The ability to expect the unexpected is essential for the supply chain strategies of the future. This conclusion is highlighted in an extensive future study conducted on behalf of Deutsche Post DHL. Professor Richard Wilding adds: "Pressure on resources will set the agenda in the future." Consafe Logistics’ experts believe that flexibility will be the strength of the future.
"To expect the unexpected shows a thoroughly modern intellect," said the Irish writer Oscar Wilde. Deutsche Post DHL has conducted a large-scale future study that charts probable developments from now until 2050 and their consequences for logistics. The scenarios provide a strong basis for developing the right strategies for a company, or in other words, "to expect the unexpected".
Five visions for the future of logistics
"Delivering Tomorrow" is the name of Deutsche Post DHL’s take on the challenges of logistics in the year 2050. The work for this project is based on a research panel and it has resulted in five visions for the future. A common element of the visions presented is that the demand for logistics will increase, while logistics providers face a range of challenges:
- Untamed economy – impending collapse
As the need for logistics increases in a world that demands rapid exchange of goods between centres of consumption, climate changes and the resulting natural disasters will more frequently pose an obstacle to logistics and challenge logistics providers.
- Mega-efficiency in mega-cities
A global super-grid between the world’s mega-cites will require gigantic transport vehicles, including trucks, ships, aircraft and even spacecraft. Logistics providers must be able to handle all logistics for the mega-cities’ airports, hospitals, shopping centres, etc.
- Customised lifestyles
Logistics providers must organise the entire physical value chain in a world where consumers can design their own products in 3D. This will lead to a decentralisation of production in which only raw materials and data are distributed globally. A strong regional logistics capacity, together with a high quality last mile distribution network, will be key success criteria for logistics companies.
- Paralysing protectionism
High energy prices and a dramatic lack of resources will lead to tensions between countries and trading blocs. Governments will see logistics as a strategic weapon and logistics providers in countries that are not members of trading blocs will serve as intermediaries in international trade.
- Global resilience - local adaptation
The top priority for the logistics sector will be security of supply and a backup infrastructure to ensure reliable transport in unstable and turbulent times. Instead of complex just-in-time deliveries, enormous warehouses will be located close to manufacturers as indispensable buffers.
Flexibility will be the new key
Ronald Schepers and Michael Barding, sales managers for Consafe Logistics in Holland and Denmark, respectively, agree with many of the conclusions of the future study. "Qualified future scenarios are extremely important to companies’ process of developing competitive logistics strategies to meet the challenges of the future," says Ronald Schepers, adding: "The most important feature is to be prepared for changes. If a company can create an attitude and culture that embraces change and rapid adjustments, it will be well equipped for the future. I believe that training change management skills on all levels is the most important investment that companies can make."
Michael Barding has worked in logistics for 22 years and he recognises that the pace of change is only moving in one direction – faster and faster. "Climate, customised lifestyles, globalisation, protectionism, etc. all contribute to increasing pressure on logistics, and the only effective response is high flexibility. The IT solutions and technologies are available – it is more a matter of the human factor being able to constantly think outside the box and to incorporate flexibility into the strategy."
Pressure on resources
According to professor in supply chain strategy, Richard Wilding from Cranfield University, the biggest challenge facing supply chain managers is a lack of resources. These resources include raw materials, cash, land, competent manpower – and even water is becoming a rare and undervalued resource. But the first and foremost concern is energy.
"One solution to the challenge is rethinking the way we use resources. Instead of the consumption model of purchase-use-dispose, we need a more sustainable model where resources are shared or rented. Does every home need its own lawnmower? Do all companies need their own warehouse, their own factory, and their own fleet of vehicles? Or could asset sharing and collaborative working increase efficiency and reduce wastage and transport utilisation?" asks Richard Wilding.
Six recommendations for logistics managers
The experts’ most important recommendation is an open, flexible and innovative approach to strategy and practical solutions. Although there is clearly no fixed script for how companies should tackle the challenges of the future, the following six practical steps are suggested as possible measures:
- Invest in the development of employees’ competencies, both in terms of basic logistics and relationship skills.
- Consider more local or regional production, arranged in a sustainable manner.
- Share assets with partners and even competitors. www.co3-project.eu is an example of so-called horizontal cooperation in transport capacity.
- Explore economy of scale measures such as larger ships and trucks.
- Examine the opportunities for postponement and mass customisation strategies, where the product’s base components are manufactured serially in low-cost countries, with customer adaptation at the last minute and close to the end customer.
- Think about material reuse and recycling in the product development phase and consider business models where the product is rented out while product liability remains with the supplier.