top trends for 2016 in manufacturing, supply chain, logistics...
TRANSCRIPT
A PUBLICATION OF CERASIS
TOP TRENDS FOR 2016 IN MANUFACTURING, SUPPLY CHAIN, LOGISTICS, & TRANSPORTATION MANAGEMENT
TABLE OF CONTENTS
1
2
3
4
5
Introduction
Manufacturing Trends
Key Trends to Watch in Smart
Manufacturing and Supply Chain
Manufacturing Technology Trends
Supply Chain Trends
Logistics Industry Trends
Logistics Technology Trends6
Transportation Management Trends7
Conclusion
INTRODUCTION
2016 Trends for the Manufacturing, Supply Chain,
Logistics, and Transportation Management
Industries
The industries of manufacturing, supply chain, logistics, and transportation
management, like much of the modern world, are seeing substantial change as new
technologies come on board. Thanks to technology and the movement towards a
“digital everything” mindset in the way business is done, many of the trends in this e-
book focus on what would have seemed like impossible feats just a few years ago in
the manufacturing, supply chain, logistics, and transportation management industries.
From augmented reality, 3D Printing, the Internet of Things, and wearables to a
concurrent revitalization of how the success or failure of the implementation of
these advanced technologies truly hinge on solid and efficient fundamental processes.
Beyond technology, the trends in manufacturing, supply chain, logistics, and
transportation management shine a light on one of the most important parts of any
business: People. From a truck driver shortage, to a manufacturing skills gap, to
creating a more strategic business plan one can execute more efficiently thanks to
properly implemented systems and technologies.
We hope you enjoy this comprehensive look into the future as we outlay the top
trends that will shape the manufacturing, supply chain, logistics, and transportation
management industries not only in 2016 but for several years to come.
INTRODUCTION
Chapter One
MANUFACTURING TRENDS
6 Manufacturing Trends to Watch Out for in
2016
E-Commerce for Manufacturing
The Internet’s large-scale global penetration has spawned an increasingly large
number of technology and web-savvy consumers, creating a huge opportunity for
both industrial manufacturers and their end customers. Over the past decade, the
application of e-commerce in manufacturing and industrial distribution, has evolved
from basic communication and transaction channel between buyer and seller, to an
end-to-end collaboration medium between all stakeholders. This collaboration is
driven by companies looking to increase sales by offering online product
recommendations and promotions, as well as end-customers seeking the rich and
personalized online experience that many retail websites offer.
E-commerce is a way for manufacturers to experiment with new products without
risking a significant investment. Instead of setting up brick-and-mortar stores, or
keeping inventory on hand, you can start offering this new product on your new store.
Manufacturing Business Technology recently wrote the 5 e-commerce trends for 2016
for manufacturers to look at that include:
1. Manufacturers will seek to increase their share of aftermarket parts sales.
2. Manufacturers will seek custom (or specifically tailored) e-commerce solutions.
3. Manufacturers will integrate e-commerce systems with IoT (Internet of Things)
initiatives.
4. Equipment manufacturers will require dealers to adopt modern parts
management systems, and to integrate those systems with their own.
5. Manufacturers will sell more parts directly to consumers, even if it’s still through
their dealer channel.
A recent report by Frost & Sullivan, “The Future of Parts and Service Retailing in the
Automotive Aftermarket” , predicts that by 2025, 10 to 15 percent of all global parts
sales will be made online. This trend will be seen in the Equipment Manufacturing
sector as well, especially in international markets.
The hindrance for manufacturers in the past was having a system in place to handle
opening up to multi-channel or even omnichannel sales. However, with the various
supply chain systems manufacturers use, such as ERP, WMS, and TMS, the systems
must all provide options to integrate together with such e-commerce platforms like
Magento, Shopify, and others in order to take hold in 2016.
Advanced Analytics Continue to Get a Bigger Plate at the Manufacturing
Dinner Table
Advanced analytics will be further involved in everyday manufacturing operations.
The workplace will become more efficient and safer due to the digitalization of assets,
known as digital manufacturing, which allows for digital design and even distributed
manufacturing.
Manufacturers will be able to improve their inventory due to the information
presented by both supply chain and operations data.
Logistics and Transportation Managers at manufacturers will have reports at their
fingertips on how to continue to reduce transportation costs, a heavy portion of the
expense budget, by leaning on data to continually improve.
Manufacturers are turning to advanced analytics to predict when a machine on the
production floor is going to fail so they can perform preventative maintenance before
a failure causes expensive unscheduled downtime.
These few areas of the application of advanced analytics are some of the applications
by manufacturers. production.
Here are 4 other broad uses of advanced analytics for manufacturers:
Improving Quality
Databases and data storage improvements, complemented by easy-to-use, analytical
software are the biggest changes when it comes improving the quality of a company’s
products, says Studio B analyst David Gillman, author of the article.
Forecasting Demand
Understanding the changes in demand for their products enables manufacturers to
better determine how to allocate their resources, according to Gillman. Predictive
analytics help manufacturers forecast future sales based on past sales.
“Good predictive analytics modelers find additional factors that influenced sales in
the past and apply those factors into forecasted sales models,” he notes.
Maximizing Equipment Value
Manufacturing engineers spend a lot of their time ensuring their companies get the
most value out of the equipment in their factories. Predictive analytics help them do
this by automating much of the analysis processes so even people without high-level
skills can perform various analyses, according to Gillman.
Increasing Equipment Uptime
Predictive analytics can also help manufacturing companies ensure that their
production equipment keeps running by comparing past machine failures to sensor
data from the machines to identify patterns before breakdowns occurs, Gillman says.
Having that information allows a manufacturer to perform the necessary maintenance
on a machine in nonemergency conditions without having to shut down
The Role of Robotics
We have written quite extensively about the role of robotics in manufacturing as well
as the impact on supply chain and logistics. The Role of Robotics in the list of
manufacturing trends in 2016 cannot be understated or ignored. In fact, just today, in
the MIT Technology Review, China is looking to retool their own manufacturing
industry by heavily investing in robotics, stating:
China is laying the groundwork for a robot revolution by planning to automate the
work currently done by millions of low-paid workers.
The government’s plan will be crucial to a broader effort to reform China’s economy
while also meeting the ambitious production goals laid out in its latest economic
blueprint, which aims to double per capita income by 2020 from 2016 levels with at
least 6.5 percent annual growth. The success of this effort could, in turn, affect the
vitality of the global economy.
Robotics have been in the manufacturing industry since the 1950s. Early industrial
robots had limited "intelligence", autonomy and operational degrees of freedom.
They were mostly designed to perform one or two sets of repetitive tasks in a highly
controlled environment. However, industrial robots are increasingly becoming more
"intelligent" and versatile. In the future, they are expected to be capable of working
without human intervention and take over most of the manufacturing processes.
According to the International Federation of Robotics:
In 2014, robot sales increased by 29% to 229,261 units, by far the highest level ever
recorded for one year. Sales of industrial robots to all industries increased compared
to 2013. The automotive parts suppliers and the electrical/electronics industry were
the main drivers of the growth. China has considerably expanded its leading position
as the biggest market with a share of 25% of the total supply in 2014.
Since 2010, the demand for industrial robots has accelerated considerably due to the
ongoing trend toward automation and the continued innovative technical
improvements of industrial robots. Between 2010 and 2014, the average robot sales
increase was at 17% per year (CAGR). The number of robot installations had never
increased so heavily before. Between 2005 and 2008, the average annual number of
robots sold was about 115,000 units. Between 2010 and 2014, the number rose to
about 171,000 units. This is an increase of about 48% and a clear sign of the
significant rise in demand for industrial robots worldwide.
The IFR predicts double-digit growth in industrial robots worldwide between this
year and the end of 2018, citing the following reasons why we are seeing such
adoption of robotics:
• Industry 4.0, linking the real-life factory with virtual reality, will play an
increasingly important role in global manufacturing.
• Human-robot collaboration will have a breakthrough in this period.
• Simplification of the use of robots will open up huge potentials in all industries
including small and medium-sized companies.
• Global competition requires continued modernization of production facilities.
• Energy-efficiency and using new materials, e.g. carbon-composites, require
continued retooling of production.
• Growing consumer markets require expansion of production capacities.
• Decline in products? life cycle and an increase in the variety of products require
flexible automation.
• There is an increasing demand, particularly from manufacturers of electronics
products such as smart phones, tablets etc., for easy to use robots with limited
applications and short life cycle that have a low price, e.g. for simple assembly
tasks which do not require high precision.
• Continuous quality improvement requires sophisticated high tech robot systems.
• Robots improve the quality of work by taking over dangerous, tedious and dirty
jobs that are not possible or safe for humans to perform.
Between 2015 and 2018, it is estimated that about 1.3 million new industrial robots
will be installed in factories around the world.
The Industry Image of Dirty Factories Going Away
The use of Advanced Technologies such as application development, the internet of
things, the increased use of robotics and also 3D Printing will take away the old
perception that manufacturing is a dirty place to work where only boring, route,
tedious jobs are available.
With an estimated skills gap in manufacturing estimated to be 2 million unfulfilled
jobs by 2025, manufacturing companies will promote the use of such advanced
technologies to bridge the skills gap and attract millennials and procure the talent that
typically goes to Silicon Valley.
