Five Trends That Will Drive Supply Chain Success in 2024

Logistics and supply chain professionals are moving away from the short-term survival thinking that characterized the pandemic period. In 2024, they need to adopt strategies, tactics and technologies that will reinvent ways of working, boost productivity, and reduce costs over the long term. 

On top of rising costs and higher customer expectations, logistics and transportation leaders are experiencing multiple supply chain disruptions the world round. To ensure continued profitability, they’re focusing on supply chain resilience, cost reduction, and transparency.

Following are the key trends will shape the logistics and supply chain landscape in 2024.

Tackling the ongoing labor shortage. The tidal wave of workers exiting the workforce in the “Great Resignation” of 2021 and 2022 — during which nearly 100 million workers quit their jobs — eased off in 2023. However, finding and retaining quality staff will continue to be a challenge in 2024, as workers opt to leave the workforce or transition to other jobs in search of higher compensation, better working conditions, and improved work-life flexibility. Yet a scarcity of manual workers isn’t the only labor constraint that distribution-focused companies are facing this year. In addition to assembling a full complement of laborers, they need to attract a growing number of knowledge workers, including supply-chain planners and analysts. 

The current restrictive U.S. immigration policies create an additional impediment for logistics and transportation organizations attempting to fill existing labor gaps and drive business growth. What’s more, they’re competing for resources against organizations across industries nationwide, as workers seek the highest pay and most favorable working conditions. To weather the labor shortage, logistics and supply chain leaders will need to strengthen retention strategies, while simultaneously boosting productivity through investments in automation.

Keeping an eagle eye on the bottom line. Shippers, carriers and logistics providers are feeling the pinch of the growing financial burden of rising labor, capital and fuel costs. Spurred by the retirement of aging workers, as well as the loss of women who left the workforce during the pandemic and didn’t return, wages have increased aggressively in some sectors. 

Similarly, with elevated fuel costs gobbling up a significant portion of transportation spend, along with higher maintenance and fleet insurance costs, the margin-sensitive transportation business will continue to feel the squeeze on profits in 2024. 

Without significant projected revenue growth to offset cost increases, companies will face intense pressure to slash operating costs and protect margins. Traditional operating models and policies impacting logistics and freight costs will be challenged in 2024. Forward-thinking companies will turn to strategic modeling tools to identify changes in the supply chain network, sourcing strategies, transportation modes and service policies.

Thinking beyond customer service. With B2B customer expectations mirroring the high-performance expectations of the B2C sector, the reactive customer service model — for example, responding to delivery queries and addressing product issues post-sale — falls short. In 2024, customer success will be defined by the quality of the overall customer experience. Impacting every touchpoint along the customer journey, from placing orders, booking delivery appointments and tracking shipments through the last mile and beyond, a positive customer experience will be critical for building brand loyalty and minimizing churn.

Delivery performance is a cornerstone of customer experience success. A 2023 survey of 8,000 e-commerce buyers found that 67% experienced a home delivery problem within a three-month period. Sixty-eight percent of those customers took some form of action against the retailer or delivery company, so it’s no surprise that consumers will no longer be willing to accept wide time windows or lack of visibility into delivery time. In 2024, the overall customer experience will be defined by greater delivery precision and reliability.

This year will usher in a new baseline standard of delivery transparency, traceability and consistency. Real-time delivery status notifications have become a must-have. Distribution-oriented companies need to ensure their delivery processes are up to the task of accurately and cost-effectively booking tighter time windows, meeting delivery promises and digitally engaging customers throughout the experience. For those organizations relying on third parties, the ability to integrate booking and tracking data with internal customer-facing systems will be invaluable.

Reinventing business models. New logistics-based operating models and electronic customer engagement will take center stage. Digital customer engagement throughout the order lifecycle, from order placement to post-delivery support, has emerged as a pivotal factor in achieving competitive differentiation, while also reducing delivery costs. 

A 2023 Descartes study found that companies that engage with their clients electronically during the delivery journey experienced greater customer satisfaction (30%), as well as a reduction in customer calls about delivery status (30%), disputes and claims (25%), and failed deliveries (10%). Similarly, customer engagement models incorporating self-service options, such as customer portals for viewing and managing delivery, will be key to reducing call-center costs and boosting customer satisfaction in 2024.

Adopting a stronger environmental focus. With the negative effects of climate change visible across the globe, the trend toward factoring environmental sustainability into purchase decisions will gather more steam in 2024.

In one 2023 consumer sentiment study, 63% of respondents were concerned about environmental impact when purchasing online and having the order delivered. Similarly, a recent study examining home delivery sustainability found that 60% of consumers were “quite” or “very” interested in using more environmentally friendly delivery methods, with 41% regularly making purchase decisions based on the environmental impact of the product or company. 

Distributors and transportation companies need to consider a combination of new environmentally conscious strategies in 2024. For example, they can minimize their ecological footprint while also reducing delivery costs by grouping multiple orders for a single weekly delivery, relying on technology to identify the most sustainable delivery options, or using electric or hybrid delivery vehicles.

With innovative delivery strategies reshaping the logistics and supply chain landscape in 2024, the “safe” choice of maintaining the status quo will be a costly stumbling block for complacent shippers and logistics companies. Indeed, as the pressure to protect margins and deliver a superior customer experience intensifies, logistics and transportation operations are becoming strategic to overall business success. Research has shown that higher financial performance and executive leadership that views supply chain and logistics as a competitive weapon go hand-in-hand. 

By embracing innovative logistics and supply chain strategies, business models, and technologies, distribution-oriented organizations have the opportunity to transform their operations to drive greater delivery efficiency and productivity, curb costs, and create a superior customer experience that will carry them through 2024 and beyond.

Chris Jones is executive vice president of industry with Descartes.