Supply Chain Management - Globalization

Alongside the many opportunities globalization presents for the supply chain industry are potential pitfalls, as such, preparing for them is crucial to the industry’s health.

Globalization has had many positive effects on supply chains. From greater market growth due to an increase in demand, to greater connectivity due the rise of the internet. With that said, the many positives have come with corresponding risks.

Milosz Majta, outlines this in his Forbes article,

Just as there are benefits and costs of globalization, there are similar pros and cons of a global supply chain. In particular, companies need to manage the related risks.

This means that those managing supply chains need to be able to mitigate for these risks if they want to see the upsides of globalization. After all, globalization is like any other major develop in market demand and pressure, resulting in both opportunities and threats. Crucially, the ability for companies to sufficiently overcome these threats is greater than ever. This in no small part being due to advances in machine learning, artificial intelligence (AI), and automation.

This week’s article by Morai Logistics highlights the obstacles that supply chains face as a consequence of globalization and what they can do to solve them.

Harmful External Factors

When managing a supply chain on a global scale, damaging external factors are more likely to come into play. These factors can look like political instability in countries, natural disasters, wars, etc. Ultimately what any of these factors amount to is a potential breakdown in supply chains. If a country’s government is in turmoil, its ports could be affected. If war breaks out, certain supply chain routes may no longer be safe. The same applies to a dangerous weather event. All these factors become more likely due to the scale and variability globalization brings with it.

This a risk that can’t always be mitigated for by its very nature—it’s external. The best a company can do is to have contingency strategies in place for each potential event. Even then, its strategy will ultimately be reactive. In turn, this threat does present an argument for regionalization. As regionalization reduces the problems of scale and instability.

Uncertainty

Market demands and trends become harder to prepare for the more actors that can influence a supply chain that are at play. With globalization comes the largest number of actors possible. In turn comes a staggering influx of data which gets increasingly hard to process, analyze, and make predictions off. Thus, supply chain companies have the potential to be floundering in the dark.

Here is where technological advancements become crucial in combatting globalization threats. By being able to automize data entry and collection, as well as process that data via AIs, this threat is greatly minimized. Once data collection becomes an automated procedure, keeping track of data becomes simple. And, with that data, an AI can make predictions and forecasts that make better sense of the market.

Complexity

More links in a supply chain mean more points of possible weakness within it. With globalization, supply chains are longer, involve more stops, take more time, and include multiple lines of communication. Consequently, this greater complexity requires greater oversight, as even one weak link can vitiate the whole chain.

This byproduct of globalization can be addressed in large part through the technologies mentioned previously. The increasing complexity in supply chains can be simplified by automating processes along it. Moreover, the reliability of a supply chain can be increased by the forecasting of AIs. Finally, the oversight needed along each link in the chain can be better achieved through blockchain technology.

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In response to growing customer expectations, supply chains are looking at regionalization as a way to be more efficient.

At the beginning of this year, Morai Logistics presented 4 supply chain and logistics trends to watch for 2019. Included in this list were the current capacity crunch, transportation regulation mandates and direct-to-consumer fulfillment that result from an increase in consumer expectations. To expand their distribution capacity, supply chains have tried localizing production through a strategy called demand-chain. Yet, the continued growth of the market is so pervasive, that the industry must continue to innovate.

According to Supply Chain Management Review, globalization has pushed supply chains to think smaller when it comes to tackling the big picture. Rather than disperse manufacturing across the globe, research indicates that regionalization is a more viable option. Organizations benefit from mobilizing products closer to the consumer, and also help remove barriers associated with efficiency and delivery.

This article by Morai Logistics explores the concept of regionalization, or post-globalization, and its current impact on the supply chain industry. It also aims to outline the benefits organizations gain from implementing this type of organizational restructuring.

Regionalization at a Glance

As mentioned above, regionalization has been found to be a product of globalization. It’s a form of organizational restructuring that aims to address ‘visibility and velocity’. The idea here is to propose a greater emphasis on meeting the growing expectations of consumers that are influenced by globalization. It also moves us to ask the question, can regionalization actually act as a catalyst for supply chain efficiency?

