2018 Trend #1: Increased Focus on Cost-to-serve OK\u2026 so this is almost a prediction, but it\u2019s a topic on which I feel qualified to speculate, and I do so with good reason. The burgeoning growth in omnichannel supply is great news for consumers and even enterprise buyers, but it also continues to add considerable complexity for supply chain organisations. In many cases, supplying companies have taken an \u201cImplement first. Ask questions later\u201d approach to multi-channel and omnichannel strategies in their haste to avoid losing sales to ecommerce giants like Amazon. One of the key risks involved in such an approach is that certain sales will undoubtedly be unprofitable, and that\u2019s an untenable situation for supply companies to remain in.<\/p>\n\n\n\n
In many cases, supplying companies have taken an \u201cImplement first. Ask questions later\u201d approach to multi-channel and omnichannel strategies in their haste to avoid losing sales to ecommerce giants like Amazon. One of the key risks involved in such an approach is that certain sales will undoubtedly be unprofitable, and that\u2019s an untenable situation for supply companies to remain in.<\/p>\n\n\n\n
Hence it will be more important than ever to perform detailed cost-to-serve analyses<\/strong>, not just to understand customer and product profitability<\/strong>, but also to determine the economics of the various order-to-cash pathways<\/strong> that make up the omnichannel supply chain.<\/p>\n\n\n\n Of course this also means that cost-to-serve (CTS) analysis becomes more complex<\/strong> in an omnichannel environment, but that won\u2019t stop companies from homing in on CTS and other detailed cost evaluations. This in turn will ensure another current trend will strengthen through 2018\u2014the use of advanced supply chain analytics<\/strong> technology.<\/p>\n\n\n\n Fear of the cloud is diminishing as concerns over data security give way to the desire for fast, flexible, high-powered computing<\/strong>. As legacy systems are retired, companies are replacing them with on-demand, cloud-based data solutions<\/strong> and services. This trend is driven by the need for supply chains to become more responsive and for management teams to better understand cost drivers in logistics activity.<\/p>\n\n\n\n These objectives are getting tougher to achieve without digital assistance, and cloud technology is gaining favour as a fast and relatively inexpensive route to analytic capabilities<\/strong>, not only for large multi-national corporations, but also for small and medium sized businesses, which are beginning to find these capabilities within reach.<\/p>\n\n\n\n Data-visualisation is improving, to a point where specialist technical competency is not essential to make sense of the mass of unstructured and structured data<\/strong> generated in a supply chain operation.<\/p>\n\n\n\n With this in mind, we should expect to see continued adoption and therefore, development of advanced analytics solutions and services <\/strong>in supply chain and logistics. These capabilities may in turn stimulate a higher degree of data-driven decision-making.<\/p>\n\n\n\n Enterprise mobility has come a long way in just a few short years. It\u2019s been less than a decade since big-budget, rugged mobile devices began to penetrate the warehouse and transport operations of large enterprises. It\u2019s taken less than five years for them to become largely irrelevant, as consumer-grade tablets and smartphones soon came to offer the same capabilities<\/strong>\u2014with a far lower price tag.<\/p>\n\n\n\n The bring-your-own-device (BYOD) movement is pervasive and while it has been slower to take hold in logistics than some other business areas (perhaps because of the investments committed to industrial hardware), the popularity of apps for supply chain management<\/strong> activities is well and truly on the rise.<\/p>\n\n\n\n I believe we\u2019ll see mobile app adoption intensify in supply chain organisations through 2018, for a number of reasons, which include:<\/em><\/strong><\/p>\n\n\n\n Omnichannel supply and the new \u201cI want it now\u201d consumer culture<\/strong> will be strong drivers of supply chain trends in 2018, including those already mentioned in this article. Furthermore, they may signal the end of \u201clean\u201d as a dominant force in supply chain design and strategy.<\/p>\n\n\n\n After years of \u201cleaning\u201d the supply chain, many companies are likely to review their approach to the determination of inventory levels and operational capacity. Instead of reducing inventory to the furthest possible degree, enterprises will respond to growing demand-unpredictability with \u201celastic\u201d strategies<\/strong>, designed to\u2026<\/p>\n\n\n\n Technology will play a huge role for companies wishing to develop elasticity in the supply chain<\/strong>. In time, advanced analytics, artificial intelligence, machine learning, automation, and IoT connectivity will enable supply chains to function within parameters impossible a few years ago.<\/p>\n\n\n\n To use an analogy, performance will be enhanced beyond what is humanly possible, in the same way as the latest military aircraft, which can only stay in the air because of countless calculations and inputs made by onboard flight-augmentation computers.<\/p>\n\n\n\n While such artificially augmented heights of supply chain elasticity are unlikely to be achieved by any company in the next 12 months, 2018 will probably be the year in which early breakthroughs are made and \u201celastic\u201d best practices<\/strong> begin to emerge.<\/p>\n\n\n\n The world of business is shifting from one where service supports the product, to a new paradigm in which service is<\/u><\/em> the product<\/strong>. This is a trend which will continue to strengthen and impact supply chain organisations\u2014both in terms of how they serve and how they are served.<\/p>\n\n\n\n Consumers and business customers alike will increasingly expect to buy products bundled with services<\/strong>. At the same time, supply companies will gain access to more services that help them meet the challenges of the new paradigm.<\/p>\n\n\n\n One example of this can be seen in the emergence of robotics as a Service (RaaS)<\/strong>, a business model that aims to make industrial robots more accessible, while also helping robotics suppliers overcome challenges that might otherwise impede market growth (like high platform costs and reticence over new-technology investment).