Supply Chains Stay the Course in 2017

Just like weather forecasts, the stock market, an election, or the team that wins the World Series (who could have imagined the Cubs), predictions concerning the advancement of warehouse management strategies have many influencing factors. At the end of the day, these prognostications are simply guesses based on where the industry has been, where we are today, and the hype around trends or market opportunities. That isn’t to say that predictions are pointless. In fact, for 2017 the outlook is quite rosy, but let’s take the views of industry experts with a grain of salt and try to identify where the industry could or should be headed next year.

Staying the course

First and foremost, I suspect that we won’t see any significant breakthroughs in new technologies or paradigm shifts in 2017 that will disrupt current best practices in the supply chain. Instead, I’m certain that we’ll see a steady stream of developments that focus on improving efficiencies and reducing cost, in addition to a widespread push for vendors to demonstrate added value.

Consumer demand drives technology adoption

The blend of e-commerce with the omni-channel experience will continue to capture buyer mindshare over more traditional brick-and-mortar retail models, which are suffering from over-capacity. The thing that will drive long-term customer loyalty is the so-called unified experience or continuity of experience. Vendors able to deliver this kind of consistency by delivering perfect shipments will be able to capitalize on this trend.

For companies involved in supply chain logistics, this means added pressure to feed consumers’ expectations by employing ever-tighter carrier relationships and technologies, which will eventually include the emergence of autonomous commercial freight deliveries. These companies are also likely to deploy a growing range of GPS-enabled tools to manage the flow of goods, providing them with up-to-the-minute information about where the freight is located, what’s happening to it en route (like temperature monitoring), and getting status updates to communicate its arrival times at scheduled destinations.

3PL vendors will benefit

These trends will put third party logistics (3PL) providers in a position to gain significant market share, but may also force some industry consolidation as they scale their networks to build geographic reach. One of the differentiating factors for these companies will be analytics, and how data can be used to capture pick, pack and ship costs to ultimately protect profit margins.

There is a cost associated with managing warehousing and logistics internally versus outsourcing, so the ability of a company to evaluate the overhead for storing and retrieving inventory efficiently and accurately will remain key in delivering shipments profitably. Simply reducing the risk of investing in warehousing software and equipment should be weighed against the flexibility of gaining 3PL support, which affords users on-demand service and the added value they provide. If done in a vacuum, this may prove to be outside the organization’s core competencies, resulting in a less competitive economic advantage.

Don’t believe all the hype

Of course, there will continue to be niche developments, heavily promoted by market leaders to capture the imaginations of would-be consumers and participants. Some examples of these are the much-hyped autonomous vehicles and drones. While these are certainly breakthrough technologies, numerous barriers to widespread deployment still need to be overcome before these approaches evolve into viable, mainstream options.

Not least of these include regulations around safety (or perceived danger) and privacy, as they attempt to coexist with traditional modes of transportation, including personal vehicles, trucks, commercial aircraft, and so on. Aside from airspace and property restrictions governing the use of drones, there is also the nuisance factor, much like “selfie sticks” used by the more narcissistic types. It is my view that the use of drones for shipping will be confined to very short-range hovers or stops based both on the power to weight challenges in the batteries available, FAA altitude restrictions, drone pilot certification and autonomous flight technologies, and clearances limited to line-of-sight flying.

Whatever 2017 brings, it is shaping up to be a busy, productive year in the world of logistics and supply chains. The more things change, the more they stay the same.

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