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January 14, 2016

Top 5 Supply Chain Trends 2016

What will 2016 have in store for the global supply chain? From technology to collaboration, expect to see some major shifts happening (or continuing) this year. We've checked out some industry leaders' predictions for 2016 and compiled our top five below. Please note that each trend has been curated directly from these companies' original posts. You can find their full trend lists beneath each point. 

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1. Augmented Reality

By Cerasis

Is augmented reality the future of supply chain? DHL Trend Research certainly seems to think so when it comes to this 2016 Supply Chain Trend. DHL looks at the following ways Augmented Reality will provide benefits to the supply chain as listed from the Elementum blog:

1. Picking Optimization: Each picker sees a ‘digital picking list’ on a heads-up display (picture Google Glass visuals). When someone selects an item, the display calculates the most efficient path through the warehouse, guides that person to the package, scans it as ‘picked’ into the Warehouse Management System, and immediately directs the picker to the next closest package.

2. Facility Planning: You’ll be able to visualize your next warehouse in full-scale before even beginning construction. You can model workflows through the facility, test measurements, even “field test” rearrangements—all virtually. Not only will it save you money, it’ll allow you to fully experience what you’re trying to do, before actually doing it.

3. Freight/Container Loading: Augmented reality could replace the need for a physical cargo list and load instructions. How? By allowing to see loading instructions on a heads-up display with step-by-step instructions on how to most efficiently load a container given the size, dimensions, and weight of the packages going into it.

4. Dynamic Traffic Support: Most delivery trucks already come equipped with GPS navigation, but AR systems are the natural successors. Heads-up and windshield displays would allow carriers to efficiently re-route shipments on the fly without causing any significant distraction to the driver. The display would show the driver critical information including cargo temperature (especially important when transporting medical devices or other fragile goods), gasoline efficiency (which changes based on the weight of the truck!), and a variety of interesting and critical information.

Check out Cerasis' complete list of 2016 trends here.

2. Nearshoring 

By Cargomatic

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

Check out Cargomatic's complete list of 2016 trends here.

3. Sustainable Supply Chains as Competitive Advantage

By Capacity LLC

We’ve all seen the scrutiny of supply chains at the highest level, whether it’s Apple’s demands from Foxconn or McDonald’s explaining where its ingredients come from. As consumers take more responsibility for their purchase decisions and factor in ethical supply chains, companies that satisfy this need will stand out from their competitors. This may be one of the more of a slow-burn supply chain trend, but socially responsible, environmentally friendly and legally compliant operations will continue to win market share.

Check out Capacity LLC's complete list of 2016 trends here.

4. Realization of the Industry 4.0 Vision

By Clearpath Robotics

In Gartner’s top 10 Strategic Technologies for 2016, analysts predict that the Internet of Things will have significant growth and impact over the next year in particular. Automation is only a piece of the puzzle when considering Industry 4.0; these evolutionary ‘smart factories’ will emerge with interconnected, centrally controlled solutions that are starting to be available to the marketplace. These solutions not only communicate with other material transport units (i.e. the fleet) on the factory floor, they also communicate with people by providing perceptive light displays and integrating into the existing WMS to receive dispatched tasks. In an interview with Forbes, Rethink Robotics CPMO Jim Lawson summed things up quite nicely, “We’ll see an aggressive push by sector leaders to accelerate the realization of the Industry 4.0 vision. Specifically, big data analytics combined with advances in cloud-based robotics.”

Check out Clearpath Robotics' complete list of 2016 trends here.

5. Collaboration Continues to Take Center Stage for Efficient Supply Chain Management

By Cerasis

Speaking of supplier collaboration, many companies have taken steps to improve the efficiency and effectiveness of their supply chain operations by automating key processes beyond procurement to areas such as with orders, invoicing, and payment. This is with good reason backed by data.

According to Emily Rakowski of the Procurement Leaders:

Research shows that companies who have embraced digital strategies are seeing real value, boosting revenue more than nine percent, market valuation more than 12%, and profitability by over 26%.

Led by procurement, many of these companies will take things to the next level and enable new processes that drive more collaborative, intelligent, and transparent ways of operating. Processes like dynamic discounting that allow them to secure discounts that can be reinvested in research and development and funding to expand their business. Contingent workforce management through which they can identify and manage highly specialized resources needed to develop that next-generation product. Or joint solution development where they get innovations that enhance their products, and their partners get something they can market to others in the industry.

By ensuring supply chain entities work together in a smarter way, businesses will be able to benefit from more efficient and effective operations.

Some benefits realized from more collaboration in the supply chain include:

  • Collaboration Increases Share of Wallet: This simply means over time you gain a deeper relationship, thus in the trust of the customer, you gain more of the business.
  • The Longer the Collaboration, the Lower the Costs: Over time, trusted collaboration begets an understanding so intimate, you begin to understand each other  and almos "finish each other's sentences." Simply put, you know internal processes and have a work flow that minimizes resources spent on administrative or time intensive tasks.
  • The Power of Word of Mouth: The old saying is true "If you do right by someone (in business), they will do right by you." Referrals are the life blood of any business, and if trust and collaboration is a part of a business relationship, a supplier, OEM, or the 3PL can refer you to get more business.
  • Innovation through Long-Term Collaboration: This goes back to the second point. The more you understand the pains and the processes of the client the easier it is to lead towards innovative ways which lead to further hard and soft cost savings.

Here is a great video from Dimension Data about the Collaborative Supply Chain that will drive the point home:

Do you agree with these supply chain trends for 2016? What changes do you see on the horizon? Share your thoughts in the comments section below!

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Filed Under: Supply Chain Management