Strong U.S. economic growth over the course of 2018 has increased demand for supply chains, exacerbating transportation challenges via higher energy costs, labor shortages, and a need for greater trucking capacity.
This high economic growth presents both challenges and opportunities, and it’s likely going forward that innovative digital technologies will be used to help accelerate change while meeting future demand. Artificial intelligence, big data analytics workloads, and machine learning are particular technologies with a range of exciting use cases in supply chain management and logistics.
Organizations operating within supply chains, including both carriers and shippers, cannot afford to avoid using innovative technological solutions to tackle their logistics challenges head-on.
There are also geopolitical concerns going forward, with sanctions against Iran due to come into effect in late 2018, which may cause a knock-on effect in terms of rising oil prices. The threat of a future trade war with the European Union also continues to loom as President Trump pursues aggressive geopolitical strategies.
Notable Supply Chain Trends
1. Big Data and Predictive Analytics
Vast quantities of data are produced at various touch points within any supply chain from a slew of activities, including each time an item moves from a shelf and each time a customer returns a product. Organizations continue to attempt to analyze this data to derive value from it and make better supply chain management decisions.
Due to advancements in technology, this previously untapped data can not only be stored and processed; the tools also exist to analyze it. A particularly important big data analytic use case in supply chains going forward will be the use of machine learning models to predict future supply chain activities. Machine learning refers to a type of artificial intelligence (AI) that provides computers with the ability to learn without being explicitly programmed.
Demand forecasting, for example, can eliminate issues with overstocking warehouses while also providing benefits to procurement and logistics planning. The underlying predictive models can incorporate factors such as the weather and past order volumes into logistics planning. Data visualization tools also play a huge role because they help represent these predictive models and their forecasts in a more easily understood manner to workers and management across supply chains. For example, you can use a radius map tool to get a new perspective into location-based data.
2. Increased Last Mile Delivery Focus
Typically covering the journey from the nearest distribution center to a final delivery address, the last mile is becoming increasingly important as customers demand more visibility. The need to track last mile delivery is crucial from both the perspective of the final customer and the businesses involved in delivering their products.
Customers want visibility into the last mile because they want to know exactly where their products are and when they will arrive. From a business perspective, tracking last mile delivery brings full visibility over the entire supply chain so that operational inefficiencies in this most important of phases can be rectified to improve the customer experience.
3. Alternative Energy Sources For Heavy-Duty Supply
Fuelling is quite clearly a major cost in supply chains, and the potential for rising prices due to geopolitical uncertainties is a major concern for logistics managers as 2018 draws to a close. If prices rise as sharply as some analysts predict, there will be a real need to seek out alternative energy sources, particularly in the heavy-duty trucking sector, where fuelling costs can quickly become astronomical.
Electric trucks are showing real promise as alternative energy sources. Recently, Hyundai announced a Memorandum of Understanding (MOU) with Swiss hydrogen company H2 Energy (H2E) and the pair plan to provide will 1,000 heavy-duty fuel cell electric trucks, powered by hydrogen. Battery technology is also improving, and there is a real feeling that supply chain managers will seriously consider these alternative fuel sources.
4. Self-Driving Trucks To Meet Labor Shortages
The trucking industry continues to suffer from a severe labor shortage. As people purchase more goods online from distant locations, and as the economy continues to boom, the labor shortage will only get worse.
The answer to this labor shortage could lie in self-driving trucks. Tesla plans to release its electric semi-trailer equipped with semi-autonomous features during 2019, and it’s likely that supply chain managers will see the allure of fully autonomous trucks if the major legal obstacles can be overcome.
5. Increased Intermodal Conversion
Aside from seeking alternative fuel sources for transportation, there is also the option to increase interest in intermodal conversion. Intermodal conversion typically combines the long-haul movement of shipping containers and truck trailers by rail with a much shorter movement by truck at one or both ends of the delivery process, although technically any two modes of transport can be combined to move cargo.
This type of transportation strategy could markedly reduce fuel costs for supply chains in what is anticipated to be a highly volatile energy market over the next 12 months. Aside from the cost benefits, intermodal conversion has the additional advantage of being a more environmentally friendly option. It can also help meet the truck capacity shortages that continue to plague supply chains as a result of driver shortages and the ELD mandate, which truckers cite as lowering their salary and quality of life.
That wraps up this list of trends to watch out for in supply chain and logistics.