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Supply Chain Top Trends In 2018

What will the next twelve months bring for supply chains

24Jan

In 2017, the pace of innovation picked up traction at a rate that has never been seen before. With IoT, AI, Blockchain and other exciting tech all developing rapidly, everyone across the industry is talking about how the new technologies barrelling towards us are going to impact the supply chain. Changing demand from customers and innovative strategies also play a hand in the industry of the future. But what trends are set to disrupt the supply chain in 2018?

Increasing Demand Due to the 'Amazon Effect'

Amazon tend to be the go-to case study for supply chain innovation. A retail giant who, according to The Verge, processes over 400 orders per second at peak times, they have widely invested in their supply chain technology and services over the last few years to secure their place as the most competitive online retail organization in the world. And with each innovation increasing speed and efficiency in their deliveries, Amazon just keep pushing the bar higher and higher. Same day delivery, which a decade ago seemed impossible, was introduced in 2014.

Their unbelievable success has sparked a phenomenon sometimes referred to as the 'Amazon effect', where consumers are demanding faster and faster delivery times and retail companies need to keep up to stay in the game. In 2018, this phenomenon is predicted to have a knock-on effect in other sectors, spreading to automotive industries, industrial manufacturing and even high tech industries. CEOs are being forced to evaluate their operational leads and adapt their supply chain management to keep up with the 'new normal.' Innovation in the supply chain is the key to staying relevant in 2018.

The Rise and Rise of Data-Driven Logistics

Big data has already begun to revolutionize supply chain and will continue to become more relevant to operations in 2018. A Capgemini Consulting survey found that 98% of 3PLs said that improving, data-driven decision making is 'essential to the future success of supply chain activities and processes'. Additionally, 81% of shippers and 86% of SPLs surveyed said that using big data effectively is fast becoming a core competency of their supply chain organization. Companies will continue to increasingly utilize big-data algorithms, smart analysts and data-visualization techniques to enhance efficiency and shorten delivery times. Currently, big data can provide information across a range of areas, including traditional enterprise data, vehicle diagnostics, traffic & weather data, social media data and more. Supply Chain Management Review predict that in 2018 companies will begin to utilize geography-specific data to anticipate the demand for a region, allowing them to ship in advance.

Data-driven logistics will also allow for greater supply chain transparency. With a Label Insight study suggesting that 94% of consumers are likely to offer loyalty to transparent brands, visibility is crucial for companies to manage to stay afloat. Greater visibility will also aid communication along the supply chain. As sensors become more prevalent in vehicles and shipping throughout the supply chain, if a shipment is going to be late, it can be known in advance rather than clogging up the supply chain later on. This improves the rate a company hits the 'perfect order' mark.

IoT Devices Will Continue to Change the Face of the Supply Chain

According to Gartner, by 2020, the number of devices connected to the IoT will more than triple, estimates suggesting there could be as many as 20.8 billion globally. And it's not just the home that will see a sharp uptake of these connected appliances. IoT devices and mobile capabilities are set to reform the supply chain with revenue opportunities and operational efficiencies.

IoT machines are already being used to transmit performance information to the central control tower systems that companies use to monitor their supply chains, and this usage will spread further in 2018. IoT devices can be used to improve vendor relations with communication happening in real-time and the improved communication can increase productivity. With organizations not waiting for other areas of the supply chain to get in contact via email or another method, time can be used more efficiently, reducing labor hours throughout the supply chain. Speaking to Dovetail, Tony Martins, VP of Supply Chain and TEVA Canada pointed out that 'the speed of the chain is not really related to the systems used by various companies - it's all about people, and people talking to people.' It will also make tracking assets considerably easier as IoT sensors can provide much more accurate inventories than a human can. In addition, IoT devices will allow you to utilise connected fleets so your carriers can be connected, allowing valuable data to be catalogued.

Renewed Focus on Sustainability

Speaking to Supply Chain Dive, Cathy Morrow Roberson stated that 'in 2018, we’ll continue to see progress in sustainable supply chains. More logistics providers that are asset-based, for example, are taking sustainability into consideration when purchasing transportation. Fuel savings is typically the biggest goal but environmental responsibility is also a growing goal.' Over the last few years, large corporations have made statements about going green. P&G, the world's leading provider of consumer goods, recently stated on their website that they aim to have 'zero manufacturing waste to landfill'. In 2017, UPS announced they would add additional compressed natural gas (CNG) fueling stations and add 390 new CNG tractors and terminal trucks and 50 liquefied natural gas (LNG) vehicles to its alternative fuel and advanced technology fleet which has more than 4,400 vehicles.

Focusing on sustainability going forward is a smart business move for companies. It reflects consumers changing habits over the last few years as the general public have a more heightened concern for the environment and the products they use. A 2015 study by Nielson found that 66% of respondents would pay more for a product or a service if the company was committed to positive social and environmental change. Inevitably, we will see more companies trying to make their supply chains green this year.

Increased Use Of Robot Delivery

Delivery robots have been enjoying a lot of attention in the last couple of years and in 2018 we will see them becoming more involved in last mile deliveries. The first official drone delivery took place in November 2016, when Domino's used a Flirtey drone to deliver pizza to a customer in Whangaparaoa, New Zealand. The Federal Aviation Administration regulations and concern over public safety mean that drone deliveries have been put on the back burner for now, but land-based robot delivery systems powered by AI software have shown real promise. On March 23, 2017, bots from Starship Technologies began to take over some of the work done by human couriers at the on-demand delivery startup DoorDash. The self-driving robots transport food from restaurants in Redwood City, California, to customers within a two-mile radius. Many organizations are now investing huge amounts of money into the development of robot delivery systems in an attempt to save costs in the long run. And the early projections add up, as a 2015 study by ARK Investing Group predicted that drone delivery would cost Amazon less than $1 per shipment, while Business Insider estimated that they currently spend approximately $5.75 on shipping per package. Expect to see a lot of these little guys about as 2018 continues.

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