Your supply chain is your company’s life-blood. It’s how you keep the raw materials on hand that you need to produce your product, it’s how you deliver that product to your customers, and it’s always evolving. Technological advances, increased demand from customers for product delivery in a couple of days (or hours!), and internet-connected devices have created opportunities and put new pressures on supply chains. These changes are affecting everyone from corporate giants, like Amazon, to your locally owned hardware store.
Let’s take a look at four supply chain trends to watch in 2018:
1. Increased Demand for Warehouse Space
The recent competition between cities to be the site of Amazon’s second US headquarters is the most high-profile example of a trend that began a few years ago, to meet the demand for speedy delivery times. Large retailers are building large, centrally-located distribution centers to quickly fulfill orders they receive from customers. The multi-million dollar center planned by Grainger here in Louisville, KY is another example and highlights that this trend isn’t only about space; it’s about location, too. Distribution centers located in areas like Louisville are within a day’s drive of most Americans. This translates to intense competition for warehouse space. It’s also one reason why we’re expanding our own warehouse space here in KY and in Dallas, TX.
2. Internet of Things
Speaking of delivery, checking your order status has never been more convenient. You can now track deliveries from companies like Amazon with a few clicks, with time and location information for when it left the warehouse, when it arrived at and/or departed from shipping facilities, and when it was delivered. But the emerging Internet of Things could allow for a level of detail that will make the way we track deliveries today feel like the stone-age. With embedded RFID or GPS sensors you could watch your delivery traveling down the interstate, through the air, or across the ocean, and get more detailed information like the temperature of the shipping container or how long it sat in the loading bay. This level of data will lead to increased efficiencies and more profitable partnerships with suppliers. Learn more about this trend in our blog, How the Internet of Things is Revolutionizing Supply Chains.
3. Investment in Innovation
While focusing on current needs and ROI, it is important to keep an eye on the promises of the future, many of which feel like they’re right around the corner. Driverless cars and trucks are one example in the news of late. Companies like Tesla have been in the headlines for advancing driverless car technology over the past few years, and they were in the news again in late 2017 when they unveiled a fully electric semi-truck, with a range of 500 miles per charge and semi-autonomous driving technology included standard. And, based on the evolution of their passenger cars, you can bet Tesla’s semi-autonomous technology will become fully-autonomous sooner rather than later.
The full impact of this technology on supply chains remains to be seen, but these vehicles offer an example of how innovation is turning supply chains on their heads to create new opportunities and significantly affect the way we store and move materials.
4. Risk Management
You depend on your supply chain to produce and deliver the products your customers want, and any disruption can cut deeply into your balance sheet and leave you with disgruntled customers. Often, the only thing you can predict when it comes to a supply chain disruption is that, one way or another, a disruption will happen. For instance, 2017 saw multiple hurricanes wipe out production in Puerto Rico, which led to a nationwide shortage in certain medical supplies.
On top of natural disasters, labor and civil unrest, fire, piracy, cyber-attacks, adverse economic conditions and more can cause disruptions. Planning proactively is critical to keeping your products flowing. For example, redundant distribution centers and suppliers can help in the event of a regional disruption. Learn more about mitigating supply chain risks in our blog, What is Supply Chain Risk?.
Keep your eyes on these emerging supply chain trends, and contact us for creative supply chain solutions.