agility as their competitive advantage when adopting industrial automation.
More SMBs will take a “DevOps” approach in their supply chain by merging IT and business processes to distinguish them with their customers.
E-commerce-based WMS and WES platforms will see more rapid adoption over the next 24 months than in the past, as the barrier to entry for digitization of warehouse operations is consistently being lowered with these software products. Specifically in their ease of installation and configuration and their usage-based licensing models.
Ocean/Air freight consolidators and LCL providers will be a hot M&A ticket for ocean carriers and large e-commerce players. With all of the CFS/warehouse infrastructure and the ability to receive container shipments then breaking them apart to coordinate LCL and parcel shipments, it will add comprehensive "all in one" capabilities to companies like Hapag-Lloyd and Wayfair.
Currently, logistics intermediaries receive 200-300 emails per FTE each day. Many of these are between logistics parties. Automating standardized requests such as quotes, ETAs, schedules and many more is one way to speed up the responses.
24/7, 365 port terminals and customs operations will continue to support the existing demand. Methods to automate customs such as QR codes or e-passports to reduce delays at discharge and total costs will be implemented.
Erik Nieves - CEO Plus One Robotics
2022 is about execution. While new entrants and interest from investors validates the warehouse automation market, the winning strategy boils down to execution. The market is clamoring for trusted solutions and partners to bring tangible improvements to their operations. Excelling in flawless deployment, product support, and customer success is every bit as important as the tech undergirding the product.
Seamless execution is what separates the enterprise-scale partners from the tech aficionados.
Jack Kennedy - CEO Platform Science
This is a particularly interesting year to try to make predictions and hard to say if my predictions are too soon or too late. One thing for sure, alternative fuels will be a mainstream discussion and part of all major fleets' tractor mix by the end of the year. Even if they don't acquire those vehicles, all the majors are likely to be in contract to acquire some. Evaluation of autonomy or at least driver assist will accelerate as well.
Trucking companies will look for better technologies to improve the day-to-day experience of their drivers, giving them a competitive edge with recruiting and retention. Payments for fleets will move into vertical SaaS with discreet, software-defined products. Verticals will get cleaved off of incumbent ERP providers that have dominated the market with their legacy, horizontal systems.
First Mile will become the new final mile. Companies have invested heavily over the last 10 years on their final mile / sales capabilities. This has created an unsustainable gap between how products are purchased vs. sold.
Given all of the challenges in the global supply chain companies will invest heavily in improved digital connections to the companies and people that make and transport their products. Financial targets related to environmental social governance will require increased investments in the first mile for transparency and immutable verification - blockchain. Companies will begin to mine the vast amounts of unstructured data that is currently buried 'underground' in the first mile.
Anshu Prasad - CEO Leaf Logistics
As we head into the new year, a lot of what made 2021 challenging for supply chain professionals remains unaddressed. Unfortunately, that means more of the same: constrained capacity, frustrated drivers with too many wasted hours and empty miles, all being asked to bear the brunt of high levels of demand. Expect tight conditions through the first half of the year, at least.
Stopgap, piecemeal approaches will continue to underdeliver, leaving supply chain professionals at a loss for explaining why their efforts haven’t made their supply chains more resilient or reliable. The few who have taken meaningful, different steps to transform their supply chain management practices will continue to outpace their competition.
Oren Zaslansky - CEO Flock Freight
There are signs of a stable but continued sputtering and uneven global economic recovery. The "everything shortage" state we've seen in 2021 will transition into a "surplus of some." Evolving consumption patterns could make demand planning and inventory management exceedingly challenging.
We should anticipate the global supply chain volatility to persist, if not accelerate, in the years ahead.
Environmental sustainability will only become more important to supply chain design and decision-making, with more sustainable alternatives, like shared truckload freight shipping, continuing to gain traction.
Advice for Supply Chain Leaders: Supply chain managers should continue to tune their networks for speed, flexibility and response time to shifting demand signals while revisiting the positions they took to survive in 2021 - excess inventories, sub-optimal procurement decisions, fragile manufacturing and distribution footprints, under-utilized transportation modes, etc.
Greening the supply chain to beat climate change will receive increasing attention in 2022. Vehicle electrification is being recognized as a key measure to green the supply chain. As the automotive industry and major logistics providers continue to make commitments to vehicle electrification targets, 2022 will witness a sea change of strategic movements in preparing the grid and charging infrastructure for an electric future.
CEO Electron Transport (Stealth)
Supply chain delays and lead time for commercial/industrial items get even longer. The lack of available industrial real estate begins to squeeze growth and execution in a wide variety of industries and companies aggressively shift back to in person operations throughout 2022.
COVID, the "Great Resignation," supply chain bottlenecks, warehouse scarcity, and many other macros will render status-quo solutions ineffective at a faster pace than ever before. Robots and automation will continue to gain traction, but they won't save the day. In 2022, operators will begin to invest in visibility and decision support tools to assist their knowledge workers in maximizing productivity from every scarce resource. If 2021 was about resiliency, 2022 will be about survival of the fittest.
AI-enabled routing will be central to the growth of time-critical logistics in 2022.
Supply chain issues, driven in part by the global pandemic, have forced businesses to leverage AI and machine learning to better navigate the increasingly dynamic supply chain. In 2022, we’ll see broader adoption of AI technologies in the logistics industry which will lead to increased efficiency, accuracy, and visibility for time-critical shipments.
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3yLiteral Who's Who of future SCM SaaS Unicorns:) Schematic Ventures finds them first!
Co-Founder and CEO at ElectroTempo, Inc.
3yThank you for including us! So grateful to be part of the Schematic Ventures portfolio. Excited to see environmental sustainability and alternative fuels being mentioned several times!
Julian Counihan thanks for including us. Loved reading the thought leadership across your portfolio. Looking forward to catching up next week at Manifest!
Cofounder & CEO | Supply Chain Professional Turned Tech Entrepreneur | Partnering with Leaders to Build High-Impact, Resilient Supply Chains
3yWhat can I do to be on this “hall of fame”? I want to share honours with my friend Robert 😎
Engagement Manager at McKinsey & Company
3yIncredible gif 😂