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4 top trends impacting supply chain management in 2019

The level of complexity in supply chains continues to rise as new trends are expected to further impact logistics operations this year.
23 January 2019 •

Technology, trade, talent, and transportation — the ability to manage these four “T”s will determine how well supply chain organizations can meet and manage customer expectations in the coming year.

With the advent of new technologies in the industry, logistics managers have to be quick to adapt in order to deal with the heightened level of complexity along the supply chain.

From blockchain to platooning, these emerging technologies, when adopted, will continue to evolve over time and can ultimately help in optimizing supply chain operations through different means.

“We are seeing key technologies reach a level of maturity that enables them to better manage complexity, while also increasing productivity and reducing costs. That makes 2019 a very exciting year in the evolution of the industry,” said Scott Sureddin, CEO of DHL Supply Chain, North America.

While supply chains are already reaping the benefits of technology in the shift toward digitalization, it is expected to continue driving greater impact on operations in the coming year.

Below are the four trends predicted to shake up the supply chain in 2019:

1. Warehouse robotics come of age

Robotics are already proving their worth in select warehouse applications, but the technology is expected to reach a tipping point this year.

For online grocer Ocado, their use of robotics, combined with artificial intelligence (AI) and Internet of Things (IoT), enables them to fulfill a whopping 280,000 orders a week across their automated distributed centers.

While order picking is a key focus of robotic development, the technology is expected to have an impact that extends beyond e-commerce fulfillment.

Recognizing the immense potential of robotics, DHL Supply Chain recently announced a US$300million (€262 million) investment to expand the deployment of emerging technologies in its North American facilities by 2020.

The ability of the current generation of robots to work alongside humans, while performing low-value tasks that increase overall warehouse productivity, can prove to be a valuable asset across a broad range of industries.

“We’ve taken a multi-vendor strategy to robotics that allows us to select the best technology for each application, while using our scale to support multiple emerging solutions. This will ultimately help broaden the range of solutions available to the industry,” said Sureddin.

2. Increased uncertainty drives greater agility

In today’s global, interconnected supply chains, new tariffs, renegotiated trade agreements and regional climate events can have a ripple effect that paralyzes an entire supply chain. Which makes proactive supply chain planning more important than ever.

Designing supply chains with the flexibility to circumvent natural disasters, or quickly re-configure to accommodate shifts in costs or material availability resulting from tariffs, has become critical to maintaining high service levels.

Sophisticated supply chain modeling allows what-if scenarios to be performed to quickly identify the best response to sudden fluctuations in costs, transportation routes or material availability.

In addition, cloud-based risk management solutions are using the power of big data analytics to identify potential supply chain disruptions, and proactively reposition orders and inventory to maintain service levels.

3. Talent gets the attention it deserves

While the talent gap remains a significant challenge, solutions are starting to emerge.

DHL Supply Chain, for instance, has taken a proactive and multi-faceted approach to recruiting and retention that has allowed the company to consistently meet customer requirements in tight labor markets.

“New technologies and fundamental areas of the supply chain have changed, meaning they now require that a person has a different and much larger skillset than required when most of the current workforce began their careers,” said Lisa Harrington, author of ‘The Supply Chain Talent Shortage: From Gap to Crisis’ report.

In addition to using robotics to increase productivity, the company has automated the recruiting process — from online applications to pre-hire testing to onboarding — to increase the quantity and quality of applicants for hourly positions.

The company has also been working closely with a number of universities and colleges to promote the career opportunities available in supply chain management while equipping students with the necessary skills to enter the industry.

4. Digitalization closes the transportation service gap and helps shippers think beyond today’s shipment

Digitalization is being applied broadly to a host of supply chain issues, but the area that will benefit most directly could be transportation.

Fleet management systems use data from truck operations to improve utilization and reduce downtime in future deployments.

A number of digital solutions are emerging to enable the industry to make better use of available transportation resources and close the service gap.

One such example is the cloud-based Transportation Management System (TMS) which can provide the insights and data to optimize resources of a company’s transportation fleet.

In addition, the adoption of IoT, in the form of fleet management systems, allows data from truck operations to improve utilization and reduce downtime in future deployments.

The biggest opportunity, however, lies in the emergence of digital freight platforms, which are essentially online marketplaces that connect shippers with carriers, streamlining processes, optimizing costs and expanding the available options.

So far, DHL Supply Chain has heavily invested in these types of innovations to help shippers think beyond today’s shipment and strategically plan for the future, while still solving the challenges of today.

Increased complexity will continue to challenge the industry in 2019. However, new digital solutions are reaching a level of maturity that warrants widespread adoption.

This could allow the industry to take significant steps forward in the areas of speed and productivity, while effectively managing the challenges created by talent and tariffs.

