Digitisation. Changing consumer habits. Political and economic uncertainty. These factors are affecting all industries, all over the world. But perhaps the businesses most impacted by these transformations are those operating in the supply chain and logistics sector. Indeed, over the past few years, we have seen a huge number of new trends take hold, with more to come for the remainder of 2019 and beyond.
So what upcoming trends does your supply chain and logistics business need to know about?
— Logistics Management (@LogisticsMgmt) March 8, 2019
1) Digital logistics becomes mainstream
The digitisation of logistics systems has been on the cards for a while now, as organisations invest heavily in innovations such as drone technology, autonomous vehicles, Internet of Things (IoT) and blockchain. While we are still a little way away from seeing widespread use of totally automated fleets, we are now at the point where, very soon, digital logistics will become the norm in supply chain management.
In particular, the Internet of Things, long discussed as having the potential to revolutionise the industry, will be used across the board to better connect each link in the supply chain. It will become so widespread that the worldwide IoT in Logistics market is expected to reach $1.05 trillion by 2022, according to new Infoholic Research figures. Logistic businesses can use IoT solutions in a number of ways to improve their operations:
- Smart sensors to more easily locate materials in warehouses and improve inventory control. For example. Cohesio's Radio Frequency Identification (RFID) technology systems use a unique serial number to wirelessly transmit product information and location, giving a more detailed level of asset control to reduce time and labour, and improve real-time data accuracy.
- Location management to better track deliveries and fleet movement.
- Monitor sensitive goods to avoid damage or loss, for example in extreme heat. Through the use of smart glasses, Cohesio's Vision Technology helps optimise logistics processes in industrial production environments and other systems-driven industries. Augmented reality helps users to easily identify stock location and availability.
Likewise, businesses are also using blockchain to extend supply chain visibility. As a distributed, decentralised public ledger, the entries into a blockchain system cannot be altered. This means logistics businesses can view every step of the supply chain from source to end user, and identify areas where something has gone wrong – for example, if goods have been left out too long. Blockchain also supports the trend towards organic, ethically sourced materials, as customers can scan a barcode on a product and view every step involved in creating, processing and shipping it.
Finally, automation in the form of automated guidance vehicles is likely to take off in the next few years, which is welcome news for those worried about the worldwide driver shortage. This is global driver shortage is particularly acute in Australia – the current average age of drivers in this country is around 50, and less than 15 per cent of those employed are below the age of 30, according to NatRoad CEO Warren Clark (as reported in Fully Loaded). With the same source reporting that road freight task is set to double by 2030, the instigation of driverless fleets can't come fast enough.
2) Political and economic uncertainty
The 21st century has been a time of uncertainty, and this is only set to continue in coming years. World trade routes are by no means set in stone, as tensions between the US and China (as well as many other countries) escalate and Britain continues on its erratic road towards Brexit. Indeed current trade routes are experiencing so much turmoil that some are predicting a renewed surge of the BRICS (Brazil, Russia, India, China and South Africa) countries into the world trade landscape.
Meanwhile, fluctuating exchange rates are leading many businesses to change suppliers frequently – the AUD/USD exchange rate stands at just 0.70 in March 2019, having stood at 0.80 at the beginning of 2018.
This means logistics businesses have to find ways of dealing with changing customs processes and new world trade routes, sometimes as quickly as it takes for Trump to press send on an ill-advised tweet. That's why the concept of supply chain resiliency (a measure of your company's ability to withstand disruptive events) will be a key focus for logistics businesses.
3) Elastic logistics
One way logistics businesses can incorporate the flexibility that this uncertainty requires (and therefore increase their supply chain resiliency) is through elastic logistics. A relatively new trend in supply chain management, elastic logistics essentially involves creating a supply chain that is able to expand and shrink at different times depending on demand and economic conditions. This scaleability can even apply to particular days where you're experiencing especially high levels of orders.
Technology plays a central role in elastic logistics. IoT allows you to more easily expand your operations because everything is already connected, so you don't have to let every element of your supply chain know about a change in demand. Likewise automation will be an important factor, as driverless cars are a lot easier to scale up than having to seek additional labour.
4) Green logistics
Climate change isn't exactly a new trend, but the solutions logistics companies are responding to it with are certainly evolving. As customers become more and more environmentally-minded, all aspects of the supply chain, from producers through to transportation, should reflect eco-friendly practices.
Again, technology plays the starring role here, allowing businesses to reduce mileage, emissions and carbon footprint in a way that wasn't previously achievable. Not only is this necessary for customer loyalty, green logistics is also helping to lower operations costs by finding more efficient ways of getting goods from A to B.
One innovation that will take off in the next few years is known as the circular supply chain. The traditional supply chain model is linear, requiring new raw materials at each stage. A circular supply chain, however, looks for ways to reclaim existing, used raw materials, helping to significantly lower costs as well as promote environmentally friendly logistics practices.
If you want to take advantage of current trends in the logistics industry, look no further than Cohesio Group. We specialise in taking tech advancements and using them to improve your workflow, productivity and bottom line. Why not give us a call today and we can break it all down over a coffee or a beer?