Logistics and Supply Chain Trends to Monitor
2015 was a year of momentum for the supply chain and logistics industry. There have been some key advances in innovation, technology, and acquisition, allowing for a more efficient and streamlined process chain. Looking forward, here are some key trends to look for in the supply chain industry for 2016.
Many of the supply chain industries have been developing digital strategies that allow them to evolve ahead of the competition. These kinds of strategies include creating a digital community of partners that all can execute coordinated processes. This results in a more organized and informed system than before.
There is also the impact of new technologies and business models, including 3D printing, sensor technology, autonomous (driverless) trucks and warehouse automation via robots. Many supply chains industries are developing and using these technological advances to meet fulfillment process requirements, cut back on labor costs and to streamline the shipping and order processes. The desire for these types of warehouse technologies, management systems, and automated controls is growing and is driven by a changing and booming market around the world.
Another technology advance includes the deployment of Cloud – type software programs, which many supply chain management companies are utilizing to streamline their processes. Cloud software programs enable companies to execute all aspects of the supply chain rapidly and with less error. Cloud has the ability to provide functionality with minimal risk, low cost, and maximum flexibility. For example, Oracle Software, a Cloud program, is one of the largest providers of supply chain applications, and predictions are that Oracle will run 80% of all supply chain applications by 2025.
Finally, within the category of technology advances/Cloud software comes wearable technology, which, combined with the use of this software, will become much more widespread in the industry in 2016. Wearable technology will give companies the ability to access and input data in real-time, which is critical for allowing suppliers to meet to stringent demands of customers.
Distribution Network Evolution – Omni-Channel Logistics
Distribution networks are evolving to support better timely deliveries to customers, as many consumers now expect prompt and time-sensitive service. Moreover, distribution networks require higher levels of warehouse capacity and overall organization within the supply chain. Online retailing is one of the major factors behind the structural shift in warehouse capacity demand, and this includes high levels of warehouse investment and investment returns.
E-commerce is at its strongest point ever, and more people are shopping online due to convenience, lower prices, and flexibility of delivery location. This includes retailers aligning with the distribution networks and shipping needs of the customers, as e-commerce continues to grow prominently in the market. Whether it be a consumer good, a service or simply a catalog that the customer is requesting, developing Omni-Channel Logistics helps to fulfill a consolidated supply channel strategy.
When it comes to sustainability, everyone is aware of their environmental footprint. Whether it is for social responsibility or environmental causes, manufacturing often has large material impacts on sustainability. In 2016, it is predicted that there will be more urgency to develop sustainable practices in the logistics field. For example, supply chain companies that own their own fleets will soon be more directly accountable to reduce CO2 and other noxious emissions from transportation. This also includes landfill reduction efforts, which have become the norm for large enterprises.
Within the sustainability model comes the issue of ethical supply chains, which will be an important agenda in the coming year. There is more awareness and interest now among consumers, particularly in the Western world, about the conditions in which the goods they purchase are manufactured. This is causing global manufacturers and retailers to investigate thoroughly into their supply chains to eliminate unethical practices, either social or environmental. Although this can create additional layers of costs, the benefits will be far-reaching, as it will create more robust and – in the long term – more profitable supply chains.
Impact of Economic Growth of the US
The market is primarily based on the price of oil and the driving of the US logistics market, along with the strength of the US dollar. In 2016, the stronger US dollar will attract imports from around the world, which in turn will give Asian and European exporters a welcome boost. China is experiencing a bit of a falling economic growth, but again, thanks to the growing US economy, China will see its exports and e-commerce market continue to grow. Also, the increase helping the global logistics industry will be a recovery in Europe, which is proceeding better than many economists expected.