The Future Trends In The Supply Chain Industry

The year 2020 marked not just the start of a new year, but also a new decade. In the previous decade, the supply chain industry turned to technology for growth, and the trend will only pick up further momentum in the coming years as businesses vie for the top spot. Between the temptation of gaining short-term benefits and the responsibility of achieving long-term goals, the industry will inevitably look up to technology more than ever.

So, what trends could dominate the supply chain industry in the coming years? Let’s take a look.

1.      Automation

While the world deals with more global problems than ever before, the stress on mechanical efficiency is ever-increasing. End-to-end, pragmatic use of automation is needed to drive scalable efficiencies. Unlike popular perception, automation is not going to make human labor obsolete. Instead, it frees human labor from repetitive tasks and allows people to work on more critical decision-making.

Here are some ways automation has impacted the supply chain industry:

Robotics

The supply chain industry is facing a labor shortage that needs an immediate solution. A push towards robotics could emerge as just what who? All companies? Humans? Labour market? need. Robotic Process Automation (RPA) can see wider adoption for automating repetitive tasks. On the other hand, heavy labor will no longer require human labor. Instead, Autonomous Mobile Robots (AMRs) would be employed to do the heavy lifting. A 2019 warehouse and distribution center survey conducted by Peerless Research Group suggests that manual picking fell from 76% to 72% last year while many warehouses are already using robotics to fasten the loading and unloading of goods.

Artificial Intelligence

Almost all industries have realised the power of artificial intelligence in recent years. A Gartner survey last year showed that 37% of companies now use some form of AI (a 270% increase since 2015). The supply chain industry is no different. The use of AI in the supply chain industry has shown great promise. By processing previous data, AI algorithms could automate many actions within the supply chain. AI can also reduce the dependency on the human element for making decisions across the supply chain. While AI cannot and should not replace human capital, it has great potential of working together to make decision-making faster and more efficient.

Smart Contracts

Smart contracts are automated, pre-determined work contracts. These contracts are automatically executed when certain conditions are met. Naturally, they speed up the supply chain operations and save both time and money. Currently, smart contracts are limited to documents, invoices, and bill payments. However, advancement in automation can make smart contracts even more versatile.

2.       Blockchain

For many years, blockchain has been touted as the next big thing for the supply chain industry. While the implementation has not been as fast as was expected, blockchain has carved a niche for itself. The Food and Beverage (F&B) industry has widely adopted blockchain for traceability, a survey from Juniper Research in a recent CNBC article suggests that blockchain can save them $31 billion by 2024. The technology will definitely expand its reach in the coming years.

Some advantages of using blockchain in supply chains include:

Transparency

The primary use of blockchain in the supply chain industry is for the transparency it offers. With the help of blockchain, all end-to-end data could be combined on a single platform, available to everyone with the right access. This allows carriers, forwarders, logistics and shipping access to all of the  same information. In simple words, blockchain allows for the streamlining of data, and boosts transparency across the supply chain.

Data Storage

Blockchain acts as a digital ledger that is immutable and incorruptible. Information, once stored on a blockchain, cannot be altered or manipulated. For sensitive data like invoices and the Bill of Lading, security is a priority. Using blockchain for data storage across the supply chain will also see broader adoption in the coming years.

Payments

The payment aspect of blockchain implementation has not been greatly utilized, but it certainly has potential. Particularly in the case of cross-border trade, cryptocurrencies could be a powerful tool for quickly settling payments. Smart contracts and cryptocurrencies can work together to automate payments at various stages of the supply chain, significantly improving efficiency.

3.       Smart Warehouses

The overall push in the supply chain seems to be towards making “smarter” warehouses. The term “smarter” implies a better and more efficient way of doing things with the aid of technology. While the concept talks of warehouses, “Smart Warehouses” actually encompass the entire supply chain end-to-end.

IoT and RFID

Internet-of-Things is one of the technologies that has only started giving a high ROI to the supply chain industry. In the cold chains, IoT facilitates continuous monitoring of temperature from remote locations (and sharing that data across the supply chain with blockchain). The Pharmaceutical industry, which suffers from a similar problem of temperature-control, has also started adopting IoT and blockchain for better transparency.

But this is only the beginning. IoT and RFID together have a vast potential of increasing visibility across the supply chain. With continuous monitoring 24×7, the data could be used for analytics that helps in future decision-making.

Location Tracking

Another aspect of smarter warehouses is keeping track of the shipment across the supply chain. This is achieved with the help of geo-tagging and GPS. Companies could also pre-set specific actions that would be triggered when the shipment reaches a particular location. While GPS is already used in the supply chain industry, geo-tagging can become more common soon.

4.      Flexible Supply Chain

Dozens of factors work across the supply chain, end-to-end. Traditionally, any of these factors could hamper the entire supply chain and cause huge losses. But today, the supply chain industry is moving towards greater flexibility. A certain agility is sought that could absorb minor issues, foresee future upheavals, and customize according to customer requirements.

Machine Learning (ML) and Analytics

Traditionally, machine learning is used with AI for automating tasks. However, a new trend of embedded machine learning can be a game-changer. In warehouse management, machine learning can offer insights like time required for specific tasks and inventory requirements. On the other end, ML could be deployed in transportation and perform analytics. The insights from it can also freight companies to save costs and/or improve efficiency.

Layering/Integration of Technology

For many years, the supply chain industry has treated technology like any other service. This has started to change now; today, every service in the supply chain uses technology. At the same time, the integration of technologies has become an essential goal for service providers. This trend has shown tangible results and is expected to continue further. Technologies from distinct operations within a supply chain, if appropriately integrated, only improve efficiency. For instance, logistics companies can benefit from blockchain in the form of SaaS, without the need for a particular blockchain infrastructure.

Conclusion

The supply chain industry is evolving at an unprecedented pace and the aforementioned trends suggest that with technology becoming integral to how supply chains operate, things will only get more exciting in the coming times.

Authored by

Dan Weinberger, UN Supply Chain Expert and CEO of Morpheus.Network