Research defines regionalization as involving…

The reorganization and division of manufacturing into smaller segments and more localized economies.

Global supply chains are very complex and can lead organizations down a path with greater risk and vulnerability. However, a consistent factor that has been a positive contributor to both globalization and regionalization is technology. How industries learn to leverage and apply manufacturing technology, enables organizations to create regional supply chains.

In order to lead in a fairly competitive industry, supply chains must become more strategic. According to Global Supply Chain Ecosystems writer, Mark Millar,

World class organisations no longer perceive the supply chain as merely tactical support for business as usual, but take a holistic position that their supply chain is what drives the business.

This has never been more applicable than when it relates to regional supply chains. As customer expectations continue to grow, there are considerable advantages to having production closer to home. Let’s explore some of the top advantages that regionalization provides organizations.

Benefits of Regionalization

To meet the growing needs of consumers, organizations must ensure their supply chains are efficient and agile. That means working technologies to create efficient, cost-effective solutions. As mentioned above, technology plays an integral role in enabling supply chains to become innovative at their approach to moving product.

When an organization breaks down a complex supply chain into smaller regional locations, they are able to streamline processes with ease. In addition, they achieve the following benefits:

  • Create visibility across supply chains
  • Increase the velocity and agility of supply chains
  • Improve response rates to ‘market changes’
  • Deliver consumer expectations and demand

In conclusion, supply chains must continue to evolve their structure in order to compete and meet the needs of today’s consumers. While the impacts of globalization remain, there is a need to respond to change in a more efficient and agile manner. Regionalization is a beneficial way for supply chains to utilize their existing networks of manufacturers, by separating them into smaller sites. This will ultimately help organizations bring product home to their customers, while differentiating the business and improving performance.

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When it comes to driving business growth, research reveals that private equity executives struggle to understand supply chain managers’ value.

Across North America, organizations and companies depend on supply chains for a wide range of core functions. However, the Global Supply Chain Institute (GSCI) found that private equity executives had a different opinion. In a 2018 survey that included the opinions of 50 executives, supply chain functions were ranked as ‘relatively unimportant’. In addition, only 16% stated that they implemented a ‘multi-year strategies for achieving supply chain excellence’.

According to Investopedia, a supply chain is defined as,

Network between a company and its suppliers to produce and distribute a specific product to the final buyer.

In addition to transporting goods from point A to point B, supply chains also help companies ‘reduce cost’ and ‘remain competitive’. Therefore, why would a company consider a supply chain to be unimportant?

This article by Morai Logistics reinforces the critical role supply chains play in the growth of an organization. It also discusses the implications that may occur when an optimized supply chain isn’t integrated.

Supply Chains and Business Growth

When we make a purchase on a digital platform for instance, we usually can expect our item to arrive within 3 to 5 business days. However, there are many moving pieces that occur behind the scenes of an organization’s efforts to deliver products efficiently and on-time. The ability for customers to receive products is reliant on supply chains. This network delivers an end-to-end experience built on collaborative efforts between suppliers, manufacturers and third party logistics (3PL) providers.

According to Logistics Bureau,

The success of your business links inextricably to the performance of your supply chain.

In an article on supply chain management leadership, Forbes states that traditionally a supply chain would be used as a ‘reactive tool’. However, as they have evolved, they are now an important strategic initiative that spreads ‘value throughout the organization’.

The integration of a robust supply chain can benefit an organization in many ways, including the following:

  • Greater visibility
  • Enable an organization to cut costs
  • Influence ‘shareholder value
  • Increase customer satisfaction

There is no denying that a supply chain is an important vehicle when it comes to driving an organizations success. Let’s look at the hardships that may occur if a supply chain management strategy isn’t implemented.

Failure to Implement Supply Chains

As mentioned earlier, a survey conducted by Global Supply Chain Institute (GSCI), indicated an interesting disconnect. There were a considerable amount of companies that didn’t understand the function, purpose and benefit of a supply chain. A lack of awareness and failure to implement supply chain strategy, was also found to lead to poor performance. This ultimately resulted in a ‘performance gap’, which would impact the organization’s bottom line. In addition, it would also cause the organization to lack competitive advantage against other players in the industry.

