Call it a cop-out if you like, but predicting which logistics and supply chain trends will make a difference to businesses in any given year has become notoriously difficult, given the speed at which technology, in particular, can suddenly disrupt the way things are done.

At the same time, technological advances such as the Internet of Things, automated transportation, and similar futuristic innovations, have been offering the promise of disruption for the last few years without really delivering. However, there is little doubt that they will do so at some point, maybe in 2017, or maybe later.

The absence of predictions in this post is quite deliberate, therefore, but if you want to know the most crucial supply chain and logistics trends to keep your eye on in 2017 and beyond, you’ll find them outlined below.

 

2018 Update: How Did the Trends Progress?

As this article proved extremely popular, I thought it worth adding a few updates to follow progress on the six trends. The additional “end of year” update sections below were added in early December 2017 and now—in the final quarter of 2018—I have added further updates to Trends #1, #2, and #3, which have each seen some exciting developments.

 

 

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Depending on the response received by the latest updates, I may revisit this article yet again with additional updates to Trends #4, #5, and #6.

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Interestingly enough, most of the trends have continued to strengthen since this article was originally written, with the exception perhaps of #6. However, it could be that virtual logistics teams are on the rise, and that the growth has simply failed to receive much attention from our industry’s media.

 

2020 Review of Trends #4, #5, and #6

Well, I did say I’d revisit these trends at some point, and although it’s been a while, two significant developments have served to raise the profile of CSR, last-mile logistics, and remote working.

 

 

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The first of those developments is the emergence of blockchain technology to trace provenance and demonstrate ethical procurement practices.

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The second is the outbreak of the COVID-19 global pandemic, which has made last-mile delivery an even more critical supply chain component, and, of course, forced many companies to embrace an environment in which staff work from home instead of at the office.

To reflect the significant impact of these developments, I’ve added a short section to each of trends #4, #5, and #6, discussing their 2020 mid-year status.

 

Key Logistics Trend #1: Warehouse Robotics in the Supply Chain

Automation is already well established in many distribution centres around the world, but for most, it is limited to workflow automation managed by increasingly advanced warehouse management systems.

 

 

 

 

There is little doubt that system-guided manual processes can make a considerable difference to warehouse efficiencies. As yet, though, the value of full automation—perhaps the holy grail of distribution centre operation—typically remains the preserve of corporations able to build purpose-designed automated warehouses, or adapt older real estate for “lights-out” operation.

The situation is changing however, as more and more MHE manufacturers bring warehouse robotics to market. Robotic solutions offer the ability to introduce automation into DC operations without the need for substantial structural alterations.

The situation is changing however, as more and more MHE manufacturers bring warehouse robotics to market. Robotic solutions offer the ability to introduce automation into DC operations without the need for major structural alterations.

If you read my post from last year about one company’s experience with automated guided vehicles (AGVs), you’ll be aware that robotic forklift trucks have been around for several years. Today, the trend in their adoption is still gaining ground.

 

 

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However, the real tipping point in the warehouse robotics trend will arrive when vendors master the art of true robotic picking, by building robots that can pick orders from conventional racking.

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Right now, trends in robotic picking are related to systems that bring goods to the picker, requiring a considerable amount of specialised racking and conveyance equipment.

When robots can pick conventionally from shelves or floor-locations, warehouse operators will be quick to seize the opportunity to switch from manual to (mostly) automated distribution centres. It’s hard to say if that moment will arrive in 2017, but for any business carrying the costs of warehouse labour, robotics developments warrant close attention in the year ahead.

 

2018 Update: Warehouse Robotics

Warehouse robotics developments turned out to be quite prolific during 2017/18. Here are a few highlights:

 

 

 

 

Climbing Robots in France: A French robotics company has developed a warehouse robot that can climb warehouse racks to pick from any level, then transition to surface transportation to carry orders to human workers. Capable of picking up to 400 orders in an hour, the robots are already in operation with one French online retailer.