This is never more so true than the hilarious current commercial video series by
General Electric about a young man recently out of college who says he got a job at
GE, a long time American manufacturing company, as a software developer. Watch
the YouTube video below of one of the commercials, and you’ll get the point about
the historical image of manufacturing when the young man’s parents gift him a
hammer upon hearing the news of his new job (click to go to video):
Further companies will partner with both local community colleges and large university
to bridge the skills gap by developing STEM partnerships.
Security for Internal Peace of Mind and Customers’ Peace of Mind
As manufacturing moves further and further into the Internet of Things and increases the
use of e-commerce as a sales channel, in order to prevent hacking of intellectual property
and keep customers’ personal data secure, manufacturers will look to increase their
investment in security for their networks. According to a recent report by Booz Allen
about manufacturing trends in 2016 as it relates to security:
When a cyber-attack does occur, companies will also have to demonstrate a propensity for
responding in a timely manner. Security must be enhanced during the design, production,
sourcing, and distribution phases, and even after the purchase is made.
As we noted in the post, “Penetration Testing: Reasons Manufacturers and Businesses
Need to Take This Key Network Security Step Now:”
The growth of the Industrial Internet of Things has increased the number of opportunities for hackers to
try and steal some trade secrets and intellectual property through a coordinated series of attacks.
This very real threat to your business is why you should consider a rethink your security standards and
look at how to start a penetration test.
Good penetration testing involves testing a company’s network to make sure that there are no threats that
can break through the company or organization’s security. But, it also involves testing non-technical
security threats, like social engineering.
Manufacturers Look towards Logistics Efficiency to Stay Competitive
Manufacturers will also continue to invest in logistics efficiency to keep up with
competitors. This requires a more efficient factory floor space and time to ensure that
manufacturers can expedite the delivery of their products. They will also work to provide
updates and fixes to products almost immediately. To accomplish these fixes, companies
will rely on customer feedback provided by product sensors and on social media and a
sound reverse logistics strategy to handle returns seamlessly.
Manufacturers of all sizes, not just larger ones, will look to invest in logistics efficiency to
not only include warehouse efficiency but as well as more investment in web-based tools
such as a transportation management system to more efficiently process shipments and
have more visibility and control in the supply chain.
Chapter Two
MANUFACTURING TECHNOLOGY TRENDS
The 4 Big Manufacturing Technology Trends to
Rule the Land in 2016
Manufacturing is changing rapidly and growing exponentially. Once, manufacturing
hinged on painstaking hours of design, blueprinting, and working with other
individuals to create a finished product. As the world has become more involved in
how technology impacts society, manufacturing has struggled to keep up with the
demand. However, manufacturing technology is experiencing an event of
groundbreaking growth, comparable to the birth of a star. 2016 promises to be one
of the most outstanding and innovative years for advancing manufacturing
technology in history. Growth beyond 2016 seems only limited to the possibilities of
the imagination. Take a look at some of the top manufacturing technology trends for
2016 and how they will radicalize the manufacturing landscape.
1. Increasing Use and Implementation of Predictive Analytics.
Manufacturing capabilities are only as good as the materials and machinery used. The
best-laid plans will fail if machine a suddenly goes down without warning or
replacement. In the US and China, according to a report by Forbes magazine,
increasing use of predictive analytics will make up the primary manufacturing
technology trend of 2016. “With the advent of the cost of technology coming down,
to deploy devices to sensors to take alarms and telemetry data, we built a [...] closed-
end loop,’ explains CEO Jerry Dolinsky of Verisae,
Yet, predictive analytics also has applications for increasing customer service and
improving experiences across the manufacturing scope. A strong focus on predictive
analytics is the fundamental factor in looking towards all new technologies and how
they can be used to increase production, drive scalability, and guarantee satisfaction
with the quality and quantity of products.
2. Embracing Virtual-Reality For A Variety Of Purposes.
Have you ever entered the world of virtual reality? If you've ever played a video
game, you have been embraced by the world of virtual reality. In manufacturing,
virtual-reality is often referred to as digital design, simulation, and integration. As
explained by Matt LaWell at Industry Week, video games and virtual reality have many
different implications for uses across engineering and increasing manufacturing
efficiency. This goes back to using predictive analytics.
For example, a company may have a given design and create this design in a digital
space. According to Rob Honeycutt, CEO of SafeRack, [We transformed] the
application of a video game to eliminate the delays in time in when requesting a quote
from a company [by] waiting for the engineers and designers at the company to
respond, and reviewing the plans [for adherence to the original idea.] Essentially, the
use of virtual reality in Honeycutt’s innovation eliminates the extra work, which
improves overall efficiency by streamlining the process, allowing the customer to see
what something will look like with a definitive cost and size almost instantaneously.
3. Creating and Using More Smart, Connected Products.
The use of smart, connected products refocuses the conversation on the Internet of
Things (IoT). By 2019, the global product and service market for the IoT is expected to
reach $5.649 billion, which amounts to a compound annual growth rate (CAGR) of 19.6
percent. That means for every five pieces of smart, connected technologies, a new, smart,
and connected item will be added every year.
Ironically, the IoT has become one of the most overused words in manufacturing, and
many people simply don't want to take the time to hear about how “machine A talking to
machine B” will improve manufacturing. Yet, the applications of the IoT global product
and service market is responsible for the generation of new, innovative ideas, such as
autonomous vehicles, remote vehicle monitoring, reliable human-machine interactions,
inexplicable scrutiny in ensuring safety systems and automation of such systems, better
traffic management, and increased precision manufacturing. Today, the IoT seems
obvious and overused, but manufacturers must be willing to explore the world outside of
the box through the IoT, which is what will happen in 2016.
4. Increasing Use of 3D Printing.
3D printing was once used in the generation of 3D puzzles and minimal applications in
manufacturing. However, the world of 3D printing, which may be referred to as additive
manufacturing, is evolving. At a 25 percent CAGR, additive manufacturing is expected to
reach $20.4 billion by 2019. This poses a major achievement and growth factor for the
manufacturing industry in 2016. Through the 3D scanning of items, manufacturers can
streamline the design and manufacturing process to rapidly create microscopically
identical parts from nearly any location.
3D printing has major applications for the creation of service parts much closer to the
end user than historically available. In 2016, the use of 3D printing for manufacturing will
grow to focus on the customer-driven designing and co-creating of individual items. This
aspect of manufacturing in 2016 will dramatically change how customers view custom
product. Imagine ordering something for your size, only in your size, without the need to
visit a tailor or make alterations. Now, imagine these applications on a broader scale in all
forms of manufacturing, such as printing electronics on-site, during the construction of
an airplane. This trend will really change the industry.
5 More Manufacturing Technologies to
Impact the Industry in 2016
What makes or breaks the use of a new technology in manufacturing? 2015 saw the
improvement of many different technologies, and manufacturers are looking to 2016
with confidence. Yet, recent shake-ups in overseas’ markets have catalyzed woes and
hopes for US manufacturing. Fortunately, many of the forthcoming technologies will
be able to circumvent these fears. Let's take a look at the five remaining technology
trends to watch for in the coming year.
1. Increasing Use of Advanced Robotics.
Advanced robotics and artificial intelligence have been the stars of some of
Hollywood's major attractions. However, artificial intelligence, machine learning, and
advanced robotics stand to inherit a significant portion of technology innovations in
2016. Due to the novice use of these manufacturing technologies, predictions for
artificial intelligence in future years is off the charts. Between 2013 and 2015, the use
of artificial intelligence and machine learning in manufacturing grew from $0.9 billion
to $36 billion, assets Forbes magazine. This is a 500 percent growth rate.
Artificial intelligence optimizes processes in real time across the manufacturing
landscape. By autonomously collecting KPIs on exponential volumes of data, the use
of artificial intelligence and machine learning will dramatically drive manufacturing.
Today, artificial intelligence and machine learning are used in unmanned aerial
vehicles, smart vehicles, speech recognition capabilities, the simulation of products,
such as explained in the augmented reality and virtual reality section of Part I, and in
monitoring conditions in nearly any setting.
2. New Ways to Select Materials.
Changes to the materials used in manufacturing will also be a major trend for 2016
manufacturing technologies. Over the past two decades, manufacturers and scientists
have invented new alloys and new materials to use. These materials may allow a
product to be manufactured to withstand harsh weather conditions, function in
otherwise inhospitable settings, or provide an equal level of protection at a fraction
of the weight. Inherently, new materials and property concerns over each new
material has led to the collection of huge quantities of data to sift through in the
selection of the material for each unique product. As a result, manufacturers will be
needing and using new ways to select materials. Watch a video by clicking image:
The use of virtual reality or augmented reality will be a defining factor in how these
materials are selected. Once, engineers and designers had a simple list of materials
to use, but innovation led to a conglomeration of hundreds, if not thousands, of
materials to use that were considered superior to those of the past. “As advanced
materials came along, as new alloys came along, as super alloys came along for
making engines go to higher temperatures and better fuel efficiencies,” explains
Ken Klapproth, a designer of jet engines for Pratt & Whitney, “the ability to kind
of manually look through those materials and compare all those variables—in your
head or on a spreadsheet—became too difficult.”
