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The coronavirus pandemic demonstrated that in order to succeed, businesses must build supply chain resilience, improve their agility and keep innovation at the forefront to meet customer expectations in times of disruption. As noted by eMarketer analyst Andrew Lipsman, “certain ecommerce behaviors…permanently catapulted three or four years into the future in just three or four months.” So what can we expect in 2021? Here are the top supply chain trends expected to emerge or accelerate in the coming year.

 

Greater investment in supply chain resilience

According to a survey of supply chain professionals by Association for Supply Chain Management (ASCM), investing in risk management and resilience will be a top company priority and the biggest supply chain management trend of 2021. Following the demand and supply shocks caused by the pandemic, companies with strong supply chain resilience were better equipped to balance their supply and demand needs than those with less resilient supply chains, who are now playing catch up.

As businesses work to fortify their supply chains, diversification of suppliers, manufacturing and transportation options is likely to continue. Between the tariffs, factory lockdowns and logistics disruptions in China, companies have learned that supply chains are fragile when they rely too heavily on a single company or geographical location. In 2021, they’ll be focused on building contingency plans and understanding their entire supply chain structures to identify and mitigate or eliminate these kinds of vulnerabilities.

 

Alternative fulfillment options and contactless transactions

Brick-and-mortar retailers without an online presence scrambled to create one this year when in-store shopping came to a halt. Omnichannel retailers—those with both physical and online stores—were able to keep their businesses going by offering convenient fulfillment options like curbside pickup and buy online, pick up in store (BOPIS). The trend toward contactless transactions was accelerated during COVID-19 and is expected to continue in 2021. In fact, according to a CommerceHub survey, 67% of respondents said they will continue to use curbside pickup when the pandemic is over. Retailers will need to pay attention to how consumer behavior changes as the COVID-19 vaccine is distributed and have the flexibility to adapt accordingly.

 

More convenient returns

Consumers don’t just expect a convenient shopping experience—they also expect a convenient returns process. To make product returns as easy as possible, retailers are adding more in-person drop-off options—no box or shipping label necessary—which are expected to become more common. Physical stores are planning to make returns more convenient by accepting returns from other online retailers at their locations, giving existing and new customers a reason to come into their stores. According to RetailWire, the “ecommerce winners” will be the retailers who make both buying and returning easy.

 

The rise of micro-fulfillment centers

As ecommerce volumes soar, retailers will continue seeking ways to get items to customers as quickly and cheaply as possible. One solution expected to trend in 2021 is the micro-fulfillment center, a smaller facility closer to consumers that has the automation of a larger warehouse. This model, said to be the future of online grocery shopping, works best for items with high-turnover and that run out relatively quickly, or where the trend can easily change.

Although micro-fulfillment centers offer close access to customers, execution can be a challenge without a logistics partner and the technology to track and manage decentralized inventory. An alternative for retailers that we’re likely to see more of in 2021 is the conversion of stores into mini-distribution centers.

 

Greater focus on the final mile

After the explosion of ecommerce this year, companies’ last-mile delivery strategies will be a critical focus in 2021. In order to stay competitive amid surging online purchases and returns, companies will need last-mile control and end-to-end visibility to manage the flow of products to/from customers, deliver to customers on time and facilitate returns with ease.

 

Sustainability strategies

According to a Harvard Business Review survey, 65% of consumers say they want to buy products from purpose-driven brands that advocate sustainability. With the pandemic-driven increase in online purchases, consumers will be thinking about how sustainable their shopping habits are, forcing retailers to offer more sustainable delivery choices. Here are three sustainability trends to watch for in 2021:

  • More eco-friendly warehouses. The shift toward eco-friendly warehouses is expected to continue in 2021. These facilities are equipped with LED lighting for reduced emissions, efficient HVAC systems for lower energy consumption and energy management systems that monitor the usage of electricity, heat, water and gas
  • Shift from linear to circular supply chain systems. Circular supply chains encourage continuous reuse of materials to minimize waste, as opposed to the traditional linear supply chain that follows the path of “produce, use, discard.” According to a 2020 Gartner survey, more than half (51%) of supply chain professionals said they expect the focus on circular strategies to increase over the next two years. (Example: Transitioning from single-use pallets to reusable block or plastic pallets that have a longer useful lifespan and can be recycled into new pallets.)
  • Greater focus on post-purchase recycling processes. Retailers will likely put a greater emphasis on recycling and how to engage customers in the recycling process. Some apparel companies, for example, provide discounts to those who drop off used clothing to be recycled. Recycling processes will become a customer expectation and have an impact on new sales for retailers.

 

Warehouse robotics and AI

The supply chain disruptions brought by COVID-19 have created a renewed sense of urgency behind warehouse robotics and artificial intelligence (AI). Per Gartner, AI is divided into two categories for supply chain application: augmentation and machine learning automation. Automation is replacing human decision making and action using a combination of hardware and software, whereas augmentation is the use of technology to support and improve human behavior, both in decision making and task execution.

As warehouse labor gets tougher to find and the pandemic continues, warehouses are shifting to technology and automation to do more of the work. For example, autonomous mobile robots (AMRs) and automated guided vehicles (AGVs), including floor cleaners, forklifts and pallet movers, are expected to be more widely accepted for driving efficiencies in warehouse management and operations. Statista reports that the global warehouse automation market is estimated to surpass $30 billion by 2026 from $15 billion in 2019.

 

Surging parcel volumes and carrier price hikes

Parcel volumes are expected to remain historically high in 2021. Traditional in-store shoppers who turned to online shopping during the pandemic may not return to the stores, or return to stores less frequently than before the pandemic. Shippers should be aware that due to these volumes, FedEx and UPS rates are increasing an average of 4.9 percent. Depending on the service you use and your package characteristics, you could see increases above or below the average. FedEx recently announced it would continue with the new trend of “off-season” surcharges in 2021, and they changed the description of its surcharges from “temporary” to “peak,” indicating that these fees may be around a while.

 

Contact Visible Today

Visible Supply Chain Management has thousands of satisfied customers and clients that rely on our company for their various shipping and logistics needs. Contact us today to start the conversation about how we can help your company navigate the new year and prosper in 2021.