Alibaba Increases Robotic Population, Reduces Human Labour: Alibaba, the world’s largest retailer, ramped up robotic labour in one of its warehouses this year, reducing the human workforce in the facility by 70%.

 

Swarming Robots in England:

Ecommerce grocery chain Ocado brought a new automated warehouse into full service this year. The warehouse has no aisles and every centimetre of floor-space is filled to just below ceiling height with inventory. A swarm of hundreds of robots works above the stacks of inventory, digging down to grab boxes and carry them to the minimal human workforce, which then packs the groceries for home delivery.

The new warehouse is nicknamed “The Hive” with good reason. The picking robots, which are each of a similar size to a washing machine, number more than 1,000. They have no intelligence as individual units, but are coordinated as a swarm by a central computer.

Each robot in the swarm can follow a set of specific instructions. For more complex tasks, such as digging deep into a stack of crates to find a slow-moving SKU, a number of the robots can work together to quickly locate and retrieve the item, much as ants, for example, will work together to drag a dead insect to the nest.

 

DHL Challenges Robotics Visionaries

Logistics giant DHL launched a challenge program to encourage the development of piece-picking warehouse robots. The winner of the 2017 challenge was Vecna Robotics, a company that provides complete robotics solutions for warehouse operators.

Vecna showcased their combination of collaborative picking and conveyor robots, which can work in warehouses with conventional shelving to pick cartons and boxes, and then move them to pallet-building areas. One of Vecna’s robots’ most advanced features is their ability to work alongside humans, unlike Amazon’s Kiva robots, for example, which must have a distinct operating environment.

The Vecna automatons use innovative vision systems, similar to those being developed for autonomous cars, to navigate complex environments and avoid colliding with human operatives, human-controlled warehouse trucks, or other robots.

 

Robotic Piece Picking Closer to Reality in 2018

Following the success in the DHL challenge, Vecna has begun working in partnership with robotics companies developing piece-picking (as opposed to carton-picking) robotic arms, to supply customers with more complex and complete robotic warehouse ecosystems.

One of those partners is RightHand Robotics, a company claiming to hold the current world record for robotic piece picking, with their RightPick system. RightPick uses machine-learning technology and can pick at rates of up to 1,000 units per hour, even with the inclusion of items that the solution has never previously encountered.

 

Cost and Efficiency Benefits of Warehouse Robotics

Of all the six trends explored in this article, warehouse robotics appears to be where the most exciting advances are being made. As of Q3 of 2018, robots have become a common sight in warehouses that primarily run full-pallet picking operations or have a relatively low number of SKUs.

 

 

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While robots are currently less prolific where carton and piece picking prevails, Amazon’s experience bodes well for companies waiting for the right time to implement robotic picking operations.

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According to estimates from Deutsche Bank, Amazon, which now has upwards of 80,000 robots in use, is achieving operational cost reductions of around 20% in the fulfillment centres where they are deployed. These cost savings largely stem from improved efficiency, with cycle times in robot-equipped fulfillment centres slashed from 60-minutes plus, to around 15 minutes.

 

Key Logistics Trend #2: Autonomous Road Transportation

As mentioned in the introduction to this post, autonomous truck development has been a trend that’s grown over the last couple of years. However, it still looks like it will be some time before autonomous goods vehicles are used in earnest on Australian highways, or those of any other country for that matter.

 

 

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Still, that’s no excuse for ignoring the progress being made on a transport solution that will potentially drive greater economic efficiency than any other supply chain technology so far imagined.

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The first driverless car trials in Australia took place in Adelaide last year, and automated trucks have already been a reality in Western Australia’s mining industry for some years. Meanwhile, in the United States, Anheuser Busch recently hauled a full load of finished goods point-to-point without a hitch, and almost without a driver (he was in the cab of the truck, but not in the driver’s seat).

Driverless vehicles have already proven themselves to be realistic solutions to slash the cost of transport, once all the legal, safety and social acceptance issues are overcome. Of course, that will take some time, but, likely, 2017 will only see autonomous vehicle development strengthen as a progressive logistics trend.