3. Increasing Use of High-Performance Computing.
The modern world of manufacturing would be impossible without the increased use of
computing powers, and manufacturers in 2016 will need to increase the use of high-
performance computing capabilities. Since new manufacturing technologies will
increasingly provide a larger amount of data to analyze, high-performance computing
powers are being used to find new, innovative ways to approach predictive analytics, the
Internet of Things (IoT), and digital design and simulation.
In fact, the high-performance computing trend typically functions above a teraflop of
computing power, which means the average computing power of these systems would
reach between 10^10 and 10^12 of operations’ processing power per second, asserts
Karen Wilhelm. For the key players in manufacturing, the US, China, and Europe,
increasing use of high-performance computing capabilities ranks sixth, third, and seventh
in priority of use respectively.
4. Increasing Use of the Industrial Internet of Things or Industry 4.0.
As the Internet of Things (IoT), also known as “Industry 4.0,” has become an integral
part of modern manufacturing, the applications for the IoT have grown. 2016 promises
to be a year of increasing use IoT in the creation of smart factories, which will
dramatically increase production capacity and efficiency. As explained by David Brousell,
manufacturers will put the theories of using the interconnectedness of machines,
computers, robotics, and sensors to test in plant floor automation, cyber-physical
monitoring of product location and stage in manufacturing, and what processes may be
changed to bolster production.
Historically, the Industrial Revolution has been considered to be the greatest leap in
manufacturing technologies, but Industry 4.0 will change that notion. According to
Thomas Koulopoulos, Industry 4.0 “will alter the nature of business in ways that will
make the industrial revolution look like a speed bump on the road towards automation.”
This trend will definitely be a game-changer.
5. Creation and Implementation of Stronger Cybersecurity and Privacy Measures.
Transforming manufacturing processes into digital information leads to one last measure
for manufacturers. Improving technology has always been a driving factor in achieving
growth, but today’s manufacturers face constant threats from hackers and those who
would exploit vulnerabilities in the digital space. 2016 will see the creation and
implementation of stronger security systems, both physical and digital, to protect their
information and technological achievements.
Since every technological trend involves innovations in how manufacturers approach
product ideation, design, and manufacture, this trend may be considered the most
important. After all, what good is using or creating a new technology if someone else can
steal it and use it for their own purposes?
2016 will be a year of change and innovation for manufacturers across the globe with the
continued rise of new and transformative manufacturing technologies. From the use of
predictive analytics to the inherent increases in security to protect these technological
breakthroughs, manufacturers must embrace new technology in order to survive. If a
manufacturer were to add together some of the facts about the monetary gains in each
aspect of the manufacturing industry in recent years, the total amount would approach
half a trillion. As your organization starts thinking about how to grow this year,
remember these trends, and embrace them wholeheartedly.
Chapter Three
SUPPLY CHAIN TRENDS
12 Trends that Will Drive Supply Chain
Management in 2016
These trends are clear in that technology will continue to, as it has over the last
decade, drive change in supply chain management. However, what is refreshing to see
is that although technology and innovation are a focus, that also we must understand
the fundamentals in order to make it all work. It was Bill Gates who famously
quipped:
The first rule of any technology used in a business is that automation applied to an
efficient operation will magnify the efficiency. The second is that automation applied
to an inefficient operation will magnify the inefficiency.
So, we must put a note on these technological trends: make sure you are looking at
your processes and your people. Do you have the most efficient process that you can
then scale with technology and automation? Do you have the right people in place?
As you will see from one of our trends, we in the supply chain industry, and as we
first hand know at Cerasis, that if you do not have the fundamentals down and the
right people in place, it is very tough to get the results you seek. After all, any
professionals job is to do the best job the most cost and time efficiently all while
reaching your goals.
Supply Chains will Look to Go Digital
Technology has driven a new wave of productivity by digitizing key financial and
business processes and enabling collaboration across the organization. This 2016
supply chain trend will continue as best-in-class organizations leverage business
networks to create a digital community of partners executing coordinated processes in
a more organized and informed way than in the past.
But, Wait....What is the Digital Supply Chain?
Accenture has put out an amazing video describing the digital supply chain and states
the following:
Digital technology is disrupting traditional operations and now every business is a
digital business. The impact on supply chain management is particularly great.
Businesses cannot unlock the full potential of digital without reinventing their supply
chain strategy.
Many companies understand the elemental nature of these changes and are already
working to introduce digital technology into their operations. However, simply adding
digital technology is not the answer.
This approach overlooks the fundamental difference between traditional supply
chains that have been “digitally enhanced” and truly integrated, re-invented supply
chains whose DNA is fundamentally digital.
For digital technology to create significant improvement in business outcomes,
businesses need to:
• Reinvent their supply chain strategy
• Reimagine supply chain as a digital supply network (DSN) that unites not just
physical flows but also talent, information and finance
This new breed of supply chain is more connected, intelligent, scalable and rapid than
traditional supply chain management.
In a metaphorical sense, the DSN enables people and data—as well as materials,
products and supplies—to travel together across the extended enterprise.
This is vastly different from digitally enhanced supply chains which (because they are
never stronger than their weakest links) have less potential to help companies:
• Develop new synergies
• Relate more fully to customers
• Rapidly reach new markets and quickly build and scale new offerings
In today’s global and connected economy, digital supply chains are the on-ramp to
innovation and success. And if you want to be among the winners, you need to get on
the highway and go fast. Start today by re-imagining your supply chain. Develop digital
strategies that allow you to proactively evolve ahead of the competition. Employ
comprehensive solutions that support the entire source-to-settle process and create
value for all parties involved in it.
#2: Responding to Innovation & Change But with An Eye On Fundamentals
As stated by Accenture on what is the digital supply chain, that you must rethink the
supply chain. And, remembering Bill Gates, if we do not keep our eye on the
fundamentals, technology will only put a spotlight on inefficient process. In this 2016
Supply Chain Trend, we are going back to the basics.
The ability to accept innovations and take advantage of the synergy effects of
individual movements is a core competence of future-oriented companies. Not losing
sight of the essentials while filtering out what is personally important, requires our full
attention and continual development. Nevertheless, we reach our limits time and again
and need support, e.g. from operations research, which provides us with intelligent
decision-making algorithms enabling us to keep up with today’s fast-paced operating
environment.
According to Grant Marshbank, COO of VSc Solutions, supply chains will face a
number of challenges, he said: “Supply chain managers are already under huge pressure
to adapt to turbulent economies, labor issues, and expansion into global markets.
“The bad news is that the rate of change isn’t going to slow down. The good news is
that emerging trends hold opportunities to reduce both costs and carbon footprints,
and enable exceptional customer service at the same time.”
“Technology will only deliver the intended positive results if it is implemented with
strategy and operations that adhere to best practice in supply chain management. Get
basics right first. Not even the smartest technology can compensate for less-than-best
practices,” he added.
“Real-time system integration, secure data exchange, visibility and traceability between
disparate systems across multiple supply chains and industry verticals are just some of
the options already available through technology,”
“The greatest barrier to the adoption of these technologies is a lack of understanding
of the benefits combined with an expectation of high implementation costs.”
Advances in technologies available to optimize supply chains have made faster
implementation times a reality. “It is easier and more affordable for both big and small
businesses to go live with a new system within two weeks of finalizing paperwork,”
explained Marshbank.
“Most supply chain professionals already have a sound strategic plan in place. Instead
of being sold a new system, they might just need some guidance on how to solve their
pain points by repurposing their existing technologies.”
“Being able to blend systems and implement tools on a scalable basis is what sets the
technology of the future apart from the unwieldy enterprise-wide software packages
that were popular in the previous era,” said Marshbank.
#3: Augmented Reality a.k.a AR
Is augmented reality the future of supply chain? Augmented Reality will provide
benefits to the supply chain:
1. Picking Optimization: Each picker sees a ‘digital picking list’ on a heads-up
display (picture Google Glass visuals). When someone selects an item, the display
calculates the most efficient path through the warehouse, guides that person to the
package, scans it as ‘picked’ into the Warehouse Management System, and
immediately directs the picker to the next closest package.
2. Facility Planning: You’ll be able to visualize your next warehouse in full-scale
before even beginning construction. You can model workflows through the
facility, test measurements, even “field test” rearrangements—all virtually. Not
only will it save you money, it’ll allow you to fully experience what you’re trying to
do, before actually doing it.
3. Freight/Container Loading: Augmented reality could replace the need for a
physical cargo list and load instructions. How? By allowing to see loading
instructions on a heads-up display with step-by-step instructions on how to most
efficiently load a container given the size, dimensions, and weight of the packages
going into it.
4. Dynamic Traffic Support: Most delivery trucks already come equipped with
GPS navigation, but AR systems are the natural successors. Heads-up and
windshield displays would allow carriers to efficiently re-route shipments on the
fly without causing any significant distraction to the driver. The display would
show the driver critical information including cargo temperature (especially
important when transporting medical devices or other fragile goods), gasoline
efficiency (which changes based on the weight of the truck!), and a variety of
interesting and critical information.
