Bob Trebilcock is the editorial director of Supply Chain Management Review. He recently discussed 10 supply chain trends to watch in 2022 on his Rebound podcast.
Bob is unique in that he has deep family roots in the pallet industry but has gone on to have a long journalistic career encompassing the supply chain. So, let’s jump in and talk about supply chain trends and possible implications for pallets.
Pallet Enterprise: One of the leading trends every year used to be cost-cutting. Now the emphasis is more on business resilience and agility. Can you talk about that shift, and fill us in about resilience and agility?
Bob Trebilcock: Even before COVID-19, you were starting to see a shift. Cost was still important, but customer expectations were putting the customer at the center of the supply chain. It was beginning to become more important. As one key supply chain officer said to me, “Cost used to be number one. It’s still in the top five, but it’s no longer number one. Customer expectation, or what some people call the customer-centric supply chain, had started to become number one.” I’ve heard this from a number of senior executives.
We have seen this trend in procurement to work with fewer and larger suppliers. Instead of having 10 suppliers, you wanted one or maybe two suppliers. The idea was that they become an extension of your business. That was great until COVID-19 came along and those suppliers shut down. And now you had all your eggs literally in one basket. And that basket was floating down the river. So that made companies start thinking about their procurement strategies and their supplier strategies. And frankly, that was even happening at some companies before COVID because of the tariff war that got launched in 2016.
So, resilience involves how fast you bounce back from disruption. How resilient are you when that disruption happens? How quickly can you get back up and running?
Agility is the ability to change. For example, China just shut down because of a disruption. Can I move this production quickly to Italy? These are real examples, by the way, from COVID, with one major manufacturer.
I think it’s important to know that there’s nothing happening in the supply chain today that wasn’t happening before COVID. All COVID did was make all of those things worse. And they all happened at once – a global shutdown, combined with things like labor shortages and port congestion. But none of those things are new. They just got worse.
Pallet Enterprise: The number two supply chain trend pertains to supply chain talent. What types of things are companies doing to maintain their talent pool?
Bob Trebilcock: A lot of it, frankly, comes down to paying more and then trying to make the job more attractive through technology and automation. Automation today isn’t about eliminating jobs. It is about ‘Can I increase my business or even meet my current demand without adding more labor or if I’m running a second or third shift where nobody wants to work.’
Also, consider alternative sources of labor that you’re not tapping into. One company I know offers opportunities to newly released non-violent offenders, or people coming out of rehab. That might make sense if your pallet plant is in a big city like Chicago, but if your pallet plant is in a rural location, it might not.
Pallet Enterprise: The leading trend this year is advanced analytics and automation. Looking at automation in particular, what types of automation are the hottest? And are pallets part of the conversation?
Bob Trebilcock: Let’s start with the last part of your question, talking about pallets. As you know, people often don’t pay attention to their pallets. But with highly automated systems, the tolerances for those systems are tighter than the tolerances of a lift truck putting a pallet in a rack. So that’s when I typically hear people talking about pallets and pallet quality.
As for automation, the hottest technology right now is robotics. And I’m thinking of warehousing and distribution. These are autonomous mobile robots that might carry a tote from a storage location to someone at a different location. Less prevalent but growing in importance are piece picking robots. That’s where you can have a robotic arm at an order-picking stations and when the tote is presented, the robotic arm picks the items needed and puts them in another tote. And the third robotic application that has all of a sudden started taking off is autonomous lift trucks, lift trucks that can operate without an operator, although they’re typically hybrid. They can operate with an operator, but they also can operate without one.
Longer-term, the automation that has been hot for some time, and continues to hold interest is what is called “goods to person” picking solutions. That is a solution that combines some type of autonomous or automated storage. Product is delivered, whatever the storage media – a case, tote, or pallet, to a pick station where a person can pick from it. It eliminates the travel time of driving a lift truck or pushing a cart through the warehouse.
Pallet Enterprise: The #3 trend is visibility. Why is visibility so important and how are companies achieving it? Do you have a sense of the role that IoT-enabled pallets will play?
Bob Trebilcock: Where in the ocean is the ship? That’s number one. But just as importantly, where on the ship is that product located? Companies are trying to be more agile so that if all of a sudden, a product gets hot, they want to understand where in the supply chain their product is, so they can redirect it as needed.
For instance, if a boat has just come into port in Los Angeles with products that are in demand, visibility enables us to pinpoint that the pallet or the container is buried in the bowels of the ship. We then determine that it’s going to take two days to get it off the boat. Based on that information, we could choose to ship stock from the warehouse instead to expedite earlier delivery, and then replenish the warehouse with what’s on the boat.
To do that, you need some kind of an IoT device, whatever it is. Do you put that device inside a shipping container? Or do you put it on pallets or the individual carton totes? And the answer to that question is that it probably depends. So, I think there will be a role for IoT-enabled pallets. But it’s not like everybody’s going to have the same strategy to get visibility because the level of visibility needed is going to be different for some companies. Some companies just need to know that the product is on a truck and where the truck is located. To do that, they don’t need to put an IoT sensor on every pallet.
Pallet Enterprise: The #4 trend is e-commerce. How is the rapid shift to e-commerce impacting supply chains?
Bob Trebilcock: The impact has been huge. At the facility level, your half a million square foot distribution center might have shipped out 200,000 items a day before e-commerce. And if there were 1,000 items on each pallet, the forklift guys had to move 200 pallets. Well, now they have to move 200,000 individual items. So, it’s just incredibly labor-intensive because you have to have somebody pick those 200,000 items.
With e-commerce, it began with two weeks delivery, and then it was one-week delivery and then it was three to five days delivery. Now it’s next day or two days delivery, and we’re moving to same-day delivery. So, you are seeing this huge buildout of e-commerce facilities as they reconfigure to get them closer and closer to the customer.
Then you have to figure out how to deliver all this stuff, and there aren’t enough trucks and people. How am I going to deliver and not lose my shirt because I have to offer free shipping, and guess what, UPS doesn’t deliver for free?
We’re (consumers are) ordering online and it’s costing supply chains a huge amount of money. They’ve got to keep taking orders and delivering them, and then they’ve got to figure out how to make it cost-effective. They are literally changing the tire while driving 60 miles per hour.
Pallet Enterprise: The #7 trend is the digital supply chain. What is it and why is it so important?
Bob Trebilcock: So, the digital supply chain is different for every company. And every company you talk to would answer that question differently. But the idea is that the digital supply chain is bringing some level of automation and that automation typically involves software and things like that. So, even though a robot is a mechanical thing and take people out of the equation, it is gathers information. A robot doesn’t just perform a task. It collects information about that task that can then be analyzed and used to improve your supply chain.
Pallet Enterprise: I noticed that sustainability did not make the top 10 list. Do you have any thoughts about that?
Bob Trebilcock: Frankly, I’m surprised. And it isn’t just sustainability. The term that we’re hearing now is ESG, which stands for Environmental, Social, and Governance. It includes the green part of it, but it also refers to sustainable business practices. I did an interview with an officer of a leading company last July. When I was setting up the interview their communications person said, “What the officer really wants to talk to you about is our diversity initiative.” And I was like, “Really, I’ve never had a supply chain officer want to talk to me about diversity.”
All of those things around being a good corporate citizen, being concerned about the environment, diversity and inclusion initiatives are certainly coming to the fore at the large corporate level. It may not be at the small to midsize business level yet. It may hit them if their customers start asking them to check the boxes regarding their sustainability or diversity initiatives. And I would say there’s particularly an opportunity there for the pallet industry to continue to promote the work it has been doing around sustainability.
