Third-party logistics (3PL) solutions that let organizations shift fixed costs into variable costs without significant capital investments or ongoing maintenance fees will gain popularity.
Fremont, CA: Supply chain disruptions caused by the COVID-19 pandemic have exposed firms to new risks, resulting in a global economic impact. As a result, most businesses spent FY2020 either putting out fires in reaction to rising online orders or taking a financial blow to install new services and business models that would help maintain and acquire new clients. It’s worth noting that the supply chain problems that occurred last year were not simply due to changes in customer behavior during the shutdown.
New innovations in “Supply Chain as a Service” (SCaaS)
Businesses worldwide are learning that running their warehouse and fulfillment services are inefficient and costly. While this is especially true for SMEs, outsourced logistics is becoming increasingly popular among businesses of all sizes.
Third-party logistics (3PL) solutions that let organizations shift fixed costs into variable costs without significant capital investments or ongoing maintenance fees will gain popularity. Due to their potential to help companies scale without the upfront cost, 2PL and 3PL providers have seen rising demand from D2C eComm sellers.
Increased demand for ethical sourcing and sustainability
As investors expect increased social and ethical conscience levels from the firms they support, it is crucial for businesses to ramp up their supply chain transparency efforts.
The FDA is proposing new legislation to ensure more “farm-to-table” traceability of food items, which will add to the urgency. One such initiative is FSMA Rule 204, which heralds a dramatic shift toward what the industry calls a “New Era of Smarter Food Safety.” While Rule 204 would be a good thing for the industry, it’s crucial to remember that ensuring supply chain visibility is now the most challenging issue for supply chain management to solve. Therefore organizations worldwide will be looking for ways to get ahead of it.
Decentralized fulfillment will become the new norm for all companies
Increased shipping times from a single, central warehouse to a customer’s front door are no longer worth the cost savings because today’s consumers want their things immediately. The cost of customer churn resulting from late delivery may potentially outweigh the benefits of centralized solutions.
A decentralized warehouse network is currently widely regarded as the most effective fulfillment method for all of these reasons. Small eComm merchants, on the other hand, have typically lacked the cash to acquire and maintain many warehouses, making decentralized business models challenging to implement until recently.