The supply chain will never be immune to disruptions — some things are simply unpredictable. But as 2020 progresses, one thing is certain: the ability to rapidly innovate and adapt will be vital for companies in the supply chain ecosystem. To effectively manage expectations and strategize for the year ahead, supply chain managers should prepare for the following challenges and trends in 2020 and plan accordingly.
Artificial Intelligence Will Reach Its Potential by Becoming Domain Specific
The potential productivity gains from AI are anticipated to be anywhere from $13.7 trillion to $15.7 trillion by 2030, according to the McKinsey Global Institute and PricewaterhouseCoopers, respectively. The next phase of AI success happens when technical capabilities are matched with industry-specific expertise. We are at a significant inflection point in the adoption of AI-enabled solutions. Linking domain expertise and data with technical innovation is necessary for technology to reach its full potential to deliver measurable, effective results to the companies that implement them.
Low- or No-Cost Trucking Software Solutions Will Become a Priority for Motor Carriers
Motor carriers are a critical link in the supply chain — yet they are the most dispersed and least connected of transportation modes. While they carry a huge volume of cargo — more than 70% of domestic tonnage— the vast majority are part of small organizations: 90% of firms operate six trucks or fewer (source: American Trucking Association). Carriers, LSPs, and shippers need to embrace solutions that provide low- or no-cost TMS-like solutions that empower even a single-truck firm with access to logistics and supply-chain networks.
Better Technology and Planning Will Close the Gap Between Planning and Execution
Traditional, long planning cycles don’t align to the expectations of today’s consumers. In addition to moving products, companies must deal with the added expectations from customers around product availability and expedited delivery — and in short, customers want what they want, and they want it now. While the Amazon effect has elevated customer experience across the board, it has also resulted in companies stockpiling trillions of dollars of inventory — a cost that very few aside from Amazon can justify. As a result, we can expect to see fewer companies stockpiling inventory and more focusing on improving inventory management and execution.
The American Transport Research Institute (ATRI) conducts an annual report on the operational costs of trucking. In its 2018 report, ATRI found that trucking companies traveled over 9.4 billion miles in 2017 and 20.7% of all those miles were empty. The industry can do better.
It has become essential for Logistics Service Providers (LSPs) to be able to securely collaborate, in the context of taking advantage of an opportunity or solving a problem, with their customers, carriers, and other service providers on a neutral digital platform. Accessible data and predictive analytics will remain key competitive differentiators. By establishing a centralized, digital repository that provides the same access to all reliable data across the supply chain, retailers can promise improved customer experience, competitive prices and a higher quality offering.
Smart Technologies Will Decrease the Amount of Time It Takes for an Invoice to Be Processed and Approved for Payment
Given the complexity of freight invoices, carriers need to wait weeks/months for invoices to be processed, which impacts their bottom line. But, with the increased investment in and use of smart technologies by companies along the supply chain, the amount of time it takes for an invoice to be received and pass audit will significantly decrease, enabling carrier invoices to be approved for payment sooner and carriers to be paid sooner. This will lead to better and stronger relationships between companies along the supply chain.
Tariffs and Trade Woes Mean New Supply Chain Opportunities in Southeast Asia
Bigger, more sophisticated supply chains will seek out new primary sources. In part due to the tension over tariffs with China, companies are moving their supply chains out of the country and building up new footholds in Southeast Asia. Aside from tariff concerns, companies are looking at overall cost of business and the availability of resources to meet their needs. Digital platforms with carrier networks will provide the logistics infrastructure enabling global companies to be more agile when designing and executing supply chains.
Maximized Capacity and Minimized Empty Miles
We will see a more concerted effort to reduce waste in the supply chain. Eliminating the empty miles and excess CO2 emissions will become a bigger focus for smaller companies as larger organizations use it as criteria when selecting supply chain partners. Major manufacturers, shippers and carriers have the clout to move the rest of the market. Smaller companies will invest in sustainable initiatives and the reduction of carbon emissions as a cost of working with major companies.
While Shipment Journeys Are Complex and Fragmented, Efforts to Improve the Flow of Products Will Take Precedence
All the data in the world doesn’t matter if you can’t execute on it. We’ve been talking about the potential of the digital supply chain for more than two decades. In 2020, the balance finally shifts from future potential to current benefits. Connected devices and IoT-enabled solutions are giving us more data than ever to make better decisions — connecting the legs of the supply chain path while simplifying information exchange. To improve the flow of products and information from point A to point B, we will see more shippers adding sensors on almost everything, not just the most expensive equipment.
In this increasingly complex industry, the supply chain never sleeps. With new challenges on the horizon, companies should equip themselves with the talent, tools and resources to navigate any disruptions and deliver real results. In 2020, automated technology and smart data will be table stakes to orchestrate an optimized supply chain with data-driven precision, agility and speed.
Glenn Jones is GVP, Blume Global.