#4: Artificial Intelligence on Steroids
Huge Investments being made in Artificial Intelligence by many companies including
Facebook, Google, Apple, Tesla, and many many more companies.
Speaking of Facebook, Mark Zuckerberg is certainly all in on Artificial Intelligence.
In a Facebook post the social network’s founder and chief executive said his personal
challenge for 2016 is to build an assistant powered by artificial intelligence to help him
at home and work.
“You can think of it kind of like Jarvis in Iron Man,” Mr. Zuckerberg wrote, referring
to the AI assistant used by Mr. Stark, the movie’s fictional main character played by
actor Robert Downey Jr.
Mr. Zuckerberg said he would code the AI assistant himself and start by exploring pre-
existing technologies. He will train his virtual assistant to understand his voice so he
can control various functions in his home. He will even train it to recognize his friends
at the door and of course, make sure he is able to know what is going on with his new
daughter, Max, at anytime of the day.
But what does Artificial Intelligence mean in the supply chain?
Machine vision and robotics are already in use around us, most notably in industrial
applications, including the warehouse, as well as facial recognition systems used by law
enforcement. Yet as Peter Gasperini explores for EBN, the possibilities of these two
types of technology are exciting—and they can apply to a number of industries.
“Some of the most exciting work in machine/computer vision stems from subtle
insight into the current deficiencies of CAD,” Gasperini writes. “In order to interact
with 3D models, designers today use clunky peripherals such as keyboards, mice and
joysticks. Machine vision systems are being developed that completely bypass such
inefficient mechanisms by employing a gesture recognition apparatus. A camera array
tracks hand and finger positions dynamically. The system then alters a 3D screen image
so that a user can virtually interact with the model, reaching into the design to toggle
switches, press buttons and so on.”
While some people fear that the onset of artificial intelligence will surpass, and
perhaps, control the human mind, Wired magazine reported that there’s evidence that
human intelligence is actually expanding by interacting with, and perhaps competing
against, artificial intelligence.
Similarly, by powering supply chain leaders and operators with advanced predictive
technologies that model future scenarios, people will be able to more effectively
operate the supply chain, while at the same time developing a deeper understanding of
the interactions of the various drivers on supply chain performance.
We will also see Artificial Intelligence through Autonomous Vehicles. We are still a long
way from the so-called “highway pilot” driving a truck, but there are predictions that in
2020, about 10 million self-driving cars will already be traveling the roads.
And further, that advent of Industry 4.0 and Smart Factories all powered by the
Internet of Things will make running a supply chain as easy as pushing buttons (of
course this all means it was set up correctly!). The use of Artificial Intelligence seems
almost endless, but be on the lookout for some serious applications in the supply chain
for 2016.
#5: Agile = The New Lean
The fundamentals of the Lean Supply Chain are still valuable, but there is a shift to
Agile? Agile simply means, according to agilemethodology.org:
Agile methodology is an alternative to traditional project management, typically used in
software development. It helps teams respond to unpredictability through incremental,
iterative work cadences, known as sprints. Agile methodologies are an alternative to
waterfall, or traditional sequential development.
Considering individualization and growing complexity, the lean concept is, however, no
longer sufficient. Now and in the future, processes in the supply chain must rather be
agile or, more clearly, flexible and interactive, ensuring high-quality delivery results. To
expand upon Agile in the supply chain management model, agile supply chain
management stands for the ability to cope with unforeseen events through the use of
lightning-fast decision making. The implementation of this management approach
requires more than just the commitment of those involved. An additional technological
component is essential and enables people to deal with the unplannable.
Achieving agile leadership skills is actually more of a process than a 2016 supply chain
trend and will accompany us through the year 2016.
#6: Procurement’s New (read Bigger) Role in the Supply Chain
Think purchasing & procurement and often what comes to mind is the struggle or
battle to make a supplier give you materials or services for the lowest amount of
money possible.
However, as global growth stalls and companies are forced to control costs to generate
profit, sourcing and procurement could take center stage.
It won’t, however, be about beating up suppliers for every penny. Instead,
procurement’s new role will be to forge new relationships with suppliers and increase
collaboration. As our friend Chuck Intrieri likes to say, collaboration is at the heart of
successful supplier relationship management.
A Wall Street Journal article wrote about how industrial manufacturers like GE and
United Technologies “are squeezing suppliers for lower costs and shifting existing
factories to cheaper locales as they seek to maintain profit margins in …. A prolonged
period of slow global growth.”
The Journal notes that UTC plans a $1.5 billion restructuring effort through 2018 that
could include closing or shifting production related to “half of the company’s 42
million square feet of manufacturing space.” “The weak link in our whole
manufacturing process remains the supply chain,” UTC’s chief executive says.
Meanwhile, GE is deploying strategies like purchasing small suppliers that provide
critical parts or services.
None of those strategies work without a strong procurement practice that is integrated
with other supply chain processes.
Like social networks, such as Facebook and LinkedIn, business networks house
incredible amounts of insights and data. Procurement will unleash the power of this
information to optimize their supply chain decisions and accelerate innovation and
growth. They may, for instance, access performance ratings on potential trading
partners along with recommendations from the community to determine who to do
business with. Or detect risk across the multi-tier supply chain based on world events
and geopolitical risk factors. They might combine in-the-moment demand data with
historic trends to predict stock outages before they happen and direct replenishment.
Or gain real-time insights into invoice approval status to more efficiently manage cash.
#7: Collaboration Continues to Take Center Stage for Efficient Supply Chain
Management
Speaking of supplier collaboration, many companies have taken steps to improve the
efficiency and effectiveness of their supply chain operations by automating key
processes beyond procurement to areas such as with orders, invoicing, and payment.
This is with good reason backed by data.
According to Emily Rakowski of the Procurement Leaders:
Research shows that companies who have embraced digital strategies are seeing real
value, boosting revenue more than nine percent, market valuation more than 12%, and
profitability by over 26%.
Led by procurement, many of these companies will take things to the next level and
enable new processes that drive more collaborative, intelligent, and transparent ways of
operating. Processes like dynamic discounting that allow them to secure discounts that
can be reinvested in research and development and funding to expand their business.
By ensuring supply chain entities work together in a smarter way, businesses will be
able to benefit from more efficient and effective operations.
Some benefits realized from more collaboration in the supply chain include:
• Collaboration Increases Share of Wallet: This simply means over time you gain a
deeper relationship, thus in the trust of the customer, you gain more of the
business.
• The Longer the Collaboration, the Lower the Costs: Over time, trusted
collaboration begets an understanding so intimate, you begin to understand each
other and almost "finish each other's sentences." Simply put, you know internal
processes and have a work flow that minimizes resources spent on administrative
or time intensive tasks.
• The Power of Word of Mouth: The old saying is true "If you do right by someone
(in business), they will do right by you." Referrals are the life blood of any
business, and if trust and collaboration is a part of a business relationship, a
supplier, OEM, or the 3PL can refer you to get more business.
• Innovation through Long-Term Collaboration: This goes back to the second point.
The more you understand the pains and the processes of the client the easier it is
to lead towards innovative ways which lead to further hard and soft cost savings.
Here is a great video from Dimension Data about the Collaborative Supply Chain that
will drive the point home (click to view video):
#8: A Bigger Focus On Supply Chain Risk Management, Especially Resiliency
For years companies focused on supply chain risk management, or, how can we address
the things that we believe could possibly go wrong in our operations.
That’s a great first step, but as we all know from Murphy’s Law, no matter how well you
plan, things are still going to go wrong that you didn’t anticipate.
The real measure of a company is its resilience, or the ability of its supply chain to
bounce back from the unexpected.
One need look no further than Chipotle to see the impact a supply chain issue – in this
case tainted products that led to E. coli outbreaks in numerous locations – can have on
a company’s reputation.
The next step is whether the Mexican food chain is resilient: Can it revamp its supply
chain and regain the loyalty of its customers. I expect other companies to ask similar
questions.
#9: Making the Supply Chain Circular Vs. Linear
2015 saw a shift from the linear supply chain to the circular supply chain. The idea of a
circular supply chain is now driven by the circular economy. While conventional supply
chains seek to efficiently move products in a linear fashion from raw materials to end
consumers, a “circular” or “closed-loop” supply chain is one that is also dependent on
feeding used products back as raw materials. The resulting circular supply chain poses
unique challenges and opportunities for supply chain professionals.
Successfully building and managing such a system requires new and unconventional
thinking. It also requires the ability for logistics and supply chain managers to look at
forward moving logistics as well as reverse logistics.
The use of reverse logistics provides a myriad of benefits to include:
• Reduced administrative, transportation and aftermarket support costs.
• Increased velocity.
• Increased service market share.
• Higher achievement of sustainability goals.
• Greater customer service and higher retention levels.
When a business, or other organization, purchases equipment, parts, or
remanufactured equipment it is an investment. Over time, this equipment improves
profitability and has a positive return on investment. When the time comes to get rid
of this equipment, business owners can employ reverse logistics practices to reap a
second return on investment from the equipment. Many computers and other
electronics contain high levels of metals, such as copper, iron, or steel, which may be
sold for reuse in new devices. or a defective automotive piece of equipment can be
remanufactured giving life to the equipment, allowing it to be reused or resold.
