Compass 2022: innovation in supply chains

The past 18 months have brought to light just how fragile and interconnected many brands' logistic networks truly are. We'll be focusing on the positive strides companies are making, and sharing insights on next-gen tech to ethical labor practices.
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Supply chain innovation is one of 10 themes Courier wants to focus on in 2022 – our compass for content, if you will. Some stories and topics get us going a bit more than others, and while they might not include the fastest growing industries or the most talked-about trends, they're the ones we think deserve more attention over the coming 12 months. Click here to see all 10 themes.

Brands these days are being pressured to provide detailed, technical breakdowns about where their raw materials are sourced from, who manufactures their products and how they choose the factories they partner with. But these efforts aren't just for show: studies show that people are willing to pay more for products that carry information about where they came from.

Achieving this level of transparency isn't easy, especially for an existing business that hasn't embedded it into operations from the off. Even for a new business, when your product has multiple components or parts, your supply chain becomes much more complicated and challenging to track. 

For the most part, businesses are at the whim of factories, manufacturers, wholesalers and brokers who might not have the same transparency aspirations. A lot of the clunky and unsexy parts of supply chains are still in the shadows. And, for those smaller brands where manufacturing costs can make or break a business, it can be difficult to exercise control over every part of the process. 

Few businesses were immune to the shortages and supply chain disruptions caused by the Covid-19 pandemic, which laid bare the globalized nature of products and resources that we deemed essential. The same happened with the Suez Canal blockage of March 2021; for the six days that a cargo ship blocked the narrow waterway, nearly $10 billion of trade was disrupted each day. 

There's still a lot to be done to mitigate the risks of relying on fragmented, global supply chains. But there's also plenty of innovation happening in the space, which will help small businesses understand and take more control over their operations. Here are some trends to keep an eye on. 

 White and private labeling. This refers to when a factory or a manufacturer produces a standardized product, which a number of businesses can then rebrand and sell as their own. The product and manufacturing process itself stay the same, but the price at which each business sells it could differ. Check out Bali Swim, a white-label swimwear manufacturer based between Sweden and Indonesia. Meanwhile, Pietra is a platform that allows content creators to partner with select manufacturers to launch their own brands and online‑shopping platforms.

Wholesaling. Typically, a retailer will buy products from brands in bulk to sell on to an end consumer. Buying in bulk also means that the retailer can get a substantial discount on the price of each unit. But middlemen (AKA, wholesalers) often buy in bulk from manufacturers to sell on to retailers, which can sometimes muddy the provenance of items as they move along the chain. With consumers demanding more transparency, wholesaling will have to evolve, too. Platforms like Faire, JOOR and Abound are digitizing the wholesale process, simplifying ordering and communication between independent brands and retailers. 

High-tech supply chains. Blockchain tech has the potential to revolutionize the fundamentals of supply-chain dynamics, with every transaction and movement of a particular component or product being tracked and recorded before it reaches the end consumer (with product QR codes that show each stage of its journey). AI and robotic automation are reducing the time and cost of getting products to people, while next-generation data analytics allow manufacturers to access real-time information about speed and efficiency through the production process.

Warehousing and storage. Larger brands and businesses are likely to have access to their own warehouses and storage facilities. Smaller brands, however, will not only have to share storage space, but must also outsource the responsibility of managing the stock that comes in and out of that space. The global market for self-storage services is expected to be worth nearly $65 billion by 2026, up from $48 billion in 2020. Neighbor is a startup that connects those who want to rent space with ‘hosts’. Running self-storage facilities is also becoming a source of passive income: OpenUnit offers software that allows storage owners to remotely manage their facilities. 

Last-mile logistics. The final step in the delivery process – getting an item from storage to the end consumer – is estimated to account for two-fifths of a company's total logistics costs. And it's not always financially viable for small businesses to manage this process by themselves, with many increasingly relying on third-party service providers. Grocery chain Walmart recently launched GoLocal, a business-to-business service that allows other companies to use its delivery network to fulfill their orders. In the Philippines, delivery provider Dingdong is using its network of more than 100 riders to help small and medium-sized businesses – including those running companies from their homes – to get products delivered to customers. The company hopes to have trained up 1 million riders by 2025.

This article was first published in Courier issue 44, December 2021/January 2022. To purchase the issue or become a subscriber, head to our webshop.

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