 

End-of-year Update: Autonomous Goods Vehicles

The trend in autonomous goods transportation hasn’t moved as quickly as warehouse automation this year, but that’s probably understandable given the very different environment involved (public highways).

 

 

 

 

However, Volvo recently unveiled a new prototype autonomous truck in Beijing, China. In the United States, a company called Embark Trucks is testing driverless technology while hauling refrigerators on a 650-mile route along low-volume highways between Texas and California.

It does seem then, that the trend quietly continues. Nevertheless, as Volvo Group CEO, Martin Lundstedt himself stated while commenting on the Chinese tests (and I also suggested when penning this post nearly a year ago), the technology is probably still a long way from becoming an operational reality.

 

Autonomous Trucks: 2018 Update

Enthusiasm for autonomous trucks has been mounting throughout 2018, with an increasing number of pundits anticipating their arrival on public roads soon. Indeed, experts believe driverless trucks in some form will almost certainly hit the highways before fully autonomous cars emerge from their experimental state to become an everyday reality.

 

 

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For example, platooning is a concept involving one or more driverless trucks linked digitally and following closely behind a manually driven lead truck.

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Platoons comprising just two trucks have offered up fuel savings of 4% during testing by the North American Council on Freight Efficiency (NACFE), but more importantly, platooning will eliminate the need for every truck to have a driver.

Given that labour represents more than 40% of the cost of road freight haulage, the potential overall cost savings of platooning are considerable. At the same time, the practice might also help transport companies overcome the seemingly interminable problem of driver shortages.

 

Key Logistics Trend #3: The Blurred Line Between Logistics and Technology Services

2017 will surely see logistics companies become increasingly hard to distinguish from technology providers, as 3PLs and 4PLs continue to leverage IT platforms as major service-selling points.

To some extent, this blurring of the line is spinning off from a similar phenomenon in the consumer markets, where sometimes it’s hard to know if you’re dealing with a business entity or a software platform. For example, when you book accommodation on AirBnB, do you think of yourself as:

a) Making a purchase from a travel-oriented service provider?

or…

b) Connecting with an independent seller through a sales-oriented social media platform?

 

 

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When you book an Uber driver to take you downtown, are you using an app to find you a private “taxi” or are you making an online purchase from a transport provider?

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This apparent blending of technology and service provision into a “singularity” is beginning to pervade B2B marketplaces, especially those related to logistics services. For instance:

• American companies needing short-term warehouse space can log into FLEXE and get connected to other companies with floor or rack-space to spare
• S. Shippers can easily find space for their goods on a truck using Convoy, a form of crowd-sourced freight service
• The logistics “control tower” concept is increasingly becoming synonymous with both supply chain management (SCM) software solutions and outsourced logistics service providers.

The same melding of software and service can be found in solutions for warehouse management, procurement/purchasing, and other operational applications in the supply chain. In these areas, on-premises software is on the wane, giving way to cloud solutions with integrated technical-support services and self-help capabilities that obviate the need for in-house IT resources.

What does this trend mean for your company? In itself, the blurry line may be little more than the source of some semantic frustrations. What it does mean, however, is that you will need to be increasingly cautious about what kind of organisation you are dealing with when procuring services and solutions.

I say this because undoubtedly, as technology and supply chain expertise continue to consolidate within logistics applications, upstart providers will have more strength in terms of technology than supply chain knowledge, or vice versa.

That will be an essential consideration when taking advantage of such solutions, since selection criteria will need to reflect your business’s strengths and weaknesses and how those of a given vendor/service provider will complement them.

Other factors to evaluate may include:

• How might the use of transport solutions affect your place in the chain of responsibility?
• Will the use of a particular service/platform improve or hamper flexibility in your supply chain?
• Can you ensure/maintain your company’s customer service promise when using third-party platforms?