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Technology, trade, talent, and transportation — the ability to manage these four “T”s will determine how well supply chain organizations can meet and manage customer expectations in the coming year.

With the advent of new technologies in the industry, logistics managers have to be quick to adapt in order to deal with the heightened level of complexity along the supply chain.

From blockchain to platooning, these emerging technologies, when adopted, will continue to evolve over time and can ultimately help in optimizing supply chain operations through different means.

“We are seeing key technologies reach a level of maturity that enables them to better manage complexity, while also increasing productivity and reducing costs. That makes 2019 a very exciting year in the evolution of the industry,” said Scott Sureddin, CEO of DHL Supply Chain, North America.

While supply chains are already reaping the benefits of technology in the shift toward digitalization, it is expected to continue driving greater impact on operations in the coming year.

Below are the four trends predicted to shake up the supply chain in 2019:

1. Warehouse robotics come of age

Robotics are already proving their worth in select warehouse applications, but the technology is expected to reach a tipping point this year.

For online grocer Ocado, their use of robotics, combined with artificial intelligence (AI) and Internet of Things (IoT), enables them to fulfill a whopping 280,000 orders a week across their automated distributed centers.

While order picking is a key focus of robotic development, the technology is expected to have an impact that extends beyond e-commerce fulfillment.

Recognizing the immense potential of robotics, DHL Supply Chain recently announced a US$300million (€262 million) investment to expand the deployment of emerging technologies in its North American facilities by 2020.

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From boosting back-end operations to personalizing the customer experience, Artificial Intelligence is quickly emerging as a game-changer for many in the logistics industry.

Every day, round the clock, hundreds of robots whizz through a giant grid that occupies a warehouse in Andover, south-west of England. Their job? To pick out groceries, anything from cereal boxes to shampoo.

Welcome to online grocer Ocado’s warehouse, which combines technologies such as Artificial Intelligence (AI), robotics and Internet of Things to automate operations and fulfill online orders.

The group processes 260,000 grocery orders a week across similar automated distribution centers. More recently, it has developed a robotic arm that uses machine learning to carefully handle different types of fruit.

Ocado’s technological pursuits offer a snapshot of how AI is making its way into the industrial setting and redefining the way businesses work, particularly in logistics.

Already, about 60 percent of corporations in the Forbes Global 2000 are either carefully assessing AI or making use of it by adapting solutions to fit or improve business needs.

The AI revolution in logistics is under way, and companies that are not looking to adopt the technology will be left behind.

AI and logistics — a natural fit

In logistics, companies depend on networks — both physical and increasingly digital — which must function harmoniously amid high volumes, low margins, lean asset allocation, and time-sensitive deadlines.

AI offers companies the ability to orchestrate and optimize such networks to degrees of efficiency that cannot be achieved with human thinking alone, according to DHL in its 2018 report on AI in logistics. It will also enable firms to exploit high volumes of data that supply chains generate daily.

Researchers at IBM estimate that only 10 percent of current systems, data, and interactions include elements of AI analysis and results, but the returns on AI investments are already substantial. This trend is set to grow as AI technologies and applications improve with time.

In fact, the use of AI in logistics is a major trend that DHL predicts we will see within the next five years.

Productivity in the back office

AI can be a huge asset to businesses that want to effect real change throughout the organization, starting with the back office.

One problem that companies operating global supply chains face is that their internal functions, such as accounting, finance, human resources, legal, and information technology, continue to be plagued by many detail-oriented and repetitive tasks.

AI can help to streamline back office functions.

Cognitive automation, which combines AI and robotic process automation, can help firms save time, reduce costs, and raise productivity and accuracy. It replaces clerical labor with software robots.

Similarly, AI can address long-standing issues in customs brokerage, and the task of facilitating the shipment and delivery of goods across geographical borders.

Customs declarations rely on complex manual processes that require in-depth knowledge of regulations, industries, and customers. It is also effort-intensive, as information must be cross-referenced and validated from scores of documents.

An enterprise AI platform like IBM Watson, using natural language processing and self-learning capabilities, can be trained with relevant data to automate the process.

This will also eliminate human error, which can be costly, as companies may incur charges for goods held in customs for too long.

Predicting trends

Perhaps the most revolutionary for logistics is AI-generated predictive analytics.

Such applications can predict demand, optimize routes and handle supply chain networks — allowing players to move from traditionally reactive business models into proactive operations.

In air freight, for instance, on-time and in-full shipment is critical. Most air freight lanes and networks are planned using historical data and professional expertise, although some aspects remain unpredictable.

To enable more proactive mitigation, DHL has developed a machine learning-based tool to predict air freight transit time delays.

The tool analyzes 58 different parameters of internal data to predict if the average daily transit time for a given lane is expected to rise or fall, up to a week in advance. It is also able to identify the top factors influencing shipment delays.