The importance of implementing a supply chain goes beyond transporting product. It enables organizations to place their customers and bottom line, as a top priority. It also introduces efficiencies into the selling and exchange of goods. This reduces costs, keeps customers satisfied and generates revenue. It’s important that employees in leadership roles and across an entire organization, recognize the significant role a supply chain has in growing their organization.

Morai-Logistics-How-Mitigation-Strategies-Help-Global-Retailers-Offset-Supply-Chain-Shortages

Organizations within the retail industry should implement mitigation strategies into their supply chain to offset potential risks such as supply shortages.

In a press release published by Air Cargo News, global retail leader, Adidas, ‘turns to airfreight to mitigate supply chain shortages’. Reports from the first quarter showed that product shortages had impacted revenue. This caused the company to seek alternatives to their supply chain. In the case of Adidas, their chief financial officer stated that using airfreight will help ensure supply in the second quarter.

Omni-channel solutions are implemented by supply chains to help improve efficiencies and lower cost. By using a tactic that involves support from a variety of modes of transportation, supply chains are able to offer optimized solutions. However, the switch to airfreight made by Adidas is a mitigation strategy used to offset supply shortages. In addition to such shortages, there is a myriad of other consequences that may result from a lack of proper planning.

To combat an ever-changing global market place, research from the Global Journal of Flexible Systems Management, consider mitigation strategies to be highly important. When a retail company fails to set appropriate strategies to mitigate upstream barriers, there can be significant consequences to the bottom line. This article by Morai Logistics aims to identify four important components to an effective mitigation strategy.

Risk of Supply Shortage

The retail industry contributes significantly to the overall profit of the global economy. According to Statista, by 2020,  the global retail market will reach ‘28 trillion U.S. dollars’. Mitigation strategies become important when supply shortages begin to impact generated revenue. Research identifies a variety of barriers that can implicate the supply of a product, including:

  • Poor infrastructure
  • Shortage of skilled labour
  • Lower productivity of workers
  • Relationship management issues
  • Supply material defects

All of these barriers can cause major consequences to the bottom line. Therefore, creating appropriate mitigation strategies should be a top priority. They may not always be consistent depending on the risk(s) that directly impact a business or organization. Let’s explore two strategies that help mitigate risks within the retail and apparel industry.

Planning Efficiency

Research conducted on the impact of ‘supply-side’ barriers in global apparel supply chain’, identify planning to be an important strategy. This strategy specifically targets impacts from problems association with product planning.

Technology is playing a helpful role in enabling organizations and supply chains to design and create predictive tools. Morai Logistics has discussed the benefits of predictive analytics in foreseeing possible patterns in barriers that may arise. This is helpful when tactfully looking at dips in supply. In order to maintain transparency with customers and avoid harmful impacts from poor customer service, planning efficiency is important.

On-time delivery

Customer satisfaction should be a main focus when identifying and creating mitigation strategies. Customers are the main contributor to revenue into the business. Today’s global retail marketplace is reliant on both bricks and mortar and online shopping customers. On-time delivery has become an important focus for organizations looking for a competitive advantage. Therefore, making a commitment to meet lead-times will help maintain and improve customer satisfaction.

Supply chains must consider risk in order to take a proactive approach to avoiding consequences that may arise due to supply barriers. By outlining and implementing mitigation strategies, an organization can improve efficiencies, commit to on-time delivery and ensure complete customer satisfaction.

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As technology continues to grow at an unprecedented pace, organizations must optimize their supply chains to compete with the ‘Amazon Effect’.

The ‘Amazon Effect’ is a significant global movement that is shaping the way consumers buy and businesses sell. The term is linked to leading organization, Amazon, and the innovative and connected approach they take on selling goods worldwide. However, the disruption caused by this technological shift also impacts many industries, including supply chain and logistics.

According to Forbes Insights, the ‘Amazon Effect’ is one of four forces that will transform ‘logistics, supply chain and transportation’. The impact on supply chain stems from the rapid increase in consumer demand and output produced by online shopping. This requires the industry to take an innovative approach to the entire end-to-end journey of delivering a product to consumer fast and efficiently.

