At the end of each year, Schematic Ventures gathers a group of senior supply chain professionals to share their thoughts on the industry’s defining trends. This year’s “Predictions from the Pro’s” is bigger than ever with twelve executives on the front lines of supply chain covering everything from physical retail to e-commerce, maritime to air freight, EDI to API. Enjoy!
We are starting to see the demand for real time data access. Years ago, EDI connectivity was a nice to have as well as a burden to implement. Now shippers and forwarders are starting the API conversation at the time of sale. What information is available and what services can we power with it? We now regularly help companies replace old error prone connections and create new ones to power services.
Supply chain disruptions will continue to occur at an escalating pace in 2020, driven by increasing consumer expectations, technological advancements, regulatory/trade considerations and labor/real estate costs. Supply chains are shifting from physical to digital, wasteful to sustainable, delayed to instantaneous, reactive to predictive, siloes to integrated and from manual to automated. Advancements in computing power, integration ease, IoT, robotics, data analytics, collaborative networks and optimization tools will be key enablers. The pace and gravity of this change is forcing companies to re-think how they do business to ensure success in the future.
2020 will be the year of data. As the market continues to coalesce around emerging and now-ubiquitous (albeit unproven) tech, operators and solution providers will be stressed to make data available, usable, and valuable. Holistic, intelligent systems that combine human intelligence and software capabilities will be the norm going forward. Simply automating through workflows and static business rules will be “ancient” history.
2020 will be a pivotal year for automation within fulfillment operations across numerous industries. Competitive differentiation, based on the right application of automation and a strong business case, will be realized by those companies that apply a holistic design and implementation approach which balances people, process, systems, equipment, flexibility, risk and change management. Companies that apply automation inappropriately and/or as the implementation of material handling equipment will fail… resulting in increased cost of service and reduced competitive differentiation. 2020 will be a defining year for separating industry winners and losers in fulfillment automation.
Greater adoption of consumer technology holds the most promise for the global supply chain industry in the next two years. When I see ‘traditional’ applications that have long learning curves, few collaboration features, and limited shortcuts I automatically think – dead on arrival. The same consumer technology that made it more social, user friendly, always on, multifunctional – offer great promise for solving some of these challenges.
“Digital” will have a whole new meaning for international shipping.
Freight forwarders have used the term “digital” to describe their progress in providing online quoting, tracking, and booking services. However, with advancements in automation – such as conversational AI and document machine learning – these technologies will raise the bar for companies claiming to be digital.
At the same time, customer portals will lose traction because of heightened competition. As a new portal comes out everyday, customers of logistics companies grow tired of keeping track of systems to log into. Importers and exporters will get bombarded with “Log into my portal” from their vendors and they will go back to the way they know how to do business: Email.
Complex distribution center operators will look to software systems to predict ordering patterns, and begin physical picking and order combinations in advance of an actual order. Peak demand has exceeded capacity in many fast moving omni-channel DC’s. To be able to meet that demand, operators of multi-level, multi-pick engine will use sophisticated algorithms to prime their fulfillment put-walls, consolidation sorters, or wave buffers with order templates that have not been matched to a replenishment or eCommerce order.
Future facility design will move from a hypothesis of “Lights-out, no-human” engagement to instead focus making workers significantly more productive. Automation remains a critical priority, but finding automation that can handle all use cases without any human engagement is not-realistic in most complex, variable situations.
We like to say ‘if it can be planned, it should be planned. Supply chain has always been about planning but practitioners have had to rely on descriptive analytics of backward looking data. At Leaf, we’re creating a forward looking view of capacity and rates, based on binding digital contracts, enabling practitioners to manage supply chains of the future.
In 2020, the dialog inside the four walls will be focused on technology and automation as means to solve the growing labor and productivity issues that companies face. As labor becomes more scarce and costly, companies are finally at an intersection where the reduced costs and the increased benefits of those technologies will dramatically increase the rate of their adoption. The dialog outside the four walls will center on trade, tariffs and the post-election election impacts on the supply chain. The winners will be those who are able to adopt new technologies enabling help them respond to changing conditions in the labor and global trade environments.
With the dissolution of several large fleet companies shaking the industry, incumbents will be thinking more about how to evolve and compete in a landscape where new, technology-focused freight solutions are proving successful in the market. As a growing segment of companies builds freight-matching technology to create their own respective supply-side and demand-side optimizations, mid to large-size incumbents (especially mid-size) will be looking for quick ways to use the same powerful technology to optimize their fleets in front of an evolving clientele. Today’s technology—which can efficiently and transparently connect shippers and carriers, or optimize the demand-side by pooling freight—is seeking enhanced supply-side capacity to fully extend its capabilities. The industry is reconfiguring itself, so it only makes sense for these larger fleet companies to leverage a partnership with organizations that have built the proven optimization technology they need to keep up.
Delivery, returns and exchange local partnerships will continue to expand. Digital retail growth has taken hold in the last few years, but margins have always been hampered in part by a returns and shipping heavy model. Decentralized pickup/drop-off partnerships have been a band-aid for the problem, but may just end up being the quickest and most asset-efficient way to address the problem. This will continue to pick up steam in 2020.
Senior Executive – Large Parcel Company
2020 will be the year of experimentation – new last-mile delivery models will emerge and be tested. Accordingly the profitability across the industry will decline as the incumbents in the industry try and figure out the balance between CX (for the consumer) and price competition. Amazon will experience headwinds in the shape of unusual alliances. Competitors will partner with each other to provide Amazon-like services. Ironically, the winners will be the ones who use the Amazon mindset of focusing on the customer instead of competing with Amazon. An example of this is Target and Walmart using their existing footprint to provide services at a cost that Amazon will find difficult to replicate.