<\/p>\n\n\n\n Suddenly you\u2019ve solved one of the scalability problems hinted at in the previous section of this article. When seasonal peaks approach, you draft in a few more robotic pickers, then send them back to the vendor as volume recedes to normal levels. You only pay for what you use, when you use it<\/strong>, and you bear little of the risk from working with the latest (and perhaps as yet unproven) technology.<\/p>\n\n\n\n That\u2019s the appeal of the \u201cas-a-service\u201d delivery model<\/strong>, and in 2018, there\u2019s every reason to believe more companies will make use of such services, and that more assets and solutions will become available via that model. Another year, another step toward the concept of \u201ceverything as a service\u201d<\/p>\n\n\n\n If you\u2019re a regular follower of our blog, you\u2019ll probably wonder why I\u2019m including perfect order in an article about supply chain trends. After all, it\u2019s nothing new. Indeed, you\u2019ll find many articles here and elsewhere about perfect order measurement, some of them dating back quite a few years.<\/p>\n\n\n\n I believe that to be the case with perfect order, which is suddenly garnering renewed attention from industry journalists and thought leaders. Not that this is a bad thing, given recent research which apparently indicates that only 84% of all orders are \u201cperfect.\u201d<\/strong><\/p>\n\n\n\n Again, omnichannel growth is an important factor, since by making the supply process more complex<\/strong> and difficult to track, it\u2019s sure to challenge perfect order performance. This is unfortunate at a time when customer-service expectations<\/strong> are higher than they have ever been.<\/p>\n\n\n\n Thankfully for companies with the means to invest though, new technologies (some of which have been discussed here) are able to enhance performance evaluation<\/strong> even in complex supply chain environments.<\/p>\n\n\n\n In the omnichannel supply chain, perfect order is central to customer perception, cost control, and profitability<\/strong>. The higher the ratio of perfect orders, the lower the cost of returns processing, rework, and delivery expedition. Hence we should expect many companies which for one reason or another, have paid little attention to perfect order, to intensify the focus on this critical performance KPI in 2018.<\/p>\n\n\n\n If your company will invest in any assets in 2018, you can expect them to be sensor equipped<\/strong> and ready to connect to the Internet of Things\u2014and I do mean any assets.<\/p>\n\n\n\n Sensor technology is really taking off and while RFID-equipped inventory is still slow in making its way to the mainstream, machinery, equipment, and even structural assets (like warehouses and offices) are likely to be fitted with sensors and accompanied by smartphone apps<\/strong> for monitoring and control.<\/p>\n\n\n\n As a result, we can also expect some growth in the adoption of supply chain control tower<\/strong>technology, especially among larger companies with the financial capacity to integrate and centralise<\/strong> automated and manual activities.<\/p>\n\n\n\n That\u2019s not to say that smaller businesses can\u2019t benefit from embedded-sensor technology too. At the very least, increased volumes of real-time information <\/strong>can only be advantageous in the quest for agility and responsiveness.<\/p>\n\n\n\n Since many assets will be equipped with sensors by default, it\u2019s unimaginable that supply chain organisations won\u2019t make use of them to some degree, if only on an experimental basis. Perhaps more than any other 2018 trend, the penetration of IoT connectivity<\/strong> is likely to generate plenty of excitement for observers in the year to come.<\/p>\n\n\n\n Other trends worth watching include autonomous trucks, drones, and the exploration of blockchain applications<\/strong> in the supply chain. It\u2019s unlikely that these technologies will mature enough to seriously disrupt industry in 2018, but they are sure to invite continued interest and even experimentation among pioneering enterprises.<\/p>\n\n\n\n2018 Trend #2: Big Data and Advanced Analytics in the Cloud<\/strong><\/h3>\n\n\n\n
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The appeal of big data analytics is only enhanced by IoT developments, which continue to enable more supply chain assets and devices to be connected to the cloud.<\/em><\/h3>\n<\/blockquote>\n\n\n\n
2018 Trend #3: Enterprise Mobility Penetration into the Supply Chain<\/strong><\/h3>\n\n\n\n
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The consumerisation of digital technology has impacted enterprise software too. Mobile apps unchain supply chain pros from their desks by making back-end systems accessible on personal devices.<\/em><\/h3>\n<\/blockquote>\n\n\n\n
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2018 Trend #4: Elastic is the New Lean<\/strong><\/h3>\n\n\n\n
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In place of lean, we might have to get used to a new conceptual buzzword in supply chain management\u2014elastic logistics<\/em>.<\/em><\/strong><\/h3>\n<\/blockquote>\n\n\n\n
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2018 Trend #5: Everything as a Service<\/strong><\/h3>\n\n\n\n
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Imagine if your company could rent a fleet of warehouse robots, complete with real-time monitoring, support services, and back-end data management in the cloud<\/em>, <\/em><\/strong>all on a pay-as-you-go basis.<\/em><\/h3>\n<\/blockquote>\n\n\n\n
2018 Trend #6: Perfect Order Will be a Big Deal<\/strong><\/h3>\n\n\n\n
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But trends don\u2019t always have to arise out of newness. Sometimes older concepts and practices can see a resurgence in popularity due to changes in the business environment or market.<\/em><\/h3>\n<\/blockquote>\n\n\n\n
2018 Trend #7: More Things Will Connect to the IoT<\/strong><\/h3>\n\n\n\n
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As the increase in sensor-equipped assets continues, the challenge will be in capturing and making use of the flood of granular data channelled through the Internet of Things.<\/em><\/h3>\n<\/blockquote>\n\n\n\n
What Trends Are on Your Radar for 2018?<\/strong><\/h2>\n\n\n\n
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Of course as always, the trends described in this article are simply the ones which, in my opinion, will make the biggest waves among supply chain organisations in 2018.<\/em><\/h3>\n<\/blockquote>\n\n\n\n