Technology has played an integral role in enabling supply chains to keep up with an ever changing global market place. In addition, an innovative and expert talent pool is also necessary to lead this industry into the future. However, there are hurdles and growing pains that come with any large scale change. This article by Morai Logistics discusses how the ‘Amazon Effect’ is shaping the supply chain and logistics industry. It also touches on effective strategies for change supply chains should implement to ensure organizations stay competitive and on top.

The Amazon Effect

The Internet and emerging technology platforms create endless opportunities for people to search and shop online. Last year, in 2018, ‘global e-retail sales’ generated USD 2.8 trillion. This number is forecasted to reach up to USD 4.8 trillion by 2021. In terms of the number of people expected to purchase product, there will be 2.14 billion global digital buyers by 2021. How do these figures relate to the ‘Amazon effect’?

According to Forbes, there has been a significant reduction in mall traffic over the years as a result of the convenience of online shopping. The article further emphasizes that purchasing products has also become ‘faster, easier and infinitely more convenient’. The ‘Amazon effect’ is a global phenomenon that is describes by Investopedia as,

The “Amazon effect” refers to the impact created by the online, e-commerce or digital marketplace on the traditional brick and mortar business model due to the change in shopping patterns, customer expectations and a new competitive landscape.

This causes an increase in pressure on retail companies to take a more innovative approach to selling at both the in-store and online level. However, there is also an incredible amount of demand on supply chains to meet these growing demands and expectations.

Supply Chain Impact

At the most basic level, supply chains enable the delivery of a good from point A to point B. From a retail perspective, this relationship is usually between a business and a customer. Between the fine lines, there is a cohesive interaction between manufacturers, shippers and possibly third party logistics providers (3PLs). However, what happens when a large increase in output occurs? According to Supply Chain and Demand Executive, supply chains that are ‘ill-equipped to administer efficient, high-volume production strategies’ suffer.

Strategies for Change

As online shoppers continue to seek companies that offer convenience and speed, supply chains must also integrate technologies that optimize their processes. Looking forward, supply chains must also evolve with external markets in order to remain competitive with the ‘Amazon effect’. In addition, there should be a focus on agility, efficiency, visibility, and end-to-end traceability. While the ‘Amazon effect’ is a disruptor, it also pushes organizations to think about the future and understand where the market is headed. By being aware of the growing expectations of customers, both retail and supply chains can thrive.

Utilizing-Smart-Sensors-Creates-Agile-and-Efficient-Supply-Chains

With 43% of supply chains using smart sensors, the industry must continue to integrate IoT tools to ensure efficiency and agility.

Last week, Morai Logistics presented the benefits of implementing smart manufacturing into supply chains. The integration of technology into factory level operations, ‘helps to create opportunities that improve efficiencies, productivity and operations on the ground floor’. By smartening up manufacturing, supply chains can ensure a high level of visibility across the shipment lifecycle. In addition, there is less reliance on manual shipment processes and more focus on automation.

If we trace smart manufacturing back to its root technology, we will find the Internet of Things (IoT). Industry experts have been integrating IoT theories and technologies into a variety of ‘machine to machine (M2M) communication’. Smart sensors, or instance is a new technology that is ‘supporting supply chain innovation and the smart factory’.

The global market share of smart sensors will grow to USD $21.5 billion by this year and USD $39 billion by 2022. Their advanced ability to uncover insightful information from data position smart sensors as a valuable technology tool to supply chains. In fact, 83% of supply chain leaders believe sensors, robotics and inventory optimization tools, are beneficial for competitive differentiation.

This week Morai Logistics will discuss how IoT technologies such as smart sensors, help the supply chain and logistics industry become more efficient and agile.

Smart Thinking with Smart Sensing

It was forecasted that by this year, the global IoT market will generate over USD $1.7 trillion. Statistic also show that the number of connected devices will be 20.35 billion. The Internet and technology continue to create opportunities for greater connection and communication. In order for supply chains to keep up with demand, supply chains must adopt and implement these tools.

There are many factors to consider when developing a comprehensive smart supply chain. The advancement toward smart manufacturing helps the industry develop efficiencies in operations and productivity. Furthermore, the use of smart technologies and tools is a huge part of smartening up the journey of products throughout the shipment life cycle.

