Global supply chains have recently faced unprecedented disruption and volatile freight rates. This September, we brought the brightest minds in logistics to our Future of Logistics Conference in Atlanta, Georgia to find out how logistics providers can remain resilient and responsive in the face of disruption. The conference collaborated with Georgia Tech’s Supply Chain and Logistics Institute to host networking events, panel discussions, and breakouts for an expert group of around 70 chief experience officers (CXOs), founders, and investors, from both large industry players and disruptors, who are shaping the logistics space today.
In exploring the current state and outlook of the industry, three key themes emerged as priorities for these leaders: talent, collaboration, and sustainability.
Would you like to learn more about our Travel, Logistics & Infrastructure Practice?
All logistics businesses rely on large, distributed workforces to deliver the goods. Finding and retaining talent has become more difficult since the COVID-19 pandemic. The United States’ (US) labor force participation rate is down sharply since pre-COVID-19, with 3.4 million fewer workers in July 2022 than in February 2020, and 10 million current job openings. In what has been termed the “Great Attrition,” employees are quitting their jobs at a record pace. At our Future of Logistics Conference, executives shared that the key to preventing attrition and a further mismatch in labor supply and demand may be to directly ask employees what they need.
As Kelly Rooney, Senior Vice President and Chief People Officer at WM, said at the conference, “It’s important to make sure that you, as a leader, ask your employees what they need, rather than someone external or HR asking them. Oftentimes, people are scared that the front-line employees won’t be open and honest with their managers, but the reality is that there is nothing more powerful than a manager being able to show their team that they listened, cared, and made changes.”
While making the changes that employees ask for could incur costs, these usually outweigh the costs of losing an employee. As Rooney also said, “We ran these feedback sessions on the field, where the drivers were, and implemented many of the changes, like adjusting schedules, and sponsoring educational programs for them and their families. The costs of attrition are considerably higher than the costs of these programs, even if they are hidden in multiple lines of the P&L (profit and loss) and are not as easy to spot as the employee benefits in the P&L.” As such, logistics companies could ultimately strengthen their standing with their workforce by listening even more attentively to their employees’ needs.
The last two years have raised the topic of supply-chain resilience to the agenda of CEOs, boards, and even elevated discussions at the federal government. Many supply-chain leaders shared examples of how they identified blind spots in various parts of their supply chain. For example, in 2017, a seaweed shortage in Nova Scotia reduced North America’s supply of carrageenan, a thickening agent commonly used in foods such as ice cream, infant formula, jelly, and more. This worked its way through multiple layers of suppliers and ultimately resulted in a shortage of several final products in the restaurant industry. With limited data- and information-sharing across the supply chain, these restaurants had very little visibility or warning of this disruption. Logistics players who support pieces of the supply chain were also affected, with blind handoffs across multiple parties that handle the raw materials, intermediate goods, final goods production, and delivery to consumers. To build resiliency across the supply chain in the face of such complexities, logistics players could increase collaboration across their entire value chain and participate in data-sharing ecosystems.
Today, mechanisms are being put in place for data-sharing across disruptors, partners, and states, with startups and government enabling collaboration. For example, the White House recently launched the FLOW initiative, which created a novel data-sharing partnership between 18 (and growing) logistics entities, such as warehousing companies and ports. Many startups have emerged to create end-to-end visibility across supply chains too.
Given the competitive nature of logistics, there may seem to be little short-term incentive for data-sharing, but in the long term, fragmented industries like logistics can benefit from such collaboration and ecosystems. Having more data collaboration and transparency could help companies to proactively plan for supply-chain risks and ensure their resiliency.
Sustainability is an increasingly important consideration for all sectors of the economy, including logistics providers. Retailers and other heavy users of logistics systems have made strong environmental, social, and governance (ESG) commitments for the coming years.
Many executives discussed the importance of thinking sustainably from the early design phase of a product, as this can reduce a product’s waste by up to 80 percent. While recycled materials in simpler packaging may be mistakenly considered as “not luxurious enough” by customers, they often have a higher quality than pure materials and are less wasteful. To drive consumer uptake of sustainable options, logistics providers could offer environmentally friendly choices and educate consumers on their benefits.
For example, Loan Mansy, Executive Vice President of Sales & Service at Clean Harbors, said, “Many companies have bought a lot of hand sanitizer during the pandemic and are now trying to figure out how to dispose of it. We have two products for our customers: one where we come, pick up the pallets of hand-sanitizer packages and incinerate them, and one where we come, pick up the pallets, disassemble the packages, and separate the sanitizer gel to extract and re-refine the alcohol for reuse. We explain to our customers that the second choice is expensive but also more sustainable. Customers can choose either of the two options, but so far all have chosen the second one.”
While there are several paths to achieve sustainability in logistics, the shift does not come without barriers. Grid development for electric vehicles is a work in progress and there is a lack of other at-scale sustainable technologies. However, by thinking sustainably from the start and educating consumers on the benefits of sustainable options, logistics providers could jumpstart their journey to sustainability.
The uncertainty faced by the logistics industry presents many challenges and opportunities. By actioning across these three key themes, logistics providers can boost their own competitiveness and keep the industry resilient and responsive.