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What are the supply chain innovations that will change the marketplace over the next five to ten years? That’s a question we are all trying to figure out to stay ahead of the competition. Let me share with you what I’m seeing in the industry as having a real impact on how we plan, manage and run our supply chain operations.
Before I list the supply chain innovations, I want to talk about the driver of change. In my opinion, the key driver is the convergence of core roles within the supply chain. There used to be a clear delineation between manufacturer, distributor and retailer. Now, we’re starting to see manufacturers acting like distributors, distributors acting like retailers and retailers owning brands as both manufacturers and distributors. Suddenly, all the lines between roles are being blurred or even completely erased.
So what does this convergence mean? Well, it means that supply chains will have to be more adaptable and flexible in order to do everything for everyone. This will be a challenge and a stretch for even the best supply chain organizations. Your ability to survive and thrive in this new reality will require new technologies and new approaches to service your customers.
In this video on the topic of collaborative robots, I stated that cobots are going to be the first form of automation beyond simple conveyors that most warehouses are going to utilize. Convergence requires all warehouse operations to adapt to heavily seasonal, demand reactive, high volume, and low unit of measure order picking. Hence, this means that picking efficiency will be a huge factor in your success. You must be able to flex up and down in picking volumes. In most situations, cobots easily double that LUM picking and they are easy to implement, which is a winning combination.
The idea of renting warehouse space that comes equipped with workers is nothing new. The 3PL warehousing model will continue and possibly expand, but look for 3PL warehouses to become far more agile and undertake more risk from the customer. This has the potential to change the game and offer supply chain agility options in ways we can only imagine. On-demand warehousing will allow a supply chain to grow and shrink its operation like never before. Picture this…opening 20 new warehouse locations for the two weeks of Black Friday just to handle the surge in orders? The potential to get very close to the customer and test new supply chain innovations using on-demand warehousing in a low-risk way will enable your company to be more flexible, agile and open to trying things like never before.
Analysts and the industry press have been predicting the move to a network of small to even tiny warehouses in urban centers for a while now, but recent changes due to the pandemic have accelerated this hyper-local fulfillment trend. Distributors are going to continue to find value in getting closer to their customers and those customers are going to continue to expect higher levels of service. This supply chain innovation is a given strategy to support those trends. The key enabling factor is the abundance of ex-retail space that is now available and can be used as fulfillment centers. Additionally, there are warehouse management systems built to support these mini-centers.
Getting products around the country is becoming a bottleneck as fuel costs, government regulations and driver shortages continue rising. To eliminate this issue, organizations will have to find more efficient ways of running those trucks and platooning may be a supply chain innovation coming soon. Platooning is basically a lead driver running the first truck and several platooned trucks that have technology to allow them to drive closely behind one another. This greatly reduces wind resistance and fuel consumption in addition to being an efficient use of team drivers. Initially this platooning is going to require a driver in each truck, but I predict that within five years we will see one driver with two or three self-driving, but remote-controlled trucks in a platoon.
These supply chain innovations will certainly enable organizations to continue a trajectory of building faster and more flexible operations to support customer demands. My advice is to start exploring these supply chain innovations now. It’s also important to have the right members on your team to help propel these innovations forward. Take a look at my last blog about Essential Supply Chain Skills for Tomorrow’s Workforce for tips in that area. The next five years will be an exciting time for supply chains and I am looking forward to seeing how these innovations grow.