Smart sensors, for instance, has the ability to harness complex data sets and translate them into actionable and insightful information. Sensors have been used to execute traditional operations, which included tracking orders and maintaining inventory. However, there are notable differences in new smart sensors. According to Deloitte,

Smart sensors are advanced platforms with onboard technologies such as microprocessors, storage, diagnostics, and connectivity tools that transform traditional feedback signals into true digital insights.

It’s an innovative way of extracting data to enable supply chains to make smarter decisions. Statistics show that 43% of supply chain leaders stated their companies ‘use sensor technology’. Furthermore, experts say that smart sensors enable ‘always-on supply chains’. By integrating smart technologies such as sensors, supply chains can benefit in many ways.

Benefits of Smart Sensors

To keep up with an upward movement in consumer demand and expectation, supply chains must look at current barriers. Common focus has been on improving visibility, productivity and operational efficiencies. Research shows that the integration of IoT technologies help in the following areas:

  • Efficiency
  • Responsiveness
  • Business Interuption

Smart sensors aid in collecting data and using it to help organizations with improved decision making. Furthermore, this enables management to reduce certain interferences that may include ‘missed handoffs, cold chain exceptions or theft’. The benefit of integrating smart sensors also includes ‘informed scenario-based contingency planning’. In addition, supply chains can improve their agility, ensure customer satisfaction and dodge unnecessary costs.

The Shift Toward a Demand Chain Model

Experts say demand-chain models are an effective solution for supply chains to meet the increased need for immediacy and improve the customer experience.

Today, consumers crave instant gratification when searching for products and services online. They want access to information and results in an immediate time frame, and this transcends throughout the buying funnel. It especially includes delivery. To meet consumer demands, there are high expectations on companies to offer same-day shipping options to their customers.

While companies work hard to get packages and goods to consumers efficiently, Forbes states,

…there comes a point where supply chain simply can’t get a package to you any faster.

This puts pressure on supply chains to evolve their strategies and execute efficient and effective solutions to meet these expectations. Distribution centers (DC) have been an integral component to a supply chain, and provide many benefits with respect to meeting these expectations. In 2017, the United States warehousing market, accounted for $148.7 billion. The total number of warehouses accounted reported in the same year was 17,353. There is a growing need for companies to expand their distribution capacity to meet the output requirements for consumers.

However, while expanding DC’s provides improved delivery solutions, experts believe a shift toward a holistic demand-chain would take it one step further. This article by Morai Logistics discusses the fundamentals of the demand-chain and the beneficial outcomes it could have as a supply chain model.

What’s a Demand-Chain?

According to Forbes, a demand-chain is ‘a state where production is localized and immediate’. It represents a shift from relying on centralized manufacturers, to autonomous machines. Supply Chain Market describes this migration as ‘the next generation in fulfillment’. It further responds to the extensive growth of ‘net economy’ or e-commerce, which has been fueling a high level of demand for immediacy.

To compete into this high-performance global market place, companies must follow a model that considers the following key metrics:

  • Product assortment
  • Fulfillment and execution
  • Visibility
  • Customer loyalty and retention

The overall added benefit of focusing on demand and pull, is that customers will get their products on demand. Simply put by Forbes, ‘there is a fast, on-demand creation of goods in the exact amount necessary’.

Top Reasons to Consider Demand

Demand-Chain models are a step toward meeting customer needs through the application of technology and demand-focused strategy. There are many reasons why this model is favourable for high-performance industries, such as supply chain and logistics.

Improves Customer Experience

Developing optimized solutions to improve on-time delivery and immediacy, has been primarily motivated by the objective of carrying out a positive customer experience. Thus, by improving visibility and leveraging technology to create more efficient modes of production and delivery, immediacy can be met.

Reduces Wasted Inventory

Businesses may run into various challenges when trying to produce and deliver large outputs, which can ultimately waste inventory. Possible reasons could be overproduction, delays or order defects. As a result, unnecessary inventory leads to a waste in product and money for the business. A demand-chain enables businesses to follow a just-in-time model where products are produced and delivered when needed.

