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The Biggest Supply Chain Trends
We’re still just starting the year 2017, and already there are some important supply chain trends to take note of. This is a space that is always in flux—those involved in logistics are constantly looking for the next big advantage or step forward in technology to cut costs and increase efficiency—but 2017 feels like we’re on the precipice of even greater change.
This is due to the fact that supply chains have become increasingly globalized, which means they are subject to changes in politics, local and international economies, and technology, all areas that are turbulent by nature. Yet the purpose of a supply chain is to remain constant despite external pressures, delivering inventory from the point of origin to a customer’s doorstep in time, every time.
With that in mind, those involved in supply chain management and its related fields should keep an eye on the following trends this year, as they’ll no doubt make a splash over the next 12 months and the years to come.
1. Donald Trump, U.S. politics and “America first”
Try as you might, you can’t avoid politics in this day and age, and the realm of supply chain management is no exception. Putting partisan views on Donald Trump’s executive orders and temperament aside, it’s undeniable that the new president has views on trade that would alter many supply chains, which often run through other countries like China and Mexico.
It’s quite possible by the end of 2017 that trade with China has decreased significantly, and trade with Mexico will also take a hit. Multinational corporations and small manufacturers alike will have to monitor the political climate and potentially redesign their supply networks to avoid heavy taxes imposed on imports, a tactic Trump has considered utilizing.
2. Investment in infrastructure
One more word on the potential effect of politics here: An area that Trump has promised to tackle is America’s infrastructure, with a
$1 trillion investment over 10 years.
Anyone currently involved in supply chain management knows the costs of transportation will only continue to rise as the nation’s infrastructure remains outdated and crumbling. Many roads, bridges, tunnels and the other public works that trucking companies, for example, use to move inventory from one part of the country to another are in disrepair. Local governments often lean on the trucking industry to make up the funding gap, whether by levying a pothole tax or imposing a trucks-only toll along highways. The American Trucking Association says the trucking industry
loses $50 billion a year in wasted time and fuel.
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Though a $1 trillion investment still wouldn’t cover all that needs to get done in the coming years, it would be a major start. There are also larger questions about infrastructure that American businesses, as well as the nation as a whole, need to consider, such as the best ways to upgrade roads that will (in the not-too-distant future) be shuttling self-driving cars and trucks. This is, hopefully, the year planning for that new reality begins.
3. Automation in warehouses
While consumers are keeping their eye on automation on the “last mile” of their delivery process (more on that later) by anticipating drone delivery, we are realistically still years away from drone-to-doorstep deliveries. A
recent demonstration by UPS showcasing their delivery drone in real-world settings went somewhat awry, illustrating the need for further development.
But at the demonstration, John Dodero, Vice President of Engineering for UPS, made a comment that spoke to the greater fear of automation: “Our goal is not to replace UPS drivers…we just want to enhance their capabilities and make them more efficient.”
At the moment, that appears to be the case in warehousing as well, where drones
are assisting warehousing workers more so than replacing them. But 2017 could be the year the scales tip, and robots take over warehouse duties more fully and autonomously.
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While in general warehouses are investing in warehouse management systems and other technological upgrades,
15 percent of executives said obtaining autonomous mobile robots was a priority. As robots become more adept at things like picking and packing, palletizing and depalletizing, and automatic sorting, the need for human workers (who need to be paid, as well as given time off, fed, etc.) at all will be reduced greatly.
4. E-commerce defines retail
E-commerce isn’t necessarily the brick-and-mortar killer most of us thought—many businesses that made their bones online are actually moving to a “bricks-and-clicks” model that makes for a more holistic selling experience—but it will continue to dominate the retail space in the future.
For example,
Cyber Monday (and the weekend preceding it) continues to smash records as THE Thanksgiving break sales day, which speaks to what makes digital shopping so popular—it can be done day or night, from anywhere, on almost any device.
This year, expect even more online promotions, and a concerted effort by businesses to make their supply chains fit the needs of their digital channels. At the most basic level, this involves an inventory management system that tracks sales across all platforms, to ensure accurate stock levels.
5. “Last mile” delivery startups
One of the hottest spaces in the supply chain game at the moment is “last mile” delivery, which is still very much up for grabs. Like many other areas of our economy, there is potential for
“Uberization” of freight and delivery.
There are a few startups that are trying to corner this market, but it will be difficult to gain control of the delivery space away from giants like UPS, FedEx and, increasingly, Amazon. But companies like Postmates and DoorDash show that there will always be space, albeit limited, for companies that want to help businesses and consumers make a fast delivery happen, even when the delivery giants say it can’t be done.
6. Amazon’s foray into 3PL territory
It wouldn’t be an article about retail and supply chains without mentioning Amazon. For the last few years, Amazon has made inroads into taking over (or at least carving out its own space) in traditional logistics, after more than one holiday season of being let down by relying on third-party logistics providers. Amazon is looking to create its
own shipping and air cargo fleets, improve its drone delivery program, and it has already opened 100+ fulfillment centers across the country as a way to cut down on delivery times and increase efficiency.
Considering that many small businesses already use Amazon’s platform to sell their wares, and the Seattle-based giant has shown no sign of slowing down its innovation of a multitude of retail and supply chain spaces, everyone needs to keep an eye on the company’s expansion to see how they will supplement, or compete with, existing solutions.
For more on what 2017 has to offer, check out our list of the leading retail trends of the upcoming year as well.