As new integrated supply chain platforms come online, which they inevitably will in 2017, it will be tempting to jump on board, especially given their accessibility (just sign up and go). Still, it’s prudent to keep an eye on the broader implications, which, in many cases, will not have been significantly tested in the use of new service models.

 

End-of-year Update: Logistics Technology as a Service

This service/technology integration trend has continued apace over the last ten months or so, perhaps most interestingly in the transportation field where “the Uberisation of logistics” has become something of a catchphrase. While speculation is polarised as to whether the concept can succeed, app-based “instant freight” services continue to spring up, not only around the world but also across transport modes.

 

 

 

 

At Sea – the Uberisation of oil transportation: OSVFinder is a French company currently providing a service to match energy companies with owners of offshore support vessels, but with big plans to expand into an “Uber” for oil and gas shipping.

The concept is simple: vessel owners and oil shippers register on the app. Vessel owners post their available capacities, and shippers post their needs. The app will then search for the most efficient solutions and enable transactions to be brokered—without the broker.

On the Road – Digital Freight Matching: Hundreds of millions of dollars are finding their way into the Uberisation of road freight, with Uber itself and the mighty Amazon both developing freight matching solutions. Other companies entering the market include Cargomatic, CargoX, and FourKites, all of which offer cargo matching in the long-distance road transport sector. At the same time, several startups have also emerged recently to compete in last-mile matching.

 

2018 Update: Logistics Technology as a Service

I make no apology for the fact that this section’s 2018 update could just as easily have been added to the robotics section. That’s primarily because one of the key developments in the service approach to logistics technology is the “robotics as a service” (RaaS) concept.

Robotics providers like inVia Robotics offer warehouse operators the possibility to implement robots without upfront investment. Instead, operators pay the provider for the work the robots carry out, much as they would pay a recruitment agency for the work performed by a temporary employee.

As a trend within a trend, it will be interesting to see if RaaS will take off. It certainly seems to be a highly promising solution for smaller companies wishing to access the cost efficiencies of warehouse automation.

 

Key Logistics Trend #4: The Appeal of Supply Chain Social Responsibility

Over the last two or three years, sustainability, carbon footprint reduction, and supply chain transparency have merged and morphed into what we now like to call corporate social responsibility. The term itself offers a clue into the conceptual origins of CSR and the socially responsible supply chain.

If they are honest, most organisations will admit that CSR efforts mostly began in response to the pressures of legislation and public opinion.

 

 

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Of late though, CSR is being regarded less as a compliance-related necessity, and more as an approach to increase revenue, secure customer and employee retention, and generate brand appeal.

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Enlightenment comes courtesy of early CSR adopters, which having discovered benefits above and beyond the obvious advantages of compliance, have been happy to share the good news. In short, corporate social responsibility is no longer just a trend—it’s trendy.

Driven by positive motivational factors and aided by a growing base of specialist service providers, more supply chain and logistics organisations will integrate CSR into their strategies over the course of 2017. If yours isn’t one of them, your stakeholders might well venture to ask why.

More to the point, though, you may want to ask yourself what benefits are being left on the table, and whether less reticent competitors are already exploiting those benefits to their advantage.

 

End-of-year Update: The Socially Responsible Supply Chain

 

 

 

 

Social responsibility continues to gain momentum in supply chain organisations as 2017 draws toward the end of its final quarter. Some companies that have been lauded by the likes of Gartner for supply chain social responsibility initiatives this year include:

• Walmart: Launched Project Gigaton, a greenhouse gas reduction program involving suppliers
• Dell: Launched a wide-ranging CSR initiative called 2020 Legacy of Good, which among other things, seeks to achieve global supply chain responsibility
• Pepsico: Ramped up sustainability initiatives in the supply chain, including water and carbon reduction

 

2020 Update: Blockchain as an Aid to CSR

Towards the end of the year in which I first wrote this article, blockchain, or distributed ledger, technology was gaining recognition for its value above and beyond its role as a basis for cryptocurrency.