Optimizes Order Fulfillment

Furthermore, a reduction in wasted inventory, a demand-chain model also aligns order fulfillment with delivery performance. When an organization can effectively understand the level of production required, they can better predict how to allocate resources to carry out the shipment life-cycle.

5 Ways RPA Optimizes Supply Chain Management

Robotic Process Automation (RPA) is an effective solution that helps improve efficiencies, reduce costs and optimize productivity.

Findings on the global RPA market, project a ‘Compound Annual Growth Rate (CAGR) of over 27%’ throughout 2013 to 2024. By 2024, this would amount to over 7, 000 Million (USD).

In a recent survey on RPA adoption, 17% of supply chain professionals believe RPA will be implemented in their organization’s by 2020. Furthermore, two thirds of respondents stated that their organization currently uses or are exploring this technology.

According to McKinsey & Company, RPA is defined as,

A type of software that mimics the activity of a human being in carrying out a task within a process.

Integrating this technology into any organization helps reduce human error and cost, while improving ROI and productivity. However, although skepticism exists in matters of replacing human jobs with automation, RPA actually provides many benefits to supply chains. Therefore, RPA is emerging as an effective technology for many industries, including supply chain and logistics.

This infographic by Morai Logistics outlines the top 5 ways RPA help improve supply chain management processes.

Robotic Process Automation: Supply Chain Optimization

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From Adoption to Digital Transformation
Experts say that supply chains must move from adoption to digital transformation if they want to improve efficiencies, operations and take their businesses to scale.

For the North American transportation supply chain and logistics industry, last year saw a widespread adoption of digital technologies. Predictive analytics proved beneficial to providing end-to-end visibility of supply chains, and ensuring efficiency with on-demand deliveries. When applied to operations, cloud-based technologies helped businesses scale, improved workflow productivity and created opportunities for competitive differentiation. Furthermore, robotic and automation armed warehouses with optimized levels of productivity and improved customer service.

Although the adoption of emerging technologies created solutions for transportation supply chains, the industry still faces many significant challenges. The increase in consumer demand for immediacy and personalization, in conjunction with pressures of the nationwide labour shortage, requires more than digital adoption. To further improve operational efficiencies, reduce costs and create opportunity for bottom line profits, supply chains must move from adoption to digital transformation.

According to Supply Chain Management Review,

Digital transformation is perhaps best explained as the implementation of new technologies to accelerate operations, sales and customer service, back office productivity and, ultimately, the growth of the business from end-to-end.

Whether the customer is a shipper, retail wholesaler or vendors, the goal of digital transformation is to ultimately improve the customer experience.

This week Morai Logistics provides an overview of what digital transformation looks like in transportation supply chains. The benefits moving from evolving from simply adopting digital technology to a comprehensive and whole-scale transformation will also be reinforced.

Digital Transformation of Supply Chains

There are many industries across the world recognizing the need to digitally transform. North America ranks at the top of the global market. By 2022, global statistics forecasts that spending on ‘the technologies and service that enable digital transformation’ will reach USD 1.97 trillion. However, in a study on the adoption of digital transformation within five major sectors, supply chains reported the ‘lowest level of digitization’.

Although digital transformation is considered to be a main focus for many, the truth is, this process fails more than it succeeds. According to the found of Supply Chain Insights, there are four common mistakes businesses make:

  • Disconnect with vision and strategy on implementing digital transformation
  • Transformation process does not include ownership from the business
  • Focus is not on meeting the needs of the customer market
  • Lack of partnership with innovative technology companies

Let’s address mistake number one: disconnect with vision and strategy. Before a supply chain executes digital transformation, they must understand the trends shaping the need to transform.

Universal Need for Digital Transformation

There are many reasons why digital transformation can improve the end to end profits of an organization. They may change depending on the industry. For supply chain and logistics, the following three reasons why adoption should move to transformation.

Customer Experience

Today, customer experience is at the top of the board when it comes to strategic priority. From social media to online buying, to smartphones, consumers have the power to connect anywhere at any time. This has changed the buyer’s journey significantly. Consumers expect a heightened level of transparency and personalized and engaging experiences.

