2019 was a year marked by major disruptive events that brought uncertainty and turmoil to supply chains around the globe. The US versus China trade wars, ongoing Brexit concerns and a myriad of natural disasters all significantly impacted the cost of doing business worldwide.
On the other hand, technologies like autonomous vehicles and blockchain helped with elevating supply chains to new levels of efficiency and productivity.
“Notorious for its heavy use of manual processes and large amounts of data stored in different ways and in different places, the logistics industry has perhaps the most to gain from implementing new technologies and following the most innovative Supply Chain and Logistics technology trends.” – TransMetrics
So, what will 2020 be like for businesses? We’ve dusted off our crystal ball and ventured some predictions on main supply chain trends to look out for next year:
Automation
Automation is rapidly changing the supply chain. It can be applied to most operational processes to increase efficiency, speed, reliability and accuracy. We have seen many companies adopting automation in 2019, whether through IoT, AI, AMR, Blockchain or MHE. A recent study found that more than 50% of current logistics investments are allocated to supply chain technologies.
Research firm LogisticsIQ estimates that the global Warehouse Automation Market will continue to grow from $13 Billion in 2018 to $27 billion by 2025, driven by various key industrial and macro trends.
We predict that in 2020, manufacturing, retail, distribution and logistics businesses will mainly invest in the following supply chain technologies:
IoT
The Internet of Things has improved the connectivity of existing technology and paved the way for the rise of new industrial solutions. IoT technology can improve visibility in production, inventory management, and predictive maintenance.
Many businesses will leverage the power of IoT driven by the availability of cheaper and more reliable solutions, the substantial growth in data storage and processing capabilities, and the emergence of AI.
AI
Artificial Intelligence (AI) is growing beyond its original early adopter excitement to offer wider tangible use cases that deliver real business value. AI can analyse and predict business patterns to automate lower-level decision-making and balance supply with the forecasted demand.
According to Gartner, by 2021 AI augmentation will create $2.9 trillion of business value and lead to an increase of 6.2 billion hours of worker productivity, globally.
AMR
Autonomous mobile robots (AMR) are set to majorly contribute to the digitization of small and medium warehouses, driven by the high demand created by the growth of e-commerce sales. Although slower than Automated Storage and Retrieval Systems in terms of pick rate per hour, their increase in popularity can be attributed to lower cost and quicker / more flexible deployment.
AMRs are undoubtedly augmenting warehouse management systems’ (WMS) capabilities, thus 2020 should bring more partnerships between these two technologies, changing the warehouse and distribution landscape.
Blockchain
We can see your eyes rolling and hear the heavy sigh: blockchain again?! Yes we know, it’s not a new trend at all... However, the increasing adoption of blockchain in supply chain is worth mentioning and will continue to rise in 2020.
Blockchain could have a transformative impact across supply chains in five to seven years, and has the potential to transform and disrupt supply chain. - Gartner
Blockchain can manage any form of exchange, agreement, or tracking process. In a nutshell, it is a distributed, digital ledger. Because it is decentralised, the blockchain ledger does not depend on any single entity for safekeeping.
In a supply chain, it can apply to anything from self-executing supply contracts to automated cold chain management. With data explosion is at its peak, this technology is promising a unified platform for increasing transparency and tracking the end-to-end product journey.
WCS and MHE
Adoption trends prove we’re on the cusp of the age of automation. Labour issues and the increasing need to improving throughput are the main forces driving adoption. Automating material handling equipment (MHE) can streamline operations and significantly improve safety.
“The combination of sensors, scanners and RFID tags with warehouse control systems and automated material handling equipment is increasingly seen as the way forward in terms of warehouse safety and operational efficiency. The same technology allows real-time identification and tracking of inventories, further helping to streamline the logistics process and reduce error potential.” – Robotics Business Review
With the hefty investments behind warehouse automation, it’s critical to put the right systems in place to optimize the robotics and fixed hardware that require immediate – and big – returns on investment.
Today, most warehouses run their operations smoothly with the support of a Warehouse Management System (WMS). A WMS offers capabilities to control inventory and the business logic that drives people and processes within the distribution centre.
However, a WMS alone won’t provide the requirements needed to control all aspects of MHE deployments, let alone the integration across multiple MHE technologies such as conveyors, sortation, AGVs, etc. A warehouse control system (WCS) can bridge the gap between the WMS and MHE softwares. It operates and manages the material handling equipment as well as providing the conduit to programmable logic controller (PLC) scanning for machine inputs.
As more companies invest in automating MHE in 2020, we will see a great opportunity for WCS and WMS vendors.
Last-Mile Technology
“The emergence of e-commerce saw a massive concentration of attention on last-mile logistics, as established retail giants, manufacturers, and e-commerce startups alike raced to meet the demands of newly empowered consumers and business buyers. Driven by necessity, the last-mile sector has come a long way, but as yet, there is no sign of the pressure letting up.” – Logistics Bureau
The retail omnichannel reality epitomises consumers’ need for instant gratification. Fast delivery isn’t a differentiator anymore; it’s an expectation. For years, companies have been investing on streamlining their last-mile solutions with autonomous vehicles.
2019 saw all major retailers racing to trial technology ranging from drones to self-driving trucks and everything in between. Self-driving cargo delivery bots are operating in several US universities, and more recently a self-driving truck completed what appears to be the first US commercial freight cross-country trip, delivering butter from California to Pennsylvania in three days. Moreover, the US Federal Aviation Administration granted UPS air and Alphabet’s Project Wing carrier certification back in April. In October, Google completed its first ever actual package delivery by drone.
This race is not at all going to slow down next year with most major players promising to start offering their autonomous delivery services commercially in 2020. Walmart, for example, just partnered with Nuro’s robot cars to deliver groceries next year.
Although the US is pioneering trials for drone and autonomous vehicle delivery, many other countries are also investing in this technology. Finally, a study by McKinsey & Company indicates that up to 15 percent of new cars will be autonomous by 2030.
Sustainability
Sustainability was at the forefront of business conversations in 2019 as customers and investors are increasingly pressuring companies to up their environmental responsibility game. Throughout this year, many big brands joined the move towards greener business practices. To name a few examples, McDonalds cut down its energy wastage by 25% with energy-efficient appliances; Dell promoted a recycling program for safe disposal of their products; Google built the world’s most energy efficient data centres on top of heavily campaigning (and funding) green energy projects. Furthermore, the number of high street fashion retailers committed to sustainability has also soared in response to the widely reported rise of re-sale (or second hand) fashion.
Companies seeking greener practices are realizing that some of their greatest challenges and opportunities often lie outside their own stores, distribution centres and manufacturing plants. As Environment + Energy Leader reported, “supply chains are responsible for up to four times the greenhouse gas emissions of a company’s direct operations”. Thus, to make a significant environmental impact, businesses must revisit their entire supply chain.
Since environmentally responsible practices are not only good for our people and our planet, they are also key to building a positive brand perception and improving long-term profitability, in 2020 we’re likely to see more businesses using supply chain sustainability as a strategy to win stakeholders support and customers’ loyalty.
“Green logistics is just one of the many supply chain trends affecting warehousing. Eco-friendly warehouses, for instance, feature advanced energy management systems that use timers and gauges to monitor the usage of electricity, heat, water, and gas all over facilities. These systems help prevent excessive waste of resources. Electric and solar-powered vehicles are also seeing more use in supply chains; these vehicles help reduce the overall carbon footprint of supply chains.” – Finances online
What are your predictions?
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