January 2015 | Sponsored | Knowledge Base

Traditional Supply Chain Models Will Be Extinct in 2025, Thanks to These 10 Disruptors

Tags: Supply Chain Management, Logistics, Technology

George Prest, is Chief Executive Officer, MHI, 704-676-1190

When 2025 rolls around, traditional supply chain models will be extinct, according to the 100-plus thought leaders and partners behind the U.S. Roadmap for Material Handling & Logistics. This open community spearheaded by MHI includes material handling and logistics practitioners, suppliers, academia, associations, publications and government. Each has a stake in the future of the $1.3 trillion material handling, logistics and supply chain field.

The report and action plan identifies 10 different disruptors prompting this transformational change. Some are well underway and evolving toward maturity. Others are in early stages of development. All will have a decisive impact on the industry's future. They include:

E-commerce and omni-channel distribution: Online purchases will be a full 10% of all retail sales by 2017. This is due both to increasing use of mobile devices and retailers willingness to invest in omni-channel distribution centers—consolidating multiple facilities used to address three different sales channels (retail stores, resellers, and individual customers) into one location.

Urbanization: Today more than 50% of the world's population lives in cities, challenging current last-mile distribution operations to develop new methods for goods delivery.

Mobile and wearable technology: Nearly 60% of Americans owning and using a smart phone to shop and track purchases. The embedded global positioning system (GPS) capability in the devices could be leveraged to enhance deliveries.

Robotics and automation: Autonomous control, driverless vehicles, and wearable computing—integrating these into coordinated systems will produce for revolutionary change in the industry by removing the potential for human error or performing tedious or dangerous tasks humans don't want to do.

Sensors and the Internet of Things: The proliferation of embedded sensors that communicate in real-time via the Internet without human intervention supports the Internet of Things. Among the opportunities: sensors in manufacturing could warn of problems and offer instructions for corrective action; packages and transport containers could be continuously tracked via GPS for optimized routing and delivery.

Big Data: Managing and leveraging the massive amounts of information companies collect and store about operations, sales, and customers requires advanced computing power to analyze and visualize the data. Organizations no longer have to look back to reconstruct what happened; they can apply sophisticated algorithms that perform predictive analytics to anticipate and prepare for future scenarios, thereby mitigating risk.

Workforce: The supply chain has an image problem. Although warehouses of the past no longer resemble those of today, as baby boomers retire the industry is challenged to attract, train, and keep an adequate workforce. Projections anticipate more than 270,000 new jobs will be created annually in the field over the next five years, meaning the industry must find new ways to appeal to a very different workforce: women, veterans, people under the age of 35, and differently-abled persons.

Sustainability: Societal pressure for corporate responsibility dictates that the industry must address the environmental impact of supply chain operations in order to mitigate its effect on local wildlife, solid waste generation, and polluting emissions.

Total supply chain visibility: Thanks to GPS, the Internet of Things, and Big Data, precise location services will make all shipments trackable in real-time by suppliers, manufacturers, shippers, and receivers—from the instant of order to the instant of delivery.

Collaboration: Existing technologies can significantly reduce the inherent cost associated with supply chains by leveraging the data held by each party. To truly reap the benefits, however, trading partners will have to establish trust in order to collaborate. For example, competitors might share trailers to eliminate empty truck miles, thereby reducing transportation costs.

How can you prepare to meet the challenges of the next decade? By fully embracing the changes driven by these 10 disruptors. Simply investing in infrastructure, technology or human resources is not enough. Companies must formulate a strategic plan that includes core competencies and future business objectives, and is in step with the customer and the changing marketplace. You can learn more about the Roadmap at mhlroadmap.org.

As the Industry That Makes Supply Chains Work, MHI pledges to be lockstep with these developments. That's why MHI and our members provide industry resources and best-in-class equipment and systems to help you deliver on the promise of supply chain efficiency, costs savings and speed to market that your customers are demanding.

As MHI begins its 70th year of delivering these solutions, I invite you to find tools to enhance your strategic plan at MHI.org and to attend ProMat 2015, March 23-26 in Chicago's McCormick Place. You can learn more at ProMatShow.com.