– Supply Chain Insight –
2022: a year of recovery, resiliency, and growth
With the holiday season upon us and 2022 quickly coming to a close, it’s a time of rest and reflection on a year that was.
With most COVID-19 related government restrictions in the rearview mirror by the beginning of 2022, for most, the last 11 months were primarily about recovery, resiliency, and growth. In other words, 2022 was about getting costs under control and adjusting to the ‘new normal’.
Instead of rehashing the past, let’s talk about the ‘new normal’. What key trends that shaped warehousing and distribution in 2022 are going to persist, not just throughout 2023, but far into the future?
2020 and 2021 were about the short game. Agility was key. Adjusting to sporadic changes in consumer demand, rising costs across the board, labor shortages and, of course, COVID related restrictions and precautions, resulted in a very reactive environment for most. Unfortunately, when you’re too busy reacting to the ever-changing circumstances of the present, you aren’t able to plan for the future. Fortunately, over the past 11 months, with restrictions easing and consumer demand normalizing, many executives were able to get their tactical and strategic (short-and-long-term) plans back on track – with a few tweaks, of course.
So, what does this 2022 ‘new normal’ look like heading into 2023? Here are the top 2 trends that we have our eye on here at Syncontext.
Realizing the power of small (but consistent) gains
If you are a follower of this blog – or really any of our content – you’ll know we believe strongly in the power of small but consistent gains, whether in business or in your personal life. When it comes to warehousing and distribution, the principle holds true as well. This is nothing new, however. Continuous improvement methodologies have been around for decades and are common place – in some shape or form – in most high-performance distribution operations. But, here’s why it was even more top of mind throughout 2022 than ever before.
When normalizing costs and efficiencies, it’s often the small (but consistent) gains that make the most impact because they are usually disruption-free, quick to implement and relatively easy to fold into the current day to day.
The best part? most of the time, it’s not even about adding anything new to the operation but rather enhancing an existing practice or process. One of the biggest paradigm shifts to occur in 2022 when it came to enhancing existing processes is how many executives and operators viewed slotting. Slotting optimization, of course, is ensuring every active item handled by your operation is stored in its most productive slot type. But, it doesn’t stop there. Proper slotting is integral to the safety of not only your personnel but your products as well. Essentially, your slotting process touches on every direct labor function on the operation floor, and beyond. Instead of continuing to rely on spreadsheets, or even just experience and gut-feeling, many executives and operators started to enhance their slotting processes by leveraging data and advanced fulfillment optimization systems like skustream. Taking it a step further, we’ve seen high-performance organizations introduce slotting optimization positions outside of inventory control – called slotting strategists – and even implement entire divisions dedicated to the process. This paradigm shift will continue throughout 2023 and beyond.
Increasing investment in equipment and technology
It’s cliché to include “investment in equipment and technology” on this type of blog entry because, of course, there’s going to be investment in new equipment and technology every year. However, 2022 was a bit different.
Back in April, Modern Materials Handling published results from their 2022 Warehouse / DC equipment survey. Facing continuing pressure from e-commerce growth, increased (and sporadic) consumer demand, and a highly competitive labor market, a lot of warehousing and distribution executives felt 2022 would be a big year for investment, not just in automation but in overall infrastructure to prime their operations for the future.
The reported results put the average anticipated spending on material handling equipment in 2022 at $459,316 – 40% more than what was expected a year prior for 2021.
According to 57% of the survey respondents, this trend is only going to continue to increase over the next few years, as automation and robotics become more available to the average distribution operation and more and more operations feel the pressure to modernize and optimize in the face of mounting competition and ever-changing consumer buying habits.
Here’s looking forward to a prosperous year ahead!
As always, if you’re looking for ways to lower labor costs and increase efficiency heading into 2023 (who isn’t?), a strategic opportunity assessment might be for you. It’s not uncommon for us to uncover between $250,000 and $500,000 in yearly (and disruption-free) operational savings. As our assessments are done with your operational data, the results are not only relevant but highly actionable.
Start 2023 off right with a Strategic Opportunity Assessment — Sign up today!
Categories: Distribution Center Design, Engineered Slotting, Process Optimization, Warehouse Optimization,