This helps air freight forwarders to better plan ahead instead of guessing when, or with which airline, their shipments should fly.

Intelligent robots

AI-powered robots and autonomous vehicles can play a big role in fulfilling the physical demands of logistics. In fact, they are fast becoming the new normal in the industry.

Shanghai-based Chinese delivery company Shentong Express uses robots that process 200,000 packages in its daily warehousing operations at half the cost of hiring human workers. Further north in the city of Caofeidian, Hebei Province, the world’s first fully autonomous harbor operated by self-driving trucks and automated cranes will be ready by end 2018.

Meanwhile, the Rotterdam World Gateway (RWG) terminal has already been deploying unmanned, fully automated cranes as Autonomous Guided Vehicles (AGVs) to unload and load ships at the port.

Companies like Japanese furniture and home furnishings chain Nitori have also tapped on self-navigating AGVs and data to achieve the most efficient handling routes, and to predict product popularity and seasonal trends. This shortens fulfillment times while improving the real-time visibility of product demand.

The vision, according to the DHL report, is that autonomous fleets will eventually be used in all aspects of the supply chain, from end to end. Another idea in the making is unmanned cargo ships that can travel across oceans with no crew on board.

A personal touch

Technology is changing the relationship between logistics providers and customers. This means that personalizing customer touch points is key to increasing customer loyalty and retention.

In 2017, DHL Parcel was among the first last-mile delivery companies to offer a voice-based service to track parcels and provide shipment information using Amazon’s Alexa. Customers simply receive updates about their parcel by talking into an Amazon Echo speaker: “Alexa, where is my parcel?”

Jenny, a chat bot developed by Israeli start-up package.ai, also assists with last-mile delivery. The conversational agent can contact parcel recipients via Facebook Messenger or SMS to coordinate delivery times, locations, and carry out other specialized instructions. Jenny has also helped cut down close to 70 percent of operational costs through route optimization and successful first-time delivery.

The applications of AI throughout the supply chain are many and varied, but one thing is clear: AI is quickly reshaping behaviors and practices in logistics.

And in an industry typically characterized by uncertainty, volatility and cumbersome processes, AI could be the technology businesses need to become more efficient.

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Every day, round the clock, hundreds of robots whizz through a giant grid that occupies a warehouse in Andover, south-west of England. Their job? To pick out groceries, anything from cereal boxes to shampoo.

Welcome to online grocer Ocado’s warehouse, which combines technologies such as Artificial Intelligence (AI), robotics and Internet of Things to automate operations and fulfill online orders.

The group processes 260,000 grocery orders a week across similar automated distribution centers. More recently, it has developed a robotic arm that uses machine learning to carefully handle different types of fruit.

Ocado’s technological pursuits offer a snapshot of how AI is making its way into the industrial setting and redefining the way businesses work, particularly in logistics.

Already, about 60 percent of corporations in the Forbes Global 2000 are either carefully assessing AI or making use of it by adapting solutions to fit or improve business needs.

The AI revolution in logistics is under way, and companies that are not looking to adopt the technology will be left behind.

AI and logistics — a natural fit

In logistics, companies depend on networks — both physical and increasingly digital — which must function harmoniously amid high volumes, low margins, lean asset allocation, and time-sensitive deadlines.

AI offers companies the ability to orchestrate and optimize such networks to degrees of efficiency that cannot be achieved with human thinking alone, according to DHL in its 2018 report on AI in logistics. It will also enable firms to exploit high volumes of data that supply chains generate daily.

Researchers at IBM estimate that only 10 percent of current systems, data, and interactions include elements of AI analysis and results, but the returns on AI investments are already substantial. This trend is set to grow as AI technologies and applications improve with time.

In fact, the use of AI in logistics is a major trend that DHL predicts we will see within the next five years.

Productivity in the back office

AI can be a huge asset to businesses that want to effect real change throughout the organization, starting with the back office.

One problem that companies operating global supply chains face is that their internal functions, such as accounting, finance, human resources, legal, and information technology, continue to be plagued by many detail-oriented and repetitive tasks.

AI can help to streamline back office functions.

Cognitive automation, which combines AI and robotic process automation, can help firms save time, reduce costs, and raise productivity and accuracy. It replaces clerical labor with software robots.

Similarly, AI can address long-standing issues in customs brokerage, and the task of facilitating the shipment and delivery of goods across geographical borders.

Customs declarations rely on complex manual processes that require in-depth knowledge of regulations, industries, and customers. It is also effort-intensive, as information must be cross-referenced and validated from scores of documents.

An enterprise AI platform like IBM Watson, using natural language processing and self-learning capabilities, can be trained with relevant data to automate the process.

This will also eliminate human error, which can be costly, as companies may incur charges for goods held in customs for too long.

Predicting trends

Perhaps the most revolutionary for logistics is AI-generated predictive analytics.

