Remember a few years ago when you paid extra to have something delivered in two days?
That’s no longer the case, and now companies like Amazon offer same-day delivery on a wide variety of items.
This focus on making faster deliveries to the customer at no additional charge is changing the way that supply chains operate – and more changes are expected in 2018 as companies ramp up their focus on customers, says Brian Hodgson, executive vice president of business development at MP Objects.
“Retailers are transforming their supply chains in two ways: building stronger and more integrated relationships with suppliers; and changing their distribution network to be closer to their customers,” he says.
He explains the stronger relationships with suppliers provides the ability to offer a broader catalog without carrying the inventory. At the same time, more advanced integration can enable the retailer to decide whether the shipment is sent from the supplier or its warehouse based on inventory, consumer proximity and transportation costs, he says.
“With respect to the distribution network, in addition to leveraging suppliers, retailers are moving fulfillment close to the consumers, and often will leverage third-party logistics companies for this coverage,” he says.
He adds that retailers also will require a broader carrier mix to cover same-day deliveries, as well as value-added services such as the installation of products.
While Amazon is driving many changes in retail, other industries are sparking supply chain changes. That is why Hodgson says he believes two of the top supply chain trends for 2018 will be building out more dynamic supply chain networks and better automation to optimize and leverage networks.
Among some other trends that Hodgson and others see for supply chains in 2018:
“The biggest area of crowdsourcing I see developing today is around the Uberization of freight,” Hodgson says. The technology for providing available shipments to a network of carriers is already well-developed, although some regulatory factors may inhibit development and profitability. “Still, in the medium/longer term this is an area that will mature and create huge value,” he predicts.
Virtual logistics teams. “With the advent of digital supply chain and control tower technology, we see virtual logistics teams as a growing concept that builds on the 4PL or lead logistics concept,” Hodgson says. “This is a team that is overseeing a number of partners to manage the end-to-end logistics processes. With the advancement of artificial intelligence, the control tower teams will move from operational tasks to more strategic functions.”
More globalization. “With the recent events such as Brexit and the push for renewed protectionism, the age of the customer will push this pendulum back to more globalization and free trade,” Hodgson says. “The economic and customer drivers will continue the long historical growth of international trade.”
Fewer traditional warehouse workers. As Amazon has already demonstrated, warehouse workers will shift from the role physical laborers to one of robot supervisors. While the company says it will need even more warehouse workers in the short term to meet customer demand, the company is already pushing for innovation in this area. Experts say this doesn’t mean robots will be a jobs killer, but a jobs creator as humans shift to more technologically demanding
Focus on quality control. While technological breakthroughs can be exciting, they can also highlight inefficiencies in the business. “The reality is that the speed at which the supply chain and logistics industries are changing are breathtaking,” reports Cerasis. A trends report cites the need for a “stronger focus on the fundamentals such as adhering to risk management, collaboration, focusing on your core, and using expert vendors to achieve your goals. It is vital that, despite all new technology, we as supply chain and logistics practitioners are leaning on tried and true practices.”