Essentially, this is part of the recycling process, but for our purposes, we identify this
as reuse due to the income generated through it.
McKinsey says it eloquently and also provides an excellent infographic (on the next
page):
Manufacturers can create value, cut costs, and reduce exposure to volatile commodity
prices by improving their resource productivity—using fewer resources for each unit
of output. Leaders are looking for opportunities beyond their own operations.
Collaboration with suppliers and customers can keep used products, components, and
materials in circulation. New business models that rethink ownership can shift value
along the supply circle.
Better Asset Management also comes from this paradigm shift. Asset management
should be an essential part of all of the supply chain processes. Manufacturers should
be constantly reviewing how they can improve on maintaining, upgrading, re-using
and recycling, electrical goods cost-effectively.
The circular economy is a practical solution to conserving resources, where products
such as a smartphone or TV will be seen in a different way, concentrating on their
parts, not seeing them as they are but as opportunities for continuous value creation.
Although for the supply chain this necessitates a reevaluation of practices.
Business models need to be reviewed, reformulating the way we work to place the
concepts of continuous value creation as a key cornerstone of our ethos and
procedure. In accommodating this, 2016 will see an emphasis upon the refurbishment
of parts and products as we move to the circular supply chain.
Circular Supply Chain
#10: Cloud Computing Continues to Increase In Use
The cloud will “level the playing” as a supply chain trend in 2016 by allowing for easy
to deploy technology and systems. In 2016, costs will prove to be a huge driver to the
cloud for those organizations that are still running legacy applications. The challenge
of infrastructure, maintenance, and labor costs will necessitate their transition to the
cloud. Four out of five new buyers are looking to the cloud simply because they don’t
want to deal with the infrastructure, labor, and additional layers of responsibility and
risk. A big trend we see right now is that many organizations are transitioning to the
cloud due to an aging workforce. A lot of really talented technology professionals are
leaving and in most cases these people are irreplaceable. How do you compensate for
losing people that you can’t replace? You put in a system that doesn’t ever need to be
replaced.
Supply Chain Management (SCM) has dramatically changed over the last few years.
With companies that have overseas manufacturing vendors working harder than ever
to improve product quality, reduce costs, and simplify processes, the concept of
report once and manage anywhere is quickly becoming the standard for best-in-class
SCM-driven organizations. Pivot88 has compiled a list of Six of the Top Supply
Chain Management Trends of 2016, stating the following:
• The Internet Of Things: Often overlooked in all of the consumer hype around
the Internet of Things (IoT), are mobile and tablet devices. These tools have
quickly become mainstays for the remote workforce, and are rapidly evolving to
support supply chain management functions.
• Digitization of Data: Moving from manual (or even hand-written) information
and data to a centralized and secure cloud-based solution minimizes costs,
eliminates inconsistencies, and standardizes the data formatting, which then
opens up the capabilities of Big Data.
• Shift to Big (but Usable) Data: With the ability to quickly and easily standardize
the collection of supply chain data from vendors, operations and logistics pros
will now have access to “bigger” and more data than ever before, allowing them
to better optimize operations.
• SCM Organizations Will Begin to Adopt Application Convergence Strategy: One
way companies can do this is to layer on top of their existing robust supply chain
systems with a light weight cloud-based solution.
• Risk Management Comes to the Forefront: Supply chain risks come in a variety
of forms. From counterfeit products, product integrity, and quality, supply chain
stakeholders are constantly faced with a barrage of SC failure points. Ultimately
the focus of risk management is on making sure that supply chain continuity is
maintained in the event of some unforeseen interruption.
• Operations Planning and Inventory Optimization Go Under the Microscope:
Going hand-in-hand with SCRM, is looking at what aspects of the supply chain
are optimal for cloud-based solutions. While the data has proven the security of
the cloud—there are still substantial concerns about the security of data there.
There are a number of benefits surrounding the move to cloud-based supply chain
management. Most of them center around reducing costs (if you’re using SAP or
Oracle, you know SCM can be extremely costly), efficiency (apply same
methodologies, processes and tools across different vendors), and scalability (whether
you’re working with 5 or 500 factories, being able to manage quality and cost is
critical).
#11: Wearables are the New Hot Trend on the Supply Chain Block
Wearable technology, combined with the use of cloud software, will become much
more widespread across the industry in 2016. The ability to access and input data in
real time is the key way in which suppliers will be able to meet stringent demands of
customers.
With the wearable technology market set only to grow, the supply chain must be
prepared for the influx of new devices, allocating resources and sourcing new parts,
as well as ensuring all technicians and other relevant people are trained. In particular,
the supply chain industry must be ready as we are yet to see how this new product
category will impact reverse logistics.
Wearable technologies like Apple Watch, Fitbit and Google Glass are revolutionizing
our daily experiences, and soon drones, self-driving cars and self-piloting planes will
be the norm.
So why not take advantage of these game-changing technological developments when
it comes to your supply chain? For example, smartwatches could help site managers
observe real-time performance of business processes, productivity, inventory levels
and deliveries. As a result, this will improve productivity by utilizing this information
to make more informed decisions.
Wearables will also help in the following 3 ways according to East West Manufacturing:
• Boosting Labor Productivity and Efficiency: Adding wearables to your supply chain
allows workers to focus on high-level tasks and leave data entry to the machines. Let's
say a distribution center receives a truckload of goods. Instead of physically counting
boxes, the receiver takes a count using eye movements that are tracked by tech
goggles similar to Google Glass.
• Improving Safety: Wearables allow you to monitor employees and machines in real
time. Measure workers' speed and efficiency and capture repeat errors. Pinpointing
issues and quickly resolving them will keep your processes running smoothly.
Wearable devices can also track vitals like body temperature, heart rate and blood
pressure to prevent exhaustion, heart attacks and other health issues that plague
overworked employees.
• Delivering Better Quality Products and Services: wearable devices help detect errors
or anomalies sooner than humans can without their help. Monitor the speed and
efficiency of every step of the manufacturing process to identify and resolve
bottlenecks. Pinpoint the source of quality issues and remedy the problem on the
spot to prevent major quality crises.
#12: A Continued, Renewed (Or New) Focus on Data Analysis for Continual
Improvement & Better Supply Chain Visibility
There are multiple benefits of leveraging data analytics for the supply chain industry,
including reducing forecasting errors and enabling informed forward planning decisions,
and better predictions for product and parts demand.
Use of Integrated Technology for efficient data interchange to decrease errors and reduce
overall resources needed to execute supply chain functions such as transportation,
warehousing, and inventory management.
Supply chain visibility has long been a goal supported by supply chain professionals. Until
recently, however, technologies that could make this goal a reality have not been available.
Today, however, there is hardly an activity that doesn’t produce some kind of data that
can help companies understand what is going on within their supply chains. As the ability
to see more clearly and deeper into supply chains improves, supply chains will become
safer and more secure. Lora Cecere, of Supply Chain Insights writes, “Today 1/3 of fruits
and vegetables and poultry products are thrown away due to spoilage. Companies struggle
with counterfeit goods. In the future I expect the automation of the chain of custody
with better control of temperature and secure handling.”
Professor Burcu Keskin from University of Alabama adds, “Data coming from different
sensors located at different suppliers from their production and transportation operations
carry a lot of information regarding the quality of production process and timeliness of
delivery. At the same time, this data may indicate possible issues in the procurement
process, regarding product quality and delivery. Monitoring and analysis of this data may
provide opportunities to intervene before issues becomes major problems.” Better
visibility can also result in real-time inventory management.
The experts at PLS Logistics Services explain, “Leading retailers will begin implementing
mobile point of sale (POS) systems, beacons, sensors and other technology that will
revolutionize inventory management and the whole buying experience. Customers will be
able to pick up an item and simply walk out of the store, with the price of the item
automatically charged to their card. Real-time visibility, both in the store and throughout
the supply chain, will allow inventory to be replaced as it is moved, and items produced as
they are bought.”
Chapter Four
KEY TRENDS TO WATCH IN SMART MANUFACTURING AND SUPPLY CHAIN
4 Key Trends to Watch in Smart Manufacturing
and Supply Chain
Industrial IoT and big data are converging to enable demand-driven 'smart supply
chains.' The advancements in 3D printing and 'Additive Manufacturing,' coupled with
supply chain efficiencies, could make distributed manufacturing a reality, ushering in
the era of smart manufacturing.
The Continual Coverage and Now Reality of Smart Manufacturing with 3D
Printing
I remember reading an MIT paper on manufacturing technology trends a couple of
years ago. It had a fascinating mention of "Additive Manufacturing" (AM) and how it
could be a game changer. One of the biggest challenges facing automotive, aerospace
and defense manufacturers is the limited shapes a part can be cut, molded or welded in.
On the other hand, a digitally 3D-printed part can be molded into an infinite number
of shapes. According to industry standard ASTM F2792-10, AM is defined as, "The
process of joining materials to make objects from 3D model data, usually layer upon
layer, as opposed to subtractive manufacturing technologies."
