Future Logistics: 5 Trends to Watch (and One You Can Probably Ignore)

Scot Phelps used his Tuesday DRI2014 session to illuminate the future of logistics and why supply chain and risk management professionals should pay attention. Scot Phelps headshot 2

Among the trends Phelps identified:

Transportation: Logistics are becoming more efficient, hence thinner, but could this be a risk to supply chain? Phelps points UPS’s practice of eliminating left turns from its driving routes to improve efficiency, going from 110 to 140 packages delivered each day, and other algorithm-based strategies.

Another thing to think about: while the spotlight has been on cable and Internet companies collecting customer data, the transportation companies know a lot about their customers by their orders as well.

Auto Manufacturing: To meet standards both in the U.S. and internationally, Volkswagon varies the top of the car depending on area, while the drive train and engine remains consistent. They take the Golf with the single global platform for all lines. By 2018-20, there will be 5 million cars made with the same platform.

It’s a smart way to mass-produce — but it also means if there’s a problem with supply chain, nothing can get made. For instance, a fire in Germany once burned up a polymer that every company used, halting production for weeks!

Makerbots: 3D printers are slowly but surely coming down in price — what was once $20,000 can now be bought for about $1,500, pretty affordable for a company that wanted an alternative to their supply chain for small plastic parts. If you’re in New York or Los Angeles, you can head to Staples to try one out!

Customization: Sneaker companies like Timbaland and Adidasare now giving customers a number of customization options — picking their own colors, uppers, laces, soles, etc. One is even offering to scan pictures the customer provides onto the shoe! Putting parts together isn’t much more complicated, and shipping is the only premium cost. What happens when we start customizing everything, as part of regular production process? In short, it can help align products to your organization’s needs.

Onshoring: For 10 years we were moving to cheaper places of production, but in practice, in most places that have cheap labor, the skillset is lacking. As a general rule, U.S. labor is more expensive, but also faster and with fewer production problems. There are also transportation costs and issues to consider. If you’re a retail company but can’t deliver a product because boat is stuck at port, that’s a problem! Onshoring shortens the transportation chain and amount of stops needed. 
But what about the future? One trend you probably won’t have to pay much attention to, Phelps says, is drones. Between travel distance and battery life, “they’re just not effective. That’s just silliness.” So drone-delivered tacos will just have to remain a fantasy, sadly.
On the other hand, the efficiency trend of the future may be in smarter packaging. Consistent packaging means more can be fitted onto a truck economically. There are already signs this will become more of an issue — such as FedEx’s decision to bill based on total mass, rather than only weight (think about how that would affect the cost of shipping, say, a big box of pillows).

 

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