Top 7 Supply Chain Trends for 2016

The global supply chain is in a constant state of flux, as global GDP growth, capital flows between nations, and the rise of mega cities change the way products move around the globe.

A few global trends affecting the supply chain:

  • After a quarter century of continuous growth, world exports plummeted in 2008 and are only beginning to bounce back.
  • Incomes in developing economies are rising faster than any other time in history.
  • As Western countries’ populations age, China is preparing to take its seat as the next world power.
  • New technologies are upending old business models and bringing new efficiencies to tired industries.

In the midst of all this economic, demographic and technological change, the logistics industry will continue to thrive. But it’s important to track how a changing global landscape will affect the supply chain at home and abroad.

Below is a list of the top 7 supply chain trends that logistics professionals should have their eye on as we approach 2016.

1. Collaborative relationships

For years supply chain experts have been predicting greater collaboration between logistics providers. However, recent advancements in information and mobile technologies have set the stage for truly integrated supply chain partnerships.

The ability to market unutilized capacity has spawned new virtual marketplaces for shared supply chain services.

Why is this a game-changing trend?

  • Availability of unutilized capacity
  • Reduced overhead through third-party partnerships
  • New revenue streams for asset-heavy companies

 

2. The Internet of (Small) Things

Gartner estimates the number of web-connected devices will reach 25 billion by 2020. Two-thirds of those devices will be embedded RFID sensors, the majority of which will be flowing up and down global supply chains.

Why is this a game-changing trend?

  • Supply chain visibility
  • Production line intelligence
  • Theft reduction

 

3. Real-time demand management

As the price of embedded sensors falls, more aspects of production, supply chain, fulfillment and sales will be monitored in real-time. As we move towards end-to-end visibility, point-of-sale data will inform production schedules. Likewise, raw materials price fluctuation will influence promotions and prices for the end-consumer.

Why is this a game-changing trend?

  • More efficient production schedules
  • More stable supply chains
  • Reduced waste

 

4. Information hoarders will become information sharers

Massive streams of data are taking business intelligence and analytics to a new level of sophistication. By analyzing “big data” and teasing out key messages, companies stand to profit handsomely from all of this data collection.

As more firms recognize the value of sharing their data sets, trans-network data systems will proliferate.

Why is this a game-changing trend?

  • Downstream data analysis reduces forecasting errors
  • As data analysis becomes more sophisticated, shared data sets become more valuable
  • Data management will require third-party, enterprise solutions

 

5. Decentralized, omnichannel fulfillment

The growth of e-commerce has forced established retailers to adopt omnichannel fulfillment practices. This creates an incentive to have smaller and more numerous distribution centers located near city centers. Large retail locations will turn into small show rooms with attached fulfillment centers.

Why is this a game-changing trend?

  • Real-time inventory tracking will be a necessity
  • Pick-and-pack technology companies will thrive
  • Asset-light e-tailers will disrupt big box retailers who do not adapt

 

6. Nearshoring

Nearshoring is when companies choose to move production closer to the end user, rather than setting up  factories in far-flung countries with historically low labor costs. As the global economy shifts, some manufacturers are restructuring their supply chains by “re-shoring” operations closer to home.

As labor costs in Asia and transportation costs rise, manufacturers are looking to bring operations closer to the end user. Nearshoring offers several advantages: less distant time zones, greater security over intellectual property, increased customer responsiveness and decreased turnaround times.

What are the reasons for nearshoring?

  • Rising labor costs in China
  • Technology has reduced the relative cost of labor
  • Potential for political instability and environmental disasters
  • Major time zone differences makes communication between U.S. and Asia difficult
  • Problems maintaining quality standards and guarding intellectual property and assets

 

7. Sustainability

The global population will reach 8.3 billion by 2030, with demand for food and energy increasing by 50% and water demand increasing by 30%. As demand for natural resources begins to outstrip easily available supplies, production costs will go up.

Why is this a game-changing trend?

  • Growing consumer concern about sustainability
  • Carbon-footprint regulations
  • Green technology opportunities

 

These  long-term trends that are already having an effect on day-to-day logistics, which is why it’s important for supply chain managers to stay up-to-date on the latest technologies that are helping logistics providers adapt to “the new normal”.

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