Employee Support

The current capacity crunch and nationwide driver shortage, also requires organizations to look at employee fulfillment. Integrating digital tools throughout the supply chain, will promote efficient methods of productivity and communication. This can have an incredible impact on performance and empowerment, while also giving more time to focus on ‘streamlined decision-making’.

Strategic Insights

The implementation of technologies throughout all facets of a supply chain can help generate large data sets, known as Big Data. Online interactions between shipper and supplier can generate unceasing amounts of data. However, without appropriate tools to translate these numbers into valuable insight, meeting the needs of either party becomes challenging. Therefore, digital transformation ensures that innovative technology solutions are in place to provide strategic data that will ultimately achieve success.

4 Supply Chain and Logistics Trends for 2019

The integration of technologies and the digitization of supply chain and logistics will continue to transform the industry in 2019.

Last year, changes in global markets and the boom in e-commerce increased consumer spending and expectations significantly. According to Statista, 21.1 % of supply chain executives found visibility to be the top challenge facing supply chains in 2018. In second place, 19.7% of respondents believe fluctuations in consumer demand was the most significant obstacle. The industry responded with the integration of innovative emerging platforms such as artificial intelligence (AI), predictive analytics, cloud technology and machine learning. This also led to the development of data-driven and predictive solutions that enabled companies to focus on providing personalized, customer-centric experiences.

At the beginning of last year, Morai Logistics discussed the Fourth Industrial Revolution known as Industry 4.0. The need for digital integration and adoption has indeed shifted from being an attractive add-on to a necessity to survive in changing markets. Despite hesitation to risk, change and integration, digital transformation is being progressively adopted by many industries, especially in supply chain and logistics. According to expert forecasts on future trends in supply chain management,

…over the next five years about 80% believe ‘digital supply chain’ will be the leading industry model

Indeed the last year has seen incredible resilience from transportation supply chains against the disruption caused by digitization. However, what trends will be at the top of the list this year?

This article reviews 4 supply chain and logistics trends of 2019.

1. Capacity Crunch

In March of 2018, Morai Logistics discussed the nationwide truck shortage and its effects on deliveries and rates. This year, the diver shortage will continue to require third party logistics (3PL) providers to improve their services. They provide shippers with solutions through ‘network connections, competitive volume rates and ongoing integration of information technology’.

2. Transportation Regulations

Another industry trend hat will carry over from 2018 and cause turbulence, is electronic logging devices (ELDs). Despite being introduced into the industry back in 2012, ELDs were officially mandated in 2017. Although this is a positive move to monitor the health of drivers, it has remained a top stressor for the industry.

3. Digitization

As mentioned above, digitization will continue to impact the transportation supply chain industry this year. The adoption of technologies, apps and emerging platforms in response to consumer demand will become necessary to compete with changing markets. Data analytics will be a major player this year as companies will have to assess ‘supplier risk, tariff risk, logistics costs or manufacturing costs’. In addition, AI and machine learning will be two significant technologies of 2019.

According to Forbes, machine learning will impact the following areas:

  • Warehouse management systems
  • Robotic vision systems
  • Supply chain planning
  • Supply chain visibility

4. Warehousing

According to Deloitte, by the end of 2018, ‘online sales of consumer products were project to increase 350%’. The dollar value of would equate to ‘USD$36 billion’. With over 2.14 billion people expected to shop online by 2021, the ecommerce market is significantly impacting consumer demand. This increase in expectations on service and delivery will require warehouses to focus on direct-to-consumer fulfillment.

What does this look like? Experts see a widespread adoption of automation and adaptable and scalable solutions such as robotics and drones. This will be highly important for the retail industry. Furthermore, improved strategies on ‘design and location’ of warehousing will ensure products are within range of consumers to guarantee fast delivery. The added pressure to expand, innovate and adopt new technologies will also have a significant impact on the labour force. Wages are expected to increase across supply chains, which should motivate companies to create ‘employee engagement programs’.

The above supply chain and logistics trends are four of many that will shape the industry this year. In order to develop solutions geared toward improving the customer experience and combating consumer demand, technology will continue to play a significant role in 2019.