In the supply chain environment, in particular, companies began exploring the use of blockchain to track the origins of materials moving through the supply chain, along with every movement and handoff those goods undergo en route from their source to their final sale as a component, ingredient, or finished product.

As of 2020, several large—and even some small—enterprises are experimenting with the use of blockchain platforms to provide intractable proof that their products come from ethical and sustainable sources, boosting their reputations as companies that take social responsibility seriously.

 

Key Logistics Trend #5: The Race for the Last Mile

Moreover, the explosion in omnichannel retail has increased demand for last-mile resources and, in many cases, the costs of operating them.

 

 

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As retailers become smarter at managing omnichannel fulfilment processes, they will graduate from just getting the goods where they need to go, to innovating for efficiency in the last mile.

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As a result, we can expect 2017 to herald a rise in the emergence of crowd-sourcing and specialised last-mile fulfilment service providers, as innovative shippers seek alternatives to parcel carrier services or in-house distribution fleet ownership.

If ever there was a supply chain scenario in which crowd-sourced logistics solutions could be beneficial, it’s in the last-mile arena. Hence 2017 might be the year in which Uber-style last-mile freight services actually take off.

Crowd-sourced transportation could be especially useful for small deliveries of goods portable enough to be transported on two or more wheels (I know that sounds suspiciously like a prediction, but really it’s just a suggestion as to what might happen).

Last-mile innovation is not and will not be restricted to the types of carriers used by commercial shippers, however. After all, today’s consumers want total flexibility in terms of how orders are received.

For example, we may see growth in solutions such as locally situated public “smart lockers” into which deliveries can be made for later collection by consumers. Such lock-boxes may also help streamline the process of returns, which continue to grow in volume because of changes in shopping habits.

Meanwhile, click-and-collect services may see more expansion, perhaps leading larger retailers to convert shopping space into warehouse storage to serve consumers preferring to shop online and collect their purchases from local facilities.

 

End-of-year Update: Last-mile Delivery

The Uberisation of last-mile distribution has already been mentioned in a previous section of this update. However, there have been other developments in this area.

 

 

 

 

Perhaps most notable of these is a trend among national postal services to “reinvent” themselves as last-mile parcel carriers. Examples include USPS in the United States, and the New Zealand Post, which in a rather novel diversification move, has been piloting home deliveries of Kentucky Fried Chicken to improve asset utilisation.

 

 

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Unconventional or not, the fact remains that as postal services continue to suffer from the decline in snail-mail, the use of logistics assets to break into new last-mile markets makes much sense.

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That’s especially true when it comes to parcel deliveries since, in many cases, the postal service will already be visiting many of the delivery points. In contrast, for a carrier like FedEx or DHL, each parcel generates the need for a new delivery.

 

2020 Update: COVID-19 Focuses Further Attention on the Last Mile

The Coronavirus crisis has led to movement restrictions and lockdowns in many countries around the world. Consequently, businesses that may never have considered offering local deliveries are capitulating to the sudden change in circumstances as their customers prove unable or unwilling to shop in brick-and-mortar stores or go out to collect their purchases.

 

 

 

 

Arguably, the pandemic is proving beneficial for the “born for the last-mile” service providers that were beginning to emerge in 2017. These companies are now proving invaluable in their ability to provide turnkey ecommerce logistics solutions for retailers transitioning quickly to online sales.

The pandemic has also spawned a new trend, born from necessity, in contactless delivery services, which use technology to enable customers to confirm receipt of their purchases electronically using their own mobile devices. These innovations mean customers no longer have to enter within close quarters of the delivery driver.

Many larger companies, which once had planners located in each distribution centre, have made the shift to centralised planning. This clearly demonstrates that in the age of information, local resources are no longer necessary to schedule and plan thousands of deliveries each day.

The next step is to recognise that with online access to planning software and real-time communication, route planners really don’t need to be sitting in a central office, but could realistically perform all necessary activities from their homes.