The promise of AM is the use of less material, lightweight alloys and to provide faster
cycle time due to rapid prototyping. The AM processes would produce less scrap,
address complex geometries and improve strength-to-weight ratios. AM has the
potential to move manufacturing from mass production in large factories with
dedicated machining and tooling lines to an era of mass customization and distributed
smart manufacturing.
It would be interesting to watch how AM matures in the years to come because it is still
in early stages. AM cost centers are currently more expensive than traditional CNC
machining, and the production rate is slower once you move past the rapid prototyping
phase. The powdered material availability and suitability in a variety of industrial
applications is still evolving. The mechanical properties of the parts produced with AM
have to be proven. It is especially important in the industries such as automotive,
aviation and energy, where failure of a part has direct safety implications.
Smart Manufacturing: Will it Take Hold in the Coming Years....the Internet of
Things Might Make it So
The next key trend I see coming is a more prominent role of Internet of Things (IoT)
in extended supply chains. IoT can help companies provide improved predictability of
customer demand with real-time visibility of product and service demand signals. In a
supply chain, strategic deployment of IoT technologies can improve asset utilization,
customer service, working capital deployment, waste reduction and sustainability. Real
time communication between machines, factories, logistic providers and suppliers
provides improved visibility on the end-to-end supply chain.
IoT can address compliance, regulatory and quality reporting requirements such as
parts traceability and product genealogy, emissions and country of origin. With IoT,
organizations are better suited to track shipped products for warranties, returns and
predictive support for maintenance.
The real premise of IoT-enabled supply chains is to delegate decision making on some
of the operational aspects to smart objects and systems, based on real time analytics
and machine learning algorithms.
One of my concerns is IoT security — especially on how to protect deeply embedded
end-point legacy devices that have limited resources and interfacing mechanisms
available.
Smart Manufacturing will Make Supply Chains Demand Driven not Forecast Driven
This brings us to customer- and market-driven supply chains. Most companies think they do
their supply chain planning based on the demand— in reality most of the time it is nothing
but a disguised forecast based supply chain. To gain and sustain competitive advantage, the
principles of lean manufacturing, just in time and inventory control are simply not enough.
Organizations would need to be not only aligned with true customer demand but also shape
the demand using technology and analytical tools.
Supply chains need to move away from being forecast driven to become demand driven.
Forecasts by their very nature are inaccurate. You cannot simply go by historic sales
patterns, throw in current market conditions and seasonality, and hope for the best. One
needs to shape the demand, the goal needs to be maximization of the profit, not simply
reduction of cost or maximization of revenue. The essence of demand shaping is knowing
about your most profitable customers and products, and protecting and promoting them.
All customers are not created equal. The data science algorithms can help in customer
segmentation and clustering. They can tell which customers are the lowest cost to serve and
which are likely to buy the highest profit products. The current crop of big data and
analytics tools provide a way to integrate data from sales, marketing, action of customers,
product reviews, competitor information, warranty data and supplier status in near real time
to make demand-driven supply chains a reality.
Big data can help in capturing structured and unstructured data from sources internal, as
well as external, to the enterprise. Big data now enables "postponement"— a practice that
allows manufactures to delay building final finished products until the very last possible
moment, to be truly sensitive to customer demand.
Smart Manufacturing Driving Reshoring?
This leads us into our final trend of distributed smart manufacturing. There have been
opposing trends of strategic outsourcing of manufacturing versus bringing more and more
manufacturing in-house. The first approach provides flexibility, frees up capital resources,
lowers cost and speeds up product development. The inherent risk with the outsourcing
approach is the potential to lose intellectual capital, lack of control on the process and
quality, and the potential of brand dilution.
Strategically, smart manufacturing is the future of manufacturing. In the next few years,
Industry 4.0 will bring advances in AM, IoT enabled connected factories, manufacturers and
distributors, and end consumers will make distributed manufacturing a reality.
Chapter Five
LOGISTICS INDUSTRY TRENDS
6 Logistics Industry Trends Set to Transform
2016 & Beyond
We have discussed how manufacturers are changing the landscape through surprising,
innovative trends. Changes in manufacturing processes, which will increase
production, lead to one ultimate result--the logistics industry must change. For third-
party logistics providers (3PLs), logistics industry trends will dramatically affect how
logistics providers of all sizes operate. Take a look at some of the top trends to
expect in 2016 for the logistics industry and how they will inherently relate to the
merger and acquisition trends.
1. Logistics Entities Move Towards Sustainability
Increasing government regulations around the globe are driving a push towards a more
sustainable fleet and means of transportation. Although logistics providers have been
gradually switching towards sustainable efforts, such as the use of natural gas-powered
vehicles, the push for sustainability in 2016 will exceed that of previous years, explains
Jordan England-Nelson. Furthermore, logistics provider who avoid implementing
sustainability measures may end up having to pay fines or penalties for violating
government regulations.
2. The Internet of Things Will Increase and Benefit Real Time Inventory
Management
From RFID sensors to large-scale monitoring of employee actions, the Internet of
Things (IoT) will become more prevalent as more smart devices come online. As a
result, logistics providers will be able to track inventory faster and more efficiently,
which will reduce the amount of time required in shipping processes. Essentially,
consumers will be able to get products faster.
3. Augmented Reality Will Make Order Fulfillment Faster
In close relation to reduced wait times for the end user, augmented reality will make the
picking process, as well as many other processes in logistics management, simpler. For
example, augmented reality-enabled glasses are currently being used by Volkswagen,
explains Ludger Schuh. Augmented reality, sometimes referred to as virtual reality, will
further drive the design and use of smart warehouses for manufacturers. As a result,
augmented reality must cross the boundary between manufacturers and logistics
providers, which will streamline the manufacturing and shipping processes around the
globe.
Not only does augmented reality pose benefits for picking processes, but it can be used
to add a new level of finesse to the creation of delivery schedules and transportation
routes. Essentially, augmented reality will increase the amount of control logistics
providers have over preparing to respond to any problem, at any time, at nearly any
location. Keep an eye out on Augmented Reality as a standout from all the other
logistics industry trends. Truly, the possibilities may be endless in logistics application.
4. Logistics Providers Will Increase Partnerships and Collaborations
While many 3PLs may not want to share data, sharing data is rapidly becoming the norm.
By working together, logistics providers can take on larger contracts to satisfy the
increasing demands of a customer and retailer base. Additionally, increasing partnerships
and collaborations will help logistics providers meet the demand for more products,
faster, and at a reduced cost. This will be especially true as the driver shortage continues.
5. Near or Reshoring Returns For Better, Faster Order Fulfillment
When the logistics industry experienced the record-breaking growth at the end of the
20th century, outsourcing manufacturing and shipping processes overseas seemed ideal.
However, overseas markets are changing, and US citizens are demanding homegrown
solutions. Furthermore, nearshoring or reshoring provides many benefits to customers,
such as reduced delivery times, reduced transportation and shipping costs, and better
communication with the manufacturer for customer service.
Nearshoring also allows manufacturers and logistics provider is to save money. For
example, collaboration between the manufacturer and shipper can be increased by
relocating the site of production closer to the site of shipment. As a result,
misunderstandings will become less prevalent, which will save money for all parties.
Ultimately, nearshoring will be one of the biggest logistics industry trends to watch for in
2016.
6. 3PLs Will Expand Services
Over recent years, 3PL have typically served a small zone, such as delivery within 100
miles. However, the modern consumer is driving and expansions of services to include
the entire supply chain. Once, 3PLs stood out as the omnipotent entities of the less than
truckload Empire. unfortunately, this business model is starting to fail, and today's 3PLs
need to provide holistic solutions for all parties involved. This goes back to recent
conversations about lean business processes. And in fact, at Cerasis, we are undergoing
this evolution ourselves as we expand mode expertise, technology for e-commerce and
reverse logistics, and plans for more robust small package offerings.
While the logistics and manufacturing industry focused on maximizing efficiency, the
shipping world sought to increase efficiency as well. Unfortunately, logistics providers
became rigid, unwilling to adapt to changes at a moment's notice. 2016 will see agility and
flexibility replace the ideal of lean systems to adapt to needs almost instantaneously, and
agility will become the focus of many logistics providers.
Chapter Six
LOGISTICS TECHNOLOGY TRENDS
3 Logistics Technology Trends in 2016:
Automation Leads the Way
Innovations in technology are changing how the world does business, and technology
is dramatically changing how entities in the logistics industry function in nearly every
aspect. From increased affordability and efficiency of the transportation management
system (TMS) to the application of Bluetooth technology for superior tracking of
product movements, 2016 will be the year in which technology becomes an integral,
if not the exclusive, part of the shipping process. Now, it's easy to think of
technology as being a manufacturer-only realm. Yet, technology breakthroughs are
further pushing the bounds on what we see as normal shipping standards. Let's take a
look at what logistics technology trends will become the dominant factors of the
logistics industry for 2016.
1. The Transportation Management System, a Long Time Logistics Technology,
Becomes More Prevalent, Yet Affordable
Historically, shippers were unable to take advantage of a TMS unless the shipper
processed an extraordinarily high volume of shipments. For many smaller shippers,
utilizing a TMS was simply out of the question. However, the rise of the cloud has
changed that. The rise of software-as-a-service, or SaaS, applications will further level the
playing field between large and small to medium-sized shipping companies. Essentially,
today's TMSs tend to focus more on cloud & web-based systems, which can be accessed
by nearly any applicable party, while previous TMS systems were located on site and only
capable of minimal communication.
