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Forecasting the Future of the Supply Chain – Trending Innovations in 2018

The Digital Revolution is shaking things up in the logistics industry. The Internet and its services such as online messaging applications are making communications much, much faster, and as a result, consumers are now expecting the same sort of speed in other sectors, such as online shopping. People want to be able to find what they need online and place an order for it within minutes, and they expect it to show up at their doorstep within a week. And people want to be sure that the process is secure, and the products are of the highest possible quality.

On paper, these expectations might seem a bit unreasonable, but large e-commerce platforms are proving that these expectations are achievable. However, it will take some drastic changes to set and maintain such a standard across the entire industry. This article will take a look at some of the trends and innovations being utilized by industry leaders that will drive the logistics industry forward for the foreseeable future.

Wider Adoption and Utilization of Cloud Computing

One of the most powerful resources available to us today is cloud computing, which allows access to data from just about any location. Supply chains in any industry can benefit massively from moving to cloud-based infrastructure. First off, it reduces costs across the board as companies will not have to invest in computer hardware to manage their data and having a decentralized data center eliminates the need to rent out or construct physical offices. And because the cloud also works as a data archive, company employees will be able to access company data for work anytime, anywhere, which streamlines business processes and improves company productivity.

Prediction of Customer Demand to Improve Through Data and Analytics

As they say in the healthcare industry, an ounce of prevention is worth a pound of cure. Applying this similar principle to the supply chain, it is better to have inventory ready to dispatch to a consumer at a moment’s notice rather than to start moving your inventory only when you receive an order. But how will you know when an order for a certain product will come in?

Logistics companies as of late are investing more and more into data and analytics, which will improve the forecasting of demand for certain products. For example, prior medicine purchases can be tracked and logged as statistical data. Accumulating this data will give suppliers an overview of current demand and eventually predict future demand for products. This will allow companies to supply where there is demand without having to over-stock, which reduces costs in the long run. Furthermore, the costs of local-level distribution methods like last mile delivery are increasing, thereby encouraging businesses to make each shipment count, so predictive analytics can be a huge help in this regard.

Industry 4.0 to Create Flexible, Adaptable Supply Chains

Industry 4.0 is here, bringing with it the latest and greatest technological innovations to come out in the past decade. Companies are now adopting this into their supply chains with the purpose of making it more flexible and more capable of adapting to ever-rising consumer demand. Industry 4.0’s focus on constant connectivity allows supply chains to work in a more orderly, systematic, and harmonious manner, which potentially increases work output throughout the company.

The greatest ideal of Industry 4.0 is the “smart factory”, a factory built around the concept of cyber-physical systems. These systems are implemented into the factory to communicate with factory machines equipped with a degree of autonomous capabilities, allowing them to effectively work without constant human supervision. The machines and factory systems operate through the Internet of Things, which facilitates communication between machines and human operators in real time. Smart factories will also be able to connect with other parts of the supply chain, which allows for much easier management. In an ideal smart factory, humans will no longer have to perform any sort of manual labor besides the repair and maintenance of factory machines. Instead, humans will serve as operators who will collect and analyze production data to make higher-level decisions and solve any problems that arise.

Is such a “smart factory” possible in the real world? Yes, but not right now. We still have a long way to go before we can build a factory floor that is truly automated and can work without human intervention. Until that happens, though, the Internet of Things and other innovations from Industry 4.0 can still be applied to supply chains to improve communication, work coordination, and in turn, productivity.

Next-Shoring Encouraging Manufacturer Homecomings

Most people are aware of the term “off-shoring”, which basically involves setting up factories in other countries to reduce the cost of production by taking advantage of lower wages in those countries. This has been the norm for manufacturing companies in the West since the 90s. However, several factors are making manufacturers consider reopening production facilities in their home countries.

First off, countries considered go-to destinations for offshore manufacturing are becoming more expensive as wages rise in those countries. Logistics costs are rising as well, which makes offshore manufacturing less viable in terms of savings; as we’ve already covered, customers demand faster product delivery, so placing manufacturing plants closer to the countries that demand those products will result in noticeable savings in shipping costs. Another reason why manufacturers are thinking of next-shoring is that recent innovations such as machine automation and other technologies under Industry 4.0 replace human labor with machines, which tend to be cheaper in the long term.

Integration of Artificial Intelligence into the Supply Chain

Artificial intelligence has long been hailed as a hallmark of the future of business and management. This is no surprise — artificial intelligence is a powerful tool that can fill in gaps and inconsistencies in already-existing systems. And now that AI is becoming more sophisticated and being distributed more widely, companies are now taking advantage of this new technology. Machine learning and algorithms can be used to analyze large amounts of statistical data to aid in management and decision-making. AI can perform more stringent quality control inspections, which can assist or replace human personnel. The possibilities seem to be endless with artificial intelligence, and its capabilities will only grow as AI technology is continually being improved upon.

In the end, regardless of the size and nature of your business, remember that these improvements are all here to increase production, improve safety, minimize risks, contribute to your bottom line, and most of all, uphold the consumer.

 

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