Trends & Predictions 2018: Supply Chain

Stephen DeAngelis

January 3, 2018

There is an old saying — “May you live in interesting times” — which has been alternatively labeled an English blessing by some or a Chinese curse by others. You choose. If you are a supply chain professional, you’re likely to conclude the interesting times in which we live are both a curse and a blessing. These times are interesting because we are seeing the world order shift before our eyes and because climate change continues to create havoc. These are also interesting times because new technologies are being developed to help supply chain professionals cope with complex supply chains. In this article, I want to focus on interesting things affecting supply chains in general. In a separate article, I’ll address trends involving the digital supply chain. Below are some of the trends pundits are highlighting and predictions they are making about the supply chain.

Supply Chain Trends

Growing Focus on E-Commerce. Kushal Nahata (@kushalnahata), Co-founder & CEO of FarEye, notes, “Changing consumer preferences and the increase in purchasing power, has led to an exponential growth of eCommerce in developed and developing markets.”[1] The growth of e-commerce is powered by two trends: A growing global middle class and the ubiquity of mobile technology. Manufacturers and retailers now understand having a strong omnichannel strategy is essential to survival.

Omnichannel Revenue Management. Although omnichannel operations are essential, Steve Banker (@steve_scm), Service Director for Supply Chain Management at ARC Advisory Group, observes retailers are struggling to understand them. He explains, “The main reason retailers invest in expensive omnichannel initiatives is to increase sales, increase market share, and improve customer loyalty. Meanwhile, most retailers have trouble understanding just what their profitability is surrounding different omnichannel order flow paths. … Eventually retailers need to understand their true costs and margin based on the omnichannel flow path.”[2]

Recognition that the Customer is King. This is not a new trend but, nevertheless, one businesses need to keep in mind. Hellen Oti-Yeboah (@hellenoti), Marketing Manager at Arkieva, notes, “In all industries, the focus on customer-centric technologies and strategies is accelerating. Everyone wants to communicate better and more productively, with the customer. In the supply chain, manufacturers have been increasingly focused on customers, with demands for customer centricity spawning the release of individualized products, as well as, creating an entire supply chain process that is customer focused.”[3]

Logistics Workers, Labor Shortages, and Automation. Banker notes there continues to be a lot of discussion about truck driver shortages and he asserts autonomous rigs aren’t going to correct that shortage any time soon. He goes on to note the dramatic increase in warehousing — thanks to e-commerce — is also creating labor shortages there. Unlike the trucking industry, warehousers have turned to robots to make up for the shortage. That trend is likely to continue and Banker expects the robotics market to boom.

Increased Use of Renewable Energy. Marlene Motyka (@MarleneMMotyka) and Joseph Fitzgerald, Principals at Deloitte, explain why more companies are turning to renewable energy, “When treated as a strategic asset rather than a tactical expense,” they write, “renewable energy provides cost and risk benefits across the supply chain. In addition, renewables can offer secondary, intangible benefits, including enhancing company culture and employee engagement, advancing your sustainability agenda and helping achieve sustainability goals, strengthening corporate reputation, and driving corporate growth by keeping pace with competitors and signaling leading environmental stewardship to customers. … Renewable energy can be used throughout the supply chain to decrease long-term costs, mitigate risk, drive new revenue, enhance brand value, and improve employee engagement. As technologies and regulations mature, companies should be re-evaluating their energy procurement strategy to take advantage of these benefits.[4]

More Emphasis on Big Data Management. In May 2018, the European Union’s General Data Protection Regulation (GDPR) will start being enforced. Martin Doyle (@DQMartinDoyle), CEO and founder at DQ Global, insists the GDPR will “not only disrupt the data industry but all business’ that hold customer data.”[5] Thanks to a never-ending series of data breaches, consumers will also begin to hold companies more accountable for how they deal with the data they gather and store. Cybersecurity will remain an area of concern for every business.

Supply Chain Predictions

More Investment will be made to U.S. Infrastructure. With the Trump administration systematically trying to dismantle international trade agreements, there will be a growing emphasis on improving national infrastructure to enhance domestic commerce. Andrew Marder (@CapterraAndrew) observes, “2018 may be the year we see some investment in American infrastructure. In May 2017, the Trump Administration started talking about infrastructure, saying, ‘If the United States continues to underinvest in infrastructure, we will continue to fall further and further behind our peers.’ While the budget is still being hashed out, there is bipartisan agreement on the need to fix America’s roads to keep trucks and cars safe and travel efficient.”[6] This is one area where bipartisanship may be possible.

Sustainability will be of Growing Importance to Companies. Nahata writes, “Companies globally are trying to set up and meet their sustainability goals – majorly by reducing their carbon footprints. According to the World Economic Forum, companies like UPS, DHL, SABMiller and Nestle are amongst the top companies that are focused on sustainability. With an objective to reduce the carbon footprints, logistics companies are expected to aggressively adopt industry’s best practices by 2020.” These efforts are not entirely altruistic. Companies are finding sustainability efforts also make good business sense. If a business case can’t be made, such efforts will not last.

Summary

The trends and predictions discussed above aren’t exhaustive, but they do provide a pretty good sampling of where the supply chain is headed over the coming years. Sawaram Suthar (@sawarams‏), Chief Marketing Officer at Tagove, suggests agility will be one of the most important characteristics winning supply chains will possess in the years ahead. He explains, “Agile supply chain management enables brands to cope with unexpected events using lightning-fast decision-making.”[7] Cognitive computing will be crucial for helping decision-makers react quickly to unexpected events as well as helping digital transformation proceed apace.

Footnotes
[1] Kushal Nahata, “Supply Chain Trends To Watch Out For In 2018,” Supply Chain Management Review, 1 December 2017.
[2] Steve Banker, “Supply Chain Trends To Watch In 2018,” Forbes, 7 December 2018.
[3] Hellen Oti-Yeboah, “7 Supply Chain Technology Trends Set to Disrupt Supply Chains in 2017 and Beyond,” Arkieva, 17 January 2017.
[4] Marlene Motyka and Joseph Fitzgerald, “Using renewable energy to drive supply chain innovation,” Deloitte, 2017.
[5] Martin Doyle, “Is your Data ready for GDPR?” Datafloq, 11 September 2017.
[6] Andrew Marder, “The 5 Biggest Logistics Trends for 2018,” Capterra Logistics Technology Blog, 3 November 2017.
[7] Sawaram Suthar, “5 Supply Chain Management Trends for 2018,” CXO Today, 23 November 2017.