As explained by Bridget McCrea of Supply Chain 24/7, the return on investment for
TMS cloud-based solutions has, on average, experienced a positive growth of 7.5 percent.
This logistics technology helps shippers allocate funds and bring forth savings to their
transportation budgets.
2. The Use Of Autonomous Vehicles & Drones Will Increase
Think about what happened when Amazon announced that it was planning to eventually
use drones to deliver products within an hour, if not minutes, of when the consumer
places the order. Over the past few years, the use of drones has become increasingly
common. As explained by Robert J Hall, president of Track Your Truck, Prime Air will
[eventually] deliver products within 30 minutes of being ordered. Ultimately, this logistics
technology is not yet ready for roll out on a massive scale. However, Intel recently set a
world record for having the most unmanned aerial vehicles, which is simply the technical
term for drones, flown in a single location, at the same time.
If drones are being used for such an artistic display of human compassion and
intelligence, logical reasoning leads to a notion in which autonomous truck delivery of
products is perfectly acceptable. Autonomous vehicles, which are essentially unmanned
vehicles, are also going to become common. In fact, autonomous vehicles are already
being used by a logistics provider in Arizona.
This holds major implications for addressing the driver shortage and minimizing the
potential damage from long-haul driver fatigue. Ultimately, third-party logistics
providers (3PLs) and other shipping entities are looking towards the insurance industry
for the successful roll out of this technology. Historically, the insurance industry’s
approval has led to some of the most successful roll outs of assisted-driving
technologies in the market. For example, when the insurance industry approved the use
of GPS and traction control measures in vehicles, the application of these logistics
technologies became widespread within a few years.
As explained by Alexa Cheater, Google announced in 2011 plans to develop an
autonomous, or self-driving car. In early 2015, Apple announced plans to ship its first,
albeit far from ready today, self-driving car in 2019. As more companies become more
involved in the idea and benefits of a self-driving truck, the role of this technology will
become increasingly linked with the logistics industry. It will also save money on fuel
costs, which results in savings of the cost of shipping.
For example, a self-driving truck may lock onto a truck in front of it, which would
result in a train effect for the shipment. At first, this doesn't seem like it would
logically save any fuel costs. However, a procession of trucks moving in tandem, at a
safe distance from one another, and able to communicate with one another in the event
of a blow out, accident, or other event, would help to reduce drag on the overall
caravan, which results greater fuel efficiency.
3. The Use of Robots in Warehouses, Loading, Unloading, and Delivery Will
Increase in 2016
Have you missed anything about the sale of robots for logistics purposes recently? A
few years ago, Kiva robots seem to be rolling out everywhere. Then, Amazon
purchased Kiva, and they vanished. In today’s reality, Amazon uses these robots
exclusively for internal production. However, this has not stopped other robotic
inventors from working to create similar systems that do not impinge on the Kiva
patent, asserts Steve Banker of Forbes Magazine.
The GreyOrange Butler robotic systems take the leg work out of the picking process
by bringing shelves to the pickers, and Fetch Robotics Freight has developed a mobile
base and a mobile picking robot to make the physical workload of manually picking
items and placing them in a given tote simpler and less strenuous. There are many
other types of robotic systems in development, and more are being created to make the
logistics industry run more efficiently. 2016 will an increase in the use robotic
technology in more warehouses, when loading shipment and freight on tow trucks,
when unloading shipment at distribution centers, and possibly when the item is
delivered at the doorstep.
Although each of these technologies will help to bridge the gap between large-scale
and small 3PLs, none of them would be function at today’s level of efficiency without
the Internet of Things. In the next portion of this series, we will take a closer look at
forthcoming changes and trends in the Internet of Things for logistics providers, and
we will move forward into how the technology of 2016 will rely on Omni Channel
solutions and become further interconnected through a non-internet-driven device that
you probably have in your office right now--Bluetooth connectivity.
3 More Advanced Technology Trends in
Logistics in 2016: Welcome to the
Hyperconnected Logistics Industry
The shipping industry of 2016 is a gross misrepresentation of what was considered
“normal” shipping practices in the 1980s or 1990s. This is due in part to significant
changes and improvements in how the logistics industry perceives and responds to
the demands of a growing customer base. Although the use of transportation
management systems, unmanned aerial vehicles, and robotics, is dramatically changing
the logistics landscape, several other technologies will become key players in the
logistics industry in 2016. After taking a look at the automation technology trends in
logistics from our first post, take a look at how these technology trends in logistics
will grow and what impact they will have for the industry.
Increasing Use of RFID-, AIDC-, & IoT-Based Technologies
It's easy to become overwhelmed when thinking about the Internet of Things (IoT), radio
frequency identification (RFID), and AIDC technologies for improving the order
fulfillment process. However, these technologies are becoming more popular and cost
effective to use. As we talked about in the blog post explaining the hyperconnected era,
these main connection technology trends in logistics are squarely focused on efficiency.
Once, RFID sensors were out of a reasonable range for most logistics providers and
shipper to use throughout the shipment journey. However, the cost of RFID sensors has
decreased exponentially in recent years, and shipping providers are able to take advantage
of these technologies without necessarily increasing the rate of shipping.
Automatic identification and data capture (AIDC) technology will become more prevalent
as RFID sensors and Bluetooth technologies are implemented throughout the logistics
industry. Essentially, AIDC provides a non-human way to automatically provide updates
to a shipment status as the shipment moves throughout the shipping process. This may be
achieved through automatic, handheld scanners, as explained by Supply Chain Digest.
Automatic identification and data capture can be used to provide real-time insight into a
shipment location, estimated time of delivery, explanation of delayed delivery, and many
other factors. Furthermore, this technology will become increasingly used to help analyze
current logistics processes and determine alternative ways of ensuring a given shipment
reaches the destination at the prescribed time.
Similar to the technology in logistics trends, AIDC and RFID technology, the Internet of
Things (IoT) will change in an unusual, profound ways in 2016. Previously, the IoT have
been used to a lot of communication between different technologies and machines to
improve the production and efficiency of shipping processes in the logistics industry. This
has helped to reduce downtime and enhance the workflow of a given shipment and
providers’ processes. In 2016, the IoT will start to take a more proactive approach in the
overall management of shipping processes. For example, the Internet of Things will
communicate with RFID, Bluetooth technologies, and other AIDC devices to rapidly
identify what parts of a given shipment need to be changed to meet the providers’ and
consumers’ demands. For some specific industries, such as those within the jurisdiction
and governing authority of the FDA, may implement stronger IoT measures, such as
temperature-monitoring, as explained in the white paper, "The Impact Of Supply Chain
Intelligence and the Internet of Things." This specific example may also be applied to a
new concept in logistics, tracking shipments with Bluetooth technologies.
Increasing Use of Bluetooth Technologies
As the world has become increasingly aware of the Internet of Things, the idea of non-
data-driven (a type of communications that do not require an internet connection or data
package to run) communications seems irrelevant. However, manufacturers are starting to
understand why a non-data driven device could hold significant promise as one of the
technology trends in logistics for increasing accountability and quality control in logistics
processes. Ultimately, the Internet of Things is still required for communication on a
broad scale. However, low cost, low energy use devices, specifically Bluetooth technology,
will further enhance logistics tracking and processing in 2016 too.
Bluetooth-enabled devices, which can be mounted on virtually any surface, such as on
shipments, loaders, docks, and throughout the rest of the shipping journey, as explained
by Logistics Beacon, can be used to relate information about a given packages proximity
to the device. Ultimately, this will help increase shipment tracking and provide a real-time
data update to the respective logistics provider’s tracking system, such as the
transportation management system, which will help drive accuracy and timeliness in all
logistics processes. For some specific industries, such as those within the jurisdiction and
governing authority of the FDA, may implement these measures
Growth of eCommerce and Omni-Channel Solutions
In recent years, businesses have grown increasingly reliant on other businesses and consumers
to increase their customer bases. Unfortunately, this is led to somewhat of a stalemate for
businesses in the digital age. 2016 will see an increase in the number of business is working
with other businesses as customers, otherwise as using B2B strategies, especially in the field
of eCommerce. Of all the technology trends in logistics, e-commerce is not a new idea and
has been prevalent in the B2C world for sometime. But, just now, are manufacturing
companies seeking out more B2B options when it comes to commerce.
For businesses who have opted to avoid embracing the millennial revolution, this year will
represent a defining moment in logistics. According to Mark Johnson, CEO of Four51,
millennials will overtake baby boomers as the occupants of the largest section of generation-
owned businesses by five percent. As a result, the demand for a strong online presence will
grow. Additionally, if a business or other logistics provider has not already taken steps to
optimize the organization's website, 2016 will be the year in which to do so.
The use of APIs, or automated protocol integration, for eCommerce will become increasingly
advanced. Similarly, the use of cloud-based platforms will become the common core aspect
of any shipper's strategy to grow their customer base. The cloud is the fundamental resource
that makes working on mobile-based devices and rapid data processing and analysis through
the IoT possible and cost-effective.