With the ability to send load and route plans directly to WMS applications and truck drivers’ hand-held devices (or even to printers located at the DC), a home-based route planners’ role could be perfectly viable in many organisations.

The same is true of many other roles traditionally based in centralised logistics centres or regional/local DCs. Purchasing, general administration, and even certain management positions could all be realistically held by employees based wholly or partially at home, reducing labour costs and enabling real-estate investment to target storage rather than office space.

 

Key Logistics Trend #6: The Rise of the Virtual Logistics Team

The concept of remote working and virtual teams has become pervasive across many commercial sectors, enabling companies to access talent globally rather than locally and cut down on travel expenses and real estate needs.

As supply chain IT continues its transition to the cloud, 2017 might be the year in which supply chain and logistics organisations begin to look closely at the benefits of remote working for administrative and support staff.

Let’s take route and dispatch planning as an example…

Many larger companies, which once had planners located in each distribution centre, have made the shift to centralised planning. These moves demonstrate that—in the age of information—local resources are no longer necessary to schedule and plan thousands of deliveries each day.

The next step is to recognise that with online access to planning software and real-time communication, route planners don’t need to be sitting in a central office, but could realistically perform all necessary activities from their homes.

With the ability to send load and route plans directly to WMS applications and truck drivers’ hand-held devices (or even to printers located at the DC), a home-based route planners’ role could be perfectly viable in many organisations.

The same is true of many other roles traditionally based in centralised logistics centres or regional/local DCs. Purchasing, general administration, and even certain management positions could all be realistically held by employees based wholly or partially at home, reducing labour costs and enabling real-estate investment to target storage rather than office space.

 

End-of-year Update: Virtual Logistics Teams

This appears to be the one trend that hasn’t visibly gathered momentum in the way I might have expected. Perhaps this is due in part to the relative immaturity of enterprise-mobility solutions for supply chain and logistics management.

 

 

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However I still foresee home-working, virtual assistants and distributed teams as a potential snowball in the supply chain arena, but perhaps the required technology is not yet where it needs to be.

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Things may change as cloud computing, and improvements in enterprise apps take hold over the next few years. Indeed, the use of apps is one of the key trends I believe to be gathering momentum already, and which I plan to include in a forthcoming article on supply chain trends for 2018.

 

2020 Update: A Seismic Shift in Favour of Virtual Teams

Fortunately for the supply chain and logistics industry, the technology to support virtual teams had already come on in leaps and bounds since I wrote this article in 2017. However, it had not been as readily adopted as in some other sectors, and the virtual supply chain team was not exactly commonplace before the Coronavirus crisis ensued.

How things have changed now that governments around the world enforce movement restrictions and stay-at-home orders in response to the pandemic. Like all industries, supply chain workers not engaged in goods handling are quickly coming to terms with a different working environment—the virtual one.

Virtual teams are becoming the new normal. Even after the worst of this particular global crisis abates, the ease with which technology makes it possible for people to work from anywhere, and the realization that remote working can save money without putting supply chain operators at any significant disadvantage, is likely to see many companies retain distributed teamwork into the future.

 

Be Ready For Disruption in Supply Chain and Logistics

Trends come and go. Some stick around for longer than others do. Some fade into obscurity, and others crystallise into breakthroughs that disrupt entire industries. As I see it, any of the six trends outlined in this post could dramatically impact your company’s supply chain and logistics operations before too long.

2020 Update: As it transpired, most of these trends indeed continued to gather pace throughout 2017, 18, and 19. In 2020, some of them—perhaps accelerated by the COVID-19 situation—are really starting to reshape the supply chain and logistics landscape, and I feel sure they will continue to do so for some years yet.

 

 

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As always, here at Logistics Bureau, we will continue to monitor developments closely. Indeed, I’ll shortly be publishing an article exploring the most promising trends for 2021.

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Of course, I won’t be so bold as to make predictions, but will simply focus on areas of innovation worth watching. Meanwhile, if you have any views on what will be big over the next year, we would love you to air them in the comments section below.