Supply Chain Trends 2019 And Beyond

Posted by Land Link on Aug 14, 2019 1:33:17 PM

In business, a trend can refer to a business model, a process or a technology. However, a trend will only be of more than passing interest if it could directly impact your business and people. We'll look at 4 emerging trends.

  1. Channels of distribution
  2. Supply chain visibility
  3. Logistics operations technologies and employee capability
  4. Operations planning process

1. Channels of Distribution

Cross border transactions are getting a lot of attention lately. International Trade is experiencing:

  • increased tariffs and non-tariff barriers between trading parties
  • implementation of bilateral trade agreements
  • countries improving their logistics services infrastructure and processes
  • increases in the cost of moving goods across borders e.g. surcharges to cover the cleaning of ship funnel emissions or the higher cost of using low sulphur fuel.

For logisticians engaged in international trade, geopolitical events, regulatory changes and associated cost increases will require an increased understanding of your current trade lanes and alternatives.

eCommerce continues to gain a lot of attention as well, but typically from a US or UK viewpoint, where eCommerce sales have forecasts up to 40 percent of all retail sales by 2023. The main challenges of eCommerce for these countries are:

  • Cost and complexity of ‘last mile delivery; adapting operations to address consumers’ changing demands.
  • Control the cost of ‘free’ deliveries. The consulting firm CapGemini has identified this business model as 'not sustainable for full scale implementation across all locations'.
  • Move distribution nodes closer to consumers. The need for fast, low-cost delivery is influencing the placement of inventories to more, but smaller fulfillment centers e.g. delivery or collection points in small warehouses, distributed lockers, and sites within shopping centers
2. Supply Chain Visibility

‘Digital Supply Chain’ is a buzzword that is gaining some attention. Generally speaking, the objective appears to incorporate continuous automation data that is communicated, normalized and structured for online analysis. The expected outcome is to enable closer collaboration between parties and within organizations; from end user demand markets to extended supply markets'

While called a trend, Digital Supply Chain is likely to be a 15 – 20 year transformation journey. Not only is this a technology journey, but an intra-enterprise and inter-enterprise challenge concerning agreement and coordination in supply chains:

  • Clarity between parties in extended supply chains concerning the Aim and Objectives.
  • Communication channels and processes available between parties.
  • Communication and integration capability of each party’s IT system and applications.

The basis of co-operation between parties in a supply chain is trust. Before any substantial progress can be made in a business relationship that requires an agreed sharing of data and information, the parties must be comfortable with a very trusted relationship. Information sharing is at a completely new level.

3. Operational Technologies

Data analysis and artificial intelligence (AI) in supply chains are receiving a lot of attention, but limited implementation. One of the reasons is a lack of qualified and experienced people, which is not new. Technology growth has exceeded the learning curve. While course/units in quantitative analysis are generally available, only a few universities provide learning in supply chain analysis.

As for physical technologies used in logistics operations, the usual suspects get a mention. For most potential users, the Capital Technology proposal identifies the suitability and financial viability of a technology for each business. Implementations will occur where there is a justified business case, as in 3PL warehouses and transport fleets.

4. Operations Planning Process

Sales and Operations Planning is a planning approach with a thirty year history of being the next ‘big thing’, but without success. An initiative to rename the process as Integrated Business Planning has not changed the situation.

No matter the type of business, the basis of S&OP is the balancing of demand for the goods and services and the capability to supply. The structured process can also enable groups within an organization to liaise and understand the challenges of other groups and reach agreements.

Stay informed on this topic and others by subscribing to our email newsletter