Blog postsApril 14, 2016
5 Big Supply Chain Trends
The FLEXE Blog is dedicated to keeping our friends in the logistics industry informed about new technologies and ideas that are transforming the nature of the business. There are so many advancements and changes occurring within the supply chain it can be pretty tough stay informed. So, occasionally we like to step back highlight multiple innovations and trends that are likely going to have an impact on the way most of us work. Here are five impactful logistics & supply chain trends you should be aware of.
1) Mobility devices for warehouses and transportation
Mobility devices are becoming more prevalent throughout the supply chain, enabling more accurate, efficient and cost-effective ways of handling tasks both inside the warehouse and out on the road. In the warehouse, barcode scanners, RFID readers and other handheld devices are streamlining a variety of shipping and inventory processes. They enable real-time schedule updates, scanning of product shipment, providing much more accurate inventory management information, and more precise handling of materials allocations. They also scan pick lists and manage help shipment tracking data.
In transportation, amidst increasing regulatory burdens, capacity crunches, and driver shortages, mobile devices are providing some positive balance. Dedicated mobility solutions are making the work more efficient by monitoring assets and human resources, routing and scheduling trucks, and enhancing service levels provided by customer-facing employees.
2) Omnichannel logistics
Omni-channel is obviously a super hot topic driving lots of changes in logistics. Retailers know they need to make operational changes and investments in order to establish a unified approach to online and brick and mortar sales. They’re essential for staying competitive. But if you’re not undergoing change in this area yet, you will. Many retailers have yet to make the heavy investments in the technologies they need to fully execute their omni-channel strategies, because what’s best from an immediate financial standpoint isn’t necessarily what’s best for the customer (or vice versa). Their hesitation is most often rooted in the conundrum of legacy technologies that are too expensive to replace across the board and often it’s too difficult or expensive to integrate them with the new. However, E-commerce continues to grow and, with that growth, customer expectations continue to evolve (and at a pretty quick pace). Omni-channel retailers have to follow that trend in order to remain relevant. If they’re not all over it already, they’re starting to figure it out right now.
3) Increasing transportation costs
At the end of last year, UPS and Fed Ex announced shipping rate increases of just under 5%. Earlier in the year, they tacked on two additional fuel charge increases. You can expect other carriers to follow suit if they haven’t already. Most held tight back when fuel prices were at their peak, in order to remain competitive, but most are likely view their rivals’ rate hikes as a signal that it’s time to correct. Add in the rising costs of trucks and a growing shortage of drivers and you have a recipe for noticeably higher shipping and transport costs. You may already be feeling it.
4) Ballooning warehouse costs
The increased cost of transporting product is one of the factors that’s driving up the cost of warehouse space too, as more companies expand their warehouse networks to get product closer to their customers. E-commerce demands, strong U.S. imports and a strong dollar are also contributing to ballooning warehouse leases. All in, the end result is that, country-wide, demand for warehouse space is outpacing the supply, which has experts predicting a ~4% (avg.) hike in the cost of warehouse space this year.
5) Supply chain sustainability
Supply chain sustainability is becoming more and more important as more companies focus and report on their sustainability efforts. While the carbon footprint of your distribution warehouse may seem like a small concern, the shipping and receiving of products could have an impact that you will need to address if you haven’t already. If this growing trend hasn’t yet arrived at your company, it’s just a matter of time (how much time depends on the type of company). Eco-friendly initiatives are becoming more important in every industry as consumers demand more social responsibility from corporations. Many companies that own their own fleets are jumping in early to evaluate and address emissions concerns. And, in most cases, large public companies are starting to measure and monitor sustainability within their warehouse network already or they will in the near future, because many of them now publish quarterly sustainability reports. Smaller public companies will likely follow behind a little and then private companies. In addition to public pressure, the EPA is expected to present strict emissions regulations this year, as well. When companies make a commitment to sustainability initiatives, their Logistics departments are typically tasked with identifying sustainability solutions for their unique area of business.
Industry-advancing trends like omni-channel retail occasionally lead to negative trends like dwindling warehouse space and increased warehouse costs. Conversely, those negative trends often spark creative and innovative cost-saving solutions. It’s that cycle that makes logistics one of today’s most rapidly-evolving industries.
What other logistics & supply chain trends do you see emerging during the rest of 2016? Let us know in the comments!
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