It is truer today, more than ever, that innovation is necessary for businesses to survive.
Traditionally, companies would plan for growth based on past performance, utilizing historical data to influence future forecasting. While there used to be some reasonable level of accuracy with these growth projections in the past, the pandemic has now shown us how growth can drastically change, ranging from stifled demand on one extreme to a rapid escalation of demand on the other extreme. Not only can the magnitude of growth change, but customers’ buying behaviors can also change, either transitioning order profiles from a higher volume of smaller orders to a lower volume of large orders or vice versa. The level of uncertainty in today’s world requires companies to embrace innovation to meet these constantly changing demands.
Innovation Within the “Four Walls”
The COVID-19 pandemic has changed what solutions are commonly implemented in facility expansions and retrofits. For example, constructing a mezzanine with extended operations on the upper level used to be a popular solution to maximize space utilization. However, with the currently high price of steel today, constructing a mezzanine is much more expensive than it was a few years ago. Therefore, companies must be creative and innovative and explore alternative solutions that are financially practical.
Considering how it is also difficult to attract and retain employees today, companies are turning to automation as a form of innovation. Solutions like autonomous mobile robots (AMRs) are great for increasing efficiency, productivity, and quality, while decreasing labor costs, but the right automation must also be flexible and scalable to adapt with changing needs of the company.
Coping with Additional Capacity and Multiple Carriers
Another direct result of the pandemic is the accelerated growth of e-commerce. As a result, parcel shipment volumes have grown much more than other modes, while the capacity of current carriers has not been able to increase at the same rate as these volumes. Carriers today simply can’t keep up. Labor can only increase capacity up until the point of maxed out truck inventory — either way, it is not enough.
Companies can explore working with multiple different carriers to obtain the capacity they need, but this comes with its own set of challenges — one of the biggest being how to manage these carriers from a systems standpoint. In order to successfully manage multiple carriers, the company’s warehouse systems must be able to effectively integrate with each carrier’s systems, all of which are likely not the same and can vary drastically on the level of system innovation and flexibility. Sharing these large and complex data sets across different platforms can pose additional challenges for all parties. Achieving this level of system integration requires a methodical, phased approach, but also requires a tight implementation timeline if businesses want to thrive during the peak holiday seasons.
After completing a successful system integration, companies must develop processes to track their performance on each carrier to ensure they are fulfilling the contracted capacity to minimize costs. Globally, this kind of information sharing is difficult to achieve, especially due to differing trade agreements worldwide. There is very little visibility into international shipping, so companies may not know when shipments arrive at and flow through customs and ports of entry, or they might experience delays due to congestion or other issues that may arise. Companies that work closely with their carriers to innovate and integrate their systems can help improve this data and information sharing and better serve their customers.
Additional Challenges for Carriers
It is well known that the trucking industry is suffering globally, and this has been a problem since before the pandemic. Carriers are dealing with a driver shortage, due to both the decrease in the current number of drivers and the limited backfill of these positions. Current drivers are aging and retiring, and filling these vacancies has been very difficult for carriers. Two large groups of potential drivers that could be called upon include the younger generations and women. Across the globe, the minimum age to drive freight is typically 21, not 18. If policy can change this age by three years, there is a greater opportunity to attract younger drivers before they enter another profession. Women are also gravitating toward more attractive jobs with better work-life balance and safer conditions. The industry should increase recruitment efforts for these populations to help close the labor gap.
While the pandemic can be credited with compounding the driver shortage, the trucking industry has been facing additional challenges internationally. For example, when the UK left the European Union, there was a population shift that resulted in many drivers leaving the UK and moving back to EU states, creating more shortages. Further, it is transactionally more difficult to ship across these borders since Brexit.
Worldwide, these difficulties are forcing businesses to innovate in order to maintain their level of service to customers. That innovation may come in the form of increased deployment of robotic solutions and development of safe, driverless technologies, or even businesses moving to company-owned fleets. Either way, only those companies that can innovate both inside and outside the facility will survive in the new normal and beyond.
This article originally appeared in the 2021 International issue of PARCEL.