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Supply Chain Predictions for 2018

Jan. 10, 2018
A look at the supply chain trends and technology that will come into play in 2018.

While predicting the future is never an easy task, in order to be competitive all businesses need to be able to accurately anticipate what trends will affect them in the coming year. Here is a look at how some companies in the supply chain sector are preparing themselves for the months to come.

Standardizing IoT

The promise of IoT is disrupting all industries – and it seems like the future is bright. The emergence of IoT is an amazing thing for supply chain executives – and especially exciting as the enabling technology is becoming less expensive and more readily available, meaning that deployments are possible now. However, for all the excitement and possibilities, some real roadblocks remain: namely, that IoT technology is like the wild west – there are no existing standards. These standards define how IoT devices will communicate, and how data will be collected, processed, handled, stored, and summarized.  These concerns will extend into 2018, as companies work on a regulatory standard – though nothing has emerged yet. Strong players in the market will emerge as platform providers to aggregate the IoT data and provide key insights into that data that drive better business decisions in 2018.

– Kristi Montgomery, VP of innovation, Kenco

The Uberization of Freight

Online interactions are becoming more and more frequent, and people are becoming increasingly comfortable with this type of automation. People are trying to automate as much of the order-to-cash process as possible - however, there are hurdles that make the fully automated “Uberization of Freight” difficult for both buyer and seller. There’s a lot of exception management involved in transportation management - timing of delivery, temperature requirements, etc. – making human intervention necessary.

In 2018 (and beyond), we’ll ultimately see more and more of this automation occur, but there’s always going to be a need for that human interaction to get you through the challenges and complexities of each and every transaction. I envision us moving in the direction of full automation and “uberization,” but it may take 10-15 years to become fully developed and accepted.

– Turney Thompson, vice president, Kenco Transportation Management

Investing in Innovation

Having a specialized team specifically focused on innovation is a growing trend in the logistics industry. Innovation Labs are continuing to pop up, emphasizing the need for companies to invest in innovation to foster creative new solutions and products. It’s imperative for companies to invest in innovation, and to turn their focus to both innovations of today and innovations of tomorrow. And according to a recent survey by Kenco, 94% of survey respondents feel that it’s important for their 3PL provider to have a competency in technology and innovation, and more than half expect their 3PL provider to be investing in innovative technologies (another 32% want to co-invest).

While supply chain leaders are spending dollars on technologies that they can implement at scale today, with the expectation of reliable and immediate ROI, it’s equally important for leaders and 3PLs keep an eye on innovation for tomorrow. The technologies that are not as high of a priority at this moment (such as drones and driverless cars) may soon rise through the ranks and become a priority – and possibly a necessity – to remain competitive in the supply chain industry. 2018 will see a focus on taking innovation beyond a buzzword and into implementable solutions that deliver executable results.

– Kristi Montgomery, VP of innovation, Kenco

E-Commerce: Combating the Amazon Effect

According to a recent study by Pew Research study, 80% of consumers make online purchases, compared to just 22% in 2000. Times are changing – and warehouses and 3PLs will play a major role in supporting the unified commerce experience in 2018. Whether a package is delivered right to their door in two days or less or they drive to a brick-and-mortar store to pick it up, consumers want what they want, when they want it and how they want it. The role of 3PLs and shippers is now more important than ever to support these fulfillment options, ensuring customers are satisfied and keeping a business’ doors open.

– David Caines, chief operating officer, Kenco

The Future of ERP

As cloud and SaaS continue to grow, companies will look toward their ERP to enable process improvements to meet today’s challenges. As ERP systems hold innumerable amounts of data, companies will look to leverage that data for better analytics and business intelligence, especially within omnichannel and multi-channel environments. Compliance, regulatory requirements and growth challenges require data to be easily pulled and interpreted, and ERP systems will be leveraged to enhance that process.