Since eCommerce is a major force in an omni channel (all-encompassing) solution to drive
business growth, businesses, especially logistics providers, must understand how the focus of
technology will shift. For Omni-channel solutions, technology will grow more focused on the
value of a product or service, not just the end product. Essentially, logistics processes will
become more important in maintaining and guaranteed customer satisfaction.
Putting It All Together
Few industries can claim to have a level of technology to equal that found in the logistics
industry, and based on this post's technology trends in logistics for 2016 and the trends in our
first post, the year is set to reveal and generate some of the most significant technological
changes in the industry throughout history. From the ability to automatically generate reports
from RFID and Bluetooth-enabled devices to the increasing focus on an omni channel
solution to acquiring new customers, technology in the logistics industry will continue to
grow and improve in accuracy and function. Although some of these technologies have been
around for a while, they are just now starting to be used to the best of their ability for the
logistics industry in 2016.
Chapter Six
TRANSPORTATION MANAGEMENT TRENDS
6 Transportation Management Trends for 2016
2016 will be a defining year for the logistics industry, and transportation management
practices must adapt to these changes. Some of these transportation management
trends reflect real worries for the logistics industry. However, logistics providers and
shippers are starting to understand how to best combat each of these problems
through the application of transportation management technologies. Take a look at
six of the trends to watch for in transportation management this year.
Increasing Focus on Regulatory Oversight and Easing Trucker/ Shipper
Responsibilities
As watchdog groups and public-perception have grown more powerful over how
businesses operate, 2016 will be a year in which the focus of the logistics industry shifts
towards increased oversight regulations and easier trucker or shipper responsibilities. At
first, many of the regulatory measures, such as electronic logging devices (ELDs), can
seem extensive and overreaching. These newer technologies and regulations are designed
to enhance the overall workflow for truckers and shippers, which will improve safety and
reduce the potential, negative impacts from incidents or accidents.
For example, a given trucker who drives beyond the hours of service in the ELD could
incur stiff penalties and fines from oversight agencies. However, imagine what financial
remuneration could be assessed on a given logistics provider if the trucker were to
operate a vehicle beyond the limitations and cause a fatality. Ultimately, these new
recommendations work to reduce the workload and risk in the logistics industry.
Outsourcing of Freight Data and Payment Management
Historically, the transportation management system of a given logistics provider has been
the sole resource and method for data processing and managing the payment of all fees,
duties, tariffs, and other charges for a shipment. As explained by John Schultz, many
modern shippers are moving towards the outsourcing of big data analysis and increasing
collaboration between different logistics providers to enhance payment management.
Software-as-a-service (SaaS) systems help shippers meet the same criteria in terms of the
data analysis, analytics, and payment management. Essentially, many of these processes
can be reduced in cost by outsourcing them to a dedicated agency, who is fully
responsible and knowledgeable about the needs of the respective organization, as well as
the logistics industry.
Similarly, the method of determining the rate of shipping will change in 2016. Previously,
rates were determined by freight classification. However, many of today’s shipments do
not fit into this decades-old methodology, asserts Peter Moore. There is a call to move
towards pricing by shipping density, otherwise known as “dimensional pricing.” As a
result, modern logistics providers must determine a new way to assess the cost of
shipping a product. For example, the shipper may review the shipments size, weight,
length of transit, demand, and availability. In addition, the shipper must determine if all
of the criteria can be met cost-effectively in-house or if an outsourced or collaborative
effort must be taken that would still bring in a profit for both organizations.
Addressing the Truck Driver Shortage
Of all the transportation management trends, it is the Truck Driver Shortage we all
must deal with either by technology solving the issue, or continuing to have a strategic
approach to logistics. In a report by the American Truckers Association, the driver
shortage is expected to grow in 2016. By 2024, the shortage may reach a height of
175,000 missing drivers. Unfortunately, some research indicates the number of drivers
needed could easily increase by nearly 1 million drivers in this time. Inherently, 2016
seems to be yet another year of dealing with the driver shortage. However, modern
transportation management systems are looking to change this trend.
The truck driver shortage seems to stem from a conglomeration of too many
shipments, not enough drivers, inefficient routes, decreased access and use of
intermodal methods of transport, and the retiring of aging drivers. However, The IoT
and increasing reliance and collaboration between logistics and shipping providers
could potentially overcome the shortage as newer technologies, such as autonomous
vehicles, increase in popularity and use. Essentially, the driver shortage seems to be
only getting worse. Yet, a true analysis cannot possibly fathom how increases and
advancements in technology will improve the truck driver shortage. As a result, the IoT
will play a major factor in helping to fix the truck driver shortage.
Using the IoT to Fix Problems in Today’s Logistics Industry
The IoT is listed in many of our trends articles and it is no different as one of the
leading forces of these transportation management trends. Today's logistics industry
and transportation management systems are considered marvels of efficiency.
However, each system often works independently and as a cohesive measure of a given
provider’s efficiency. Unfortunately, many of these systems do not consider how
collaboration between providers could help to overcome the problems faced by the
industry.
For example, the IoT has been used extensively in improving warehouse processes. Yet,
the IoT can be extended into the electronic logging devices, work reports, hours of
service, and nearly any other metric that can be tracked for drivers, as explained by
Gary Wollenhaupt. Ultimately, the IoT could be a potential solution and increasing the
response to the driver shortage, as well as ensuring the overall efficiency of the
shipping provider as it relates to the FAST Act, other regulatory measures, changes in
freight data management and payment processing, and the inter-management of
transportation management systems.
Focus on Implementation of the FAST Act
In late 2015, President Obama signed the Fixing America's Surface Transportation Act
(FAST Act). As explained by the US Department of Transportation, the Fast Act
provides a source of long-term funding for surface transportation in the US. This is
one of the most important transportation management trends over the next decade. In
other words, more capital will be available to improve highways, transit lines, and
collaboration between regulatory agencies and shipping providers. Transportation
management systems will need to take these measures into consideration in the
creation of new routes, prioritization of shipments, and rates. Ultimately, an increase in
fund availability naturally lends itself to an increase in taxes across the spectrum of
businesses and individuals, which poses major implications in determining rates and
working with other shipping providers.
Increasing Collaboration and Inter-management of Transportation
Management Trends
It seems like collaboration and data analysis seem to constantly crop up in logistics
articles. However, if you take the time to understand how the collaboration in inter-
management of transportation management systems truly affects the logistics industry,
you will see a trend towards increasing profitability across the industry. At heart, the
inter-management achievement of a TMS refers to the joint effort between multiple,
competing parties to achieve a greater return on investment and lower shipping rates
for the end user.
Although this could appear counterproductive, it helps to address the problems faced
by the logistics industry.
For example, the increasing number of deliveries on single route may not be reasonably
achievable by a given provider. However, another provider may use less-than-truckload
shipments to meet this demand by outsourcing some services to other parties. This
sounds like the definition of a third-party logistics provider, but this definition explains
how third-party logistics providers will need to grow increasingly reliant on one
another to achieve a strong return on investment for all parties involved.
CONCLUSION
Trends to Change the Industries, But Still a
Focus on the Fundamentals
Modern business is changing, and the manufacturing, supply chain, logistics, and
transportation management industries is no exception. In 2016, companies will need
to make serious changes to processes and standard operating procedure in order to
survive the problems faced and these trends. From an increasing focus on meeting the
demands of compliance and regulatory measures to executing IoT deployment m
trucks as a means of improving and reducing the impact of the driver shortage, each
of these trends will help refocus these industries to the “big picture,” not the
individual picture. However, it is vital that the fundamentals are adhered to in order to
not let any new technology, tool, or process implemented only shine a bright light on
the inefficiency of your company.
We hope you enjoyed this educational e-Book on the trends for 2016 and beyond in the
manufacturing, supply chain, logistics and transportation management industries.
Cerasis, a transportation management company founded in 1997, has always believed in the use
of technology to improve process to not only reduce cost but to stay strategic, competitive, and
have the ability to use data from technology to continually improve. In fact, one of our core
values is just that: continuous improvement of our people process and technology.
We built our Cerasis Rater TMS in 1998, launching it as web-based before Google was even a
business. Our (now Army, as our Development Manager, Jerel Byrd calls them) development
team are always continually improving the Cerasis TMS, as we know it is vital to have a system
that is not only innovative, but sound, secure, and enables those in transportation to do their job
all while doing it cost effectively.
Are you using a TMS to help manage your transportation department as a shipper? What are
you seeing in the space?
In addition to our transportation management system (TMS), the Cerasis Rater, when you are a
Cerasis shipper, you gain access to the following managed services:
• Transportation Accounting to include: Invoice auditing, one weekly invoice no matter
how many shipments, and freight payment services
• Comprehensive end to end freight claims management: if your freight is damaged or lost,
we will handle the freight claim on your behalf
• Carrier Relations: We will negotiate rates on your behalf and you get better rates thanks
to our buying power
• Inbound Freight Management
• Reverse Logistics
• Robust Analytics and Reports
Want to learn more? Visit http://cerasis.com
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