4 Key technology trends that will impact supply chain execution

The fast pace of the digital revolution is having a profound effect on the supply chain, and will have a disruptive impact in the coming months and years. Here are four trends and how they’ll help companies boost efficiency, productivity and competitiveness.

Internet of Things: Information integration will streamline the supply chain
Internet of Things (IoT) is a hot area at the moment, with companies positioning themselves to deliver solutions for smart cars, smart homes and smart cities. It’s poised to make the supply chain industry smarter, in both the short and long term.

Research from McKinsey Global Institute1 found that in 2025 IoT will have a total economic impact of between $2.17 trillion and $5.75 trillion across factories, retail environments, logistics and navigation – key supply chain areas.

This value will come from productivity and efficiency improvements – from predictive maintenance and quality control to warehouse, fleet and inventory management. Sensor networks, intelligent accounting and RFID will help optimisation and planning in all areas. Manufacturers and distribution centres will be able to link their operations to what’s happening in-store, and refine their goods flow and processes accordingly.

RFID. Time to make that impact
For more than 15 years we’ve been predicting that RFID will become mainstream thanks to the ability to track each item’s precise location through its RFID tag. People in our industry have hyped about how tags will make it easy to collate key product and logistics data from the manufacturer, through the distribution centre, ultimately transferring directly to the retailer’s own ERP and stock management systems. The problem has previously been the price, but with the advent of millions of machines talking to each other (or so the proponents of IoT tell us), the chips are about to fall in price – and into place.

So finally, staff will fulfil the promise of taking stock using sensors connecting to the RFID tags, eliminating the need for manual counting. As IoT quickly takes hold (and I’m sure it will) sensors will track inventory by monitoring weight and height, triggering automatic re-ordering when customised conditions are met. Store managers will be able to optimise shelf space based on accurate consumer behaviour data, because sensors will track customer habits as they browse.

Accurate data and increased automation will improve margins
RFID is one key to IoT because it makes it easy to identify individual items and track their exact location. However, even without the wider integration with IoT, it offers substantial benefits for retailers, manufacturers and distributors.

Already widely used for retail apparel, RFID has seen a 25% increase in tagging year on year. This trend will continue. Retailers benefit from 95% inventory accuracy, improved sales, decreased out-of-stocks, increased margins and expedited returns, according research from the RFID Lab at Auburn University2.

The technology will soon see substantial growth among manufacturers, who will benefit from streamlined logistics, lower inspection costs and better planning. The 2014 GS1 US Standards Usage Survey found that 48.2% of manufacturers were currently implementing RFID, with another 21.1% planning to implement it this year.3

Warehousing and distribution centres will also come on board as penetration increases among manufacturers. For example, RFID tags will enable inspectors to locate mis-picks quickly, and even tell them which box on which pallet contains the error. The added depth and volume of information will feed into warehouse management and ERP systems to streamline everything from receiving and storage through to picking, packing and loading.

3D Printing: The nexus of fast lead times and low inventory requirements
At present, 3D printing is primarily in prototyping and small volumes – the technology isn’t at the stage where we can mass produce goods economically. This capability, however, is very close.

According to a DHL Supply Chain Matters survey, 22% of manufacturers plan to adopt 3D printing in next 3 years, with an additional 30% planning do to so in the next 5 years4.

The rise of 3D printing will have two principal implications for supply chain management.

First is the rise of re-shoring – the technology will reduce reliance on low-cost manufacturing centres overseas, eliminating many of the lead time and quality issues companies have grappled with recently.

Secondly, companies won’t have to tie up assets or space with inventory. Warehouse requirements, and the whole just-in-time and Kanban cultures, will change drastically because new products will be made to order – in many cases at point of sale.

Drones: Re-defining fast delivery
With the rise in omni-channel retailing, delivery speed has become a crucial aspect of the consumer experience.

Nowadays, people tend to hate having to go to the shop to pick up goods. But not getting deliveries on time, or having to wait between 2.00pm and 10.00pm for a delivery, also destroys the shopping experience. Some delivery experiences are bordering on awful, and it can destroy loyalty to even the strongest brands.

This has led to current trends such as a rise in 3PL companies, who act as an outsourced delivery solution for retailers.

Drones will take this a step further, eventually making a next-hour delivery service viable. There are many regulatory, safety and environmental issues still to overcome in this area, but major companies such as Amazon, Google and Sony are known to be investing in drone research and development.

Making the unsustainable sustainable
In a recent conversation with Magnus Qvant, CEO of Resilient Regions in south Sweden, he was passionate about how these new innovations could reduce the burden of traffic and its associated problems on our city environments. While the trend is to reduce the flow of traffic, some major chains have relocated their stores and delivery centres right in the middle of large cities, creating greater logjams as both consumers and suppliers feed the store.

Magnus sees a reverse “shops as showrooms” trend as the answer, where several chains combine their capacity to deliver all goods bought directly to shoppers’ homes within an hour of them returning from the shopping mall. The logistical challenge is of course in the coordinating of deliveries from all centre stores.

Food shopping has already begun this trend, but Magnus sees a quick transition to autonomous logistics using driverless vehicles to deliver to chilled goods receiving areas in residential buildings.

All of course controlled through RFID, manufactured using 3D printing (although foodstuffs may be a way off) and delivered by drones.

See you in the near future.

 


Source

  1. McKinsey Global Institute, The Internet of Things: Mapping the Value Beyond the Hype, June 2015. (http://www.mckinsey.com/insights/business_technology/the_internet_of_things_the_value_of_digitizing_the_physical_world)
  2. Logistics Management ‘RFID gains traction with retailers and manufacturers, says study,’ 25 March 2015. (http://www.logisticsmgmt.com/article/rfid_gains_traction_with_retailers_and_manufacturers_says_study)
  3. Logistics Management ‘RFID gains traction with retailers and manufacturers, says study,’ 25 March 2015. (http://www.logisticsmgmt.com/article/rfid_gains_traction_with_retailers_and_manufacturers_says_study)
  4. Supply Chain 247, ‘The Implications of 3D Printing for the Global Logistics Industry,’ 23 January 2014. (http://www.supplychain247.com/article/the_implications_of_3d_printing_for_the_global_logistics_industry)
2017-03-01T15:01:51+00:00 June 15th, 2016|Article, News|