Technology will remain king

Companies will continue to be challenged to optimize and improve, and the overall supply chain will continue to be affected by immersive technologies, including IoT, robotics and machine learning. Companies will also look at best-of-breed tools to optimize capabilities; these include design and sourcing, order and inventory management, global logistics, and solutions that optimize the manufacturing process on the shop floor.

Predictive analytics will alter the future of the supply chain

2018 will be about predicting the future, not just about understanding the present. While real-time supply chain visibility is still important, manufacturers and wholesalers will look for solutions with predictive capabilities, allowing them to understand when a product will land on the shelves versus its real-time location. With 70% of organizations using advanced analytics to overhaul their business strategies and update how they compete in their respective markets, predictive analytics will move to the forefront of the supply chain.

– Ajay Chidrawar, VP, global product management & customer success, CGS

Impacts on the Supply Chain 

Supply chain managers need to be aware of the following impacts on their operations:

The electronic logging device (ELD) rollout in the U.S., in combination with previously introduced Hours of Service (HOS) regulations and driver availability and the impact on road freight.

The international e-commerce boom, which will drive innovation and convergence in commerce, shipping, and customs systems, and its influence on shipping, fulfillment, and customs compliance solutions

Big Data as a mainstream tool, for monitoring risks, sources, and competition to develop more resilient supply chain systems, as geopolitical risks to the supply chain seem to be intensifying. 

Ken Wood, EVP product management, Descartes

Smart Parts

Part and machine service will become the “product” as the focus becomes guaranteeing product uptime.

Emerging technology such as IoT-enabled smart parts will boom.

The cloud will continue to become the supply chain management standard.

– Gary Brook, CMO, Syncron

Shake Up in the Supply Chain

Many economic and industry analysts see a positive economic environment for both foreign and domestic markets, giving rise to more investments in tools, like transportation management systems, that can help a business grow and improve customer service levels. Supply chains will be a major focus for improvements in 2018 as C-level executives come to accept that the supply chain is central to a business’ success.

Capacity constraints, already high at 99% utilization, will grow even tighter due to increased demand. As a result, transportation costs will go up by as much as 10% or more. Optimization of backhaul movements using a TMS to foster collaboration among providers on a transport network will help ease the capacity crunch.

Companies are transforming their supply chains with digital technologies that will change the ecosystem of the business, eliminating silos, unlocking performance enhancements and boosting productivity. Digital apps can improve service, cost, inventory levels and processes to drive operational excellence.

Cloud-based solutions will continue to grow in acceptance as small-to-medium sized businesses begin to deploy systems quickly and for a lower cost to improve supply chain operations.

In 2018, modular solutions that offers the ability to select a specific function such as inbound management, vendor compliance, or filling a fleet’s backhaul will grow in popularity. A modular solution that integrates into existing infrastructure offers minimal risk and rapid ROI.

Supply chain transparency will become forefront of supply chain agendas in 2018 to help businesses be better prepared to mitigate disruptions in the supply chain caused by vulnerabilities associated with natural disasters, suppliers, customers and other risks.

Customer demand for Amazon-like services in both business and consumer markets will continue to grow requiring visibility up and down the supply chain so that customers will know where their orders are at all times.

Supply chains will become smarter as more businesses will harness the power of big data to grow more responsive than reactive. Technologies like machine learning and artificial intelligence will be integrated into supply chain apps to further enhance decision making that leads to profitable outcomes.

Bigger focus on Last Mile Delivery operations with digital matching of assets (both people and vehicles) will speed delivery times. Shippers want to focus on lowering the cost of this operation while improving service levels.

Greater focus on Global Logistics Communities where supply chain trading partners connect to a collaborative network to gain access to community-benefitting services such as sharing or matching loads.

In 2018, shippers must embrace change in order to succeed. Waiting and seeing what will happen is no longer an option. Transportation management systems are poised as the fundamental tool for supply chain transformation, helping businesses to position themselves above the competition with sustainable profits and better service levels.

Dan Clark, founder and president, Kuebix

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