3 Trends on the Future of Logistics to Keep an Eye On

Distribution warehouse centerWe’ve reached an era today where people are becoming more and more aware of how companies move their goods and where they are manufactured. There is even a Kickstarter company that gives you the breakdown of where your shirts are coming from! We are also starting to get more and more aware of how supply chain services are affecting our environment by increasing efforts to create a more sustainable supply chain. This includes taking advantage of new technologies in order to accommodate today’s large transportation and supply chain demands. New advancements in e-commerce and the changing trends in global logistics has been a player in these shifts.

We’ve narrowed our list down to three main trends to watch for, and these trends will definitely affect the end user hopefully by being able to create a more efficient and cost-effective supply chain in the near future.

1 – Synchronizing Tracking on the Supply Chain

There is a lot of buzz in the logistics community these days on Radio-Frequency Identification (RFID) technology. Companies are starting to look into synchronizing how packages are tracked especially when it comes to services that involve global logistics or supply chains that involve multiple modes (i.e. intermodal services).

So what does this mean for both manufacturers and customers? The main benefits of RFID implementation in the supply chain are laid out quite nicely via a case study post on RFID for international supply chain management. Essentially, RFID tags can be read from a distance (with no line of site needed) and are easily tracked. This allows for a more visible supply chain that increases tracing on internal shrinkage, thereby reducing it, as well as makes it easier to detect counterfeit products (all authentic products can be given a unique ID).

For the manufacturers and distributors, the ease of tracing and tagging reduces the number of mistakes along the supply chain and the scanning process can also reduce the time it takes for shipments to move. On the customer end, there is less hassle when it comes to tracking and receiving products. While this may sound like a win-win, RFID technology is still not a perfect solution due to two main issues: reader collision and tag collision. The scanners can get easily confused when two tags overlap, so there has to be a system in place that allows for scanning tags one at a time.

2 – Creating a Sustainable Supply Chain

There is a new trend for consumers to want to be more aware of the process by which goods arrive at their door. This arose out of consumers wanting to be able to make informed decisions when purchasing with regards to both sustainability and fair trade issues, and a growing prevalence in ‘bringing products back home’ (i.e. keeping things local). So it is not surprising that companies have started to think about and even implement some changes in order to have a greener, sustainable supply chain. Concurrently, government run initiatives are being put in place to help set in motion its development such as the Clean Energy Manufacturing Initiative (CEMI).

Companies are now taking advantage of said initiatives by having wind and solar powered manufacturing plants, which in turn have been shown to not only reduce their carbon footprint but also, in some cases, cut costs for end consumer prices. This creates a win both for the environment and the consumer.

Apart from environmental concerns, part of the sustainability trend also involves fair-trade. This issue, while mostly prevalent in the food industry, is becoming critically important in consumer buying decisions. The desire to buy ethically clean products is extending to more and more products to the everyday consumer. As mentioned earlier, the Kickstarter project is one that attempts to fully focus on this for their brand imaging, but major retailers are starting to participate as well even in the luxury sector.

There are plenty of benefits on the logistics end apart from satisfying consumer buying trends that further stimulate the initiative to go for greener and more sustainable supply chain practices. It can protect market share and reduce risk premiums as well as cut costs for both manufacturers and consumers while increasing supply chain efficiency. Thus it seems like in the future we will start to see more and more companies striving for producing sustainable products at every stage of the process and promoting their initiatives to create transparent ethical business conduct and sustainable products.

3 – Nearshoring and Bringing Manufacturing Back Home

Finally, with our current globalization trends we are noticing that more and more companies have started thinking about bringing their manufacturing closer to home. Nearshoring is the transferring of business processes to nearby country, often bordering your own. It is a trend that has taken precedence in companies due to the fact that certain costs have been increasing in typically low-cost countries like China.

Recent research has shown that more and more manufacturing executives would like have the US or Mexico as their preferred location for nearshoring. This is due to the fact that these nearshoring initiatives led to a 5-10% reduction in ‘landing costs’ already. The trends suggest that by 2015, US manufacturing costs will match that of China while manufacturing in Mexico and India stay strong. These trends suggest a move out of Asia with a focus on the US and Mexico as new manufacturing hubs.

At the end of the day, there are many developments that have not been discussed as current trends for the future of logistics (but be sure to stay tuned for future posts!). But these three issues are currently trending and should be watched carefully. It will be interesting to see how these factors will tie in to manufacturers, third party logistics providers, and all other parties along the entire supply chain up to the end consumer.

If you have any questions, please feel free to give us a shout. Otherwise, feel free to see where we fit in the supply chain as a 3rd party logistics provider by checking out what we do. Otherwise, have a great rest of the week and enjoy the long weekend!

1 thought on “3 Trends on the Future of Logistics to Keep an Eye On”

  1. Pingback: 3 Sustainable Supply Chain Initiatives that Rock! | morailogistics.com

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