Preparing the Supply Chain for Changing Consumer Demands

A healthy understanding of current trends, companies can plan ahead and look to automation technology to provide the flexibility to navigate through the disruptions ahead.

Littlewolf1989 Warehouse Worker
littlewolf1989-warehouse worker

Planning ahead, whether it’s for your company’s supply chain or a weekend trip, isn’t so much about knowing what’s going to happen; it’s about preparing for what could happen. You can’t possibly predict the future, but you can plan for what is probable and make arrangements accordingly.

It’s no secret that recent supply chain trends have been less than predictable. A series of social and economic macro-shocks have radically affected the way consumers shop and interact with brands. And, as the consumer experience has shifted, supply chains have had to shift with it. The organizations having the most success are the ones that are adjusting their supply chains in advance of coming trends. They are planning ahead — not because they know exactly what is going to happen, but because they know something will happen.

Here’s how technology is best used to prepare the supply chain to meet current trends and changing consumer demands.

Urbanization and speed

The combination of urbanization and speed to consumer is driving a significant shift in how supply chain networks are designed. The days are gone when the solution for all e-commerce challenges was building a single, enormous fulfillment center in the middle of a cornfield. Now, to meet the delivery speed needs of consumers, organizations are looking to smaller fulfillment facilities located in or near the metropolitan market region they are serving. As the populations of these regions continue to grow, the return on investment to justify standing up smaller fulfillment facilities within the regions grows as well. Placing these smaller urban fulfillment centers nearer to where consumers live allows organizations to get product into consumer hands within hours, which is the new “free 2-day” standard delivery expectation.

From a technology perspective, urban fulfillment centers require high storage density with high throughput. Automation providers have available and are currently deploying goods-to-person micro-fulfillment solutions in urban fulfillment centers. There are several variations on the theme (some are more space-efficient, some provide higher throughput), but all facilitate a nimble and quick supply chain.

There are “close-to-consumer” fulfillment strategies across several industries. The primary ones leading the way are general merchandise and apparel. But, there’s also durable manufacturing organizations placing small assembly operations and spare parts fulfillment near metro markets to meet the speed demands of consumers.

Sustainable packaging

The world continues to increasingly embrace the critical role of sustainability in the manufacture, distribution and consumption of products. Consumers are looking for brands that are elevating environmental friendliness. As companies focus attention on carbon neutrality, environmental efforts gain more weight and sustainable packaging becomes a priority. Best practices on packaging are both an effort to mitigate the negative impact of non-recoverable (single-use) materials and a way to fulfill customer expectations for positive management of environmental resources.

The biggest challenges are to avoid single-use packaging and to minimize non-used space. Trends for sustainable packaging include returnable/reusable containers, bioplastics and edible films. In many cases, it’s no longer practical or prudent to default to super-rigid, rectangular packaging. And, this new age of consumer packaging is creating a growing variety of more unique handling characteristics that material handling automation must be able to accommodate.

Companies are having to adapt their operations to address the challenges brought on by new packaging standardization, new handling methods and changes in flow of inventory. Automation solutions featuring trays and totes to move goods through a facility are well suited for handling the variations and offer an excellent example for how technology can provide the necessary flexibility for supply chains to adapt quickly to change.

Individualization and consumer choice

The growing trend toward very specific consumer preferences (from extreme price consciousness to very specific dietary practices such as veganism) has given rise to products and solutions tailored to those preferences. To meet these unique needs, manufacturers and retailers have been expanding their offerings with more choices. To survive this SKU proliferation, there has been a shift to reduce lots sizes toward a sort of “lot-size-of-one” mentality (a unique choice for every individual).

Supply chains are now having to grapple with how best to cope with this shift. Typically, the number of choices a company offers its customers will have an inverse relationship with the throughput of its supply chain. Early in the pandemic, there was a retraction of product offerings as organizations placed a greater importance on supply chain throughput and volume. As a consumer, you may have noticed fewer choices at your local retailer. That’s because those organizations focused their efforts and resources on only the highest-demanded products. Now after the initial disruption of the pandemic, the number of offerings is increasing again and will continue to do so to meet consumer demands toward individualization.

An aging society’s impact on supply chains

Global population numbers continue to expand as expected lifespan metrics improve. Healthcare technology advancements across the world are driving the average age of the global population to rise. And, with an aging population comes an aging workforce. Since the year 2000, the average age of the workforce has increased by approximately 5 years. As a result, two key trends are affecting global supply chains:

·        The need for more ergonomically friendly solutions to accommodate the aging workforce.

·         The need for a combination of people and robotics in the workforce.

Creating a working environment that is more ergonomically friendly goes hand in hand with a flexible automation environment where people can focus on truly value-added tasks and robotics can handle repetitive, labor-intensive tasks. A supply chain environment that is welcoming for a wide range of physical abilities will be critical for organizations to meet their operation goals, particularly given the recent global labor challenges.

What’s going to happen next?

That’s the thing — nobody knows exactly what’s going to happen next in supply chains. But, with a healthy understanding of current trends, companies can plan ahead and look to automation technology to provide the flexibility to navigate through the disruptions ahead.