Such applications can predict demand, optimize routes and handle supply chain networks — allowing players to move from traditionally reactive business models into proactive operations.

In air freight, for instance, on-time and in-full shipment is critical. Most air freight lanes and networks are planned using historical data and professional expertise, although some aspects remain unpredictable.

To enable more proactive mitigation, DHL has developed a machine learning-based tool to predict air freight transit time delays.

The tool analyzes 58 different parameters of internal data to predict if the average daily transit time for a given lane is expected to rise or fall, up to a week in advance. It is also able to identify the top factors influencing shipment delays.

This helps air freight forwarders to better plan ahead instead of guessing when, or with which airline, their shipments should fly.

Intelligent robots

AI-powered robots and autonomous vehicles can play a big role in fulfilling the physical demands of logistics. In fact, they are fast becoming the new normal in the industry.

Shanghai-based Chinese delivery company Shentong Express uses robots that process 200,000 packages in its daily warehousing operations at half the cost of hiring human workers. Further north in the city of Caofeidian, Hebei Province, the world’s first fully autonomous harbor operated by self-driving trucks and automated cranes will be ready by end 2018.

Meanwhile, the Rotterdam World Gateway (RWG) terminal has already been deploying unmanned, fully automated cranes as Autonomous Guided Vehicles (AGVs) to unload and load ships at the port.

Companies like Japanese furniture and home furnishings chain Nitori have also tapped on self-navigating AGVs and data to achieve the most efficient handling routes, and to predict product popularity and seasonal trends. This shortens fulfillment times while improving the real-time visibility of product demand.

The vision, according to the DHL report, is that autonomous fleets will eventually be used in all aspects of the supply chain, from end to end. Another idea in the making is unmanned cargo ships that can travel across oceans with no crew on board.

A personal touch

Technology is changing the relationship between logistics providers and customers. This means that personalizing customer touch points is key to increasing customer loyalty and retention.

In 2017, DHL Parcel was among the first last-mile delivery companies to offer a voice-based service to track parcels and provide shipment information using Amazon’s Alexa. Customers simply receive updates about their parcel by talking into an Amazon Echo speaker: “Alexa, where is my parcel?”

Jenny, a chat bot developed by Israeli start-up package.ai, also assists with last-mile delivery. The conversational agent can contact parcel recipients via Facebook Messenger or SMS to coordinate delivery times, locations, and carry out other specialized instructions. Jenny has also helped cut down close to 70 percent of operational costs through route optimization and successful first-time delivery.

The applications of AI throughout the supply chain are many and varied, but one thing is clear: AI is quickly reshaping behaviors and practices in logistics.

And in an industry typically characterized by uncertainty, volatility and cumbersome processes, AI could be the technology businesses need to become more efficient.

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The ability of the current generation of robots to work alongside humans, while performing low-value tasks that increase overall warehouse productivity, can prove to be a valuable asset across a broad range of industries.

“We’ve taken a multi-vendor strategy to robotics that allows us to select the best technology for each application, while using our scale to support multiple emerging solutions. This will ultimately help broaden the range of solutions available to the industry,” said Sureddin.

2. Increased uncertainty drives greater agility

In today’s global, interconnected supply chains, new tariffs, renegotiated trade agreements and regional climate events can have a ripple effect that paralyzes an entire supply chain. Which makes proactive supply chain planning more important than ever.

Designing supply chains with the flexibility to circumvent natural disasters, or quickly re-configure to accommodate shifts in costs or material availability resulting from tariffs, has become critical to maintaining high service levels.

Sophisticated supply chain modeling allows what-if scenarios to be performed to quickly identify the best response to sudden fluctuations in costs, transportation routes or material availability.

In addition, cloud-based risk management solutions are using the power of big data analytics to identify potential supply chain disruptions, and proactively reposition orders and inventory to maintain service levels.

3. Talent gets the attention it deserves

While the talent gap remains a significant challenge, solutions are starting to emerge.

DHL Supply Chain, for instance, has taken a proactive and multi-faceted approach to recruiting and retention that has allowed the company to consistently meet customer requirements in tight labor markets.

“New technologies and fundamental areas of the supply chain have changed, meaning they now require that a person has a different and much larger skillset than required when most of the current workforce began their careers,” said Lisa Harrington, author of ‘The Supply Chain Talent Shortage: From Gap to Crisis’ report.

In addition to using robotics to increase productivity, the company has automated the recruiting process — from online applications to pre-hire testing to onboarding — to increase the quantity and quality of applicants for hourly positions.

The company has also been working closely with a number of universities and colleges to promote the career opportunities available in supply chain management while equipping students with the necessary skills to enter the industry.

4. Digitalization closes the transportation service gap and helps shippers think beyond today’s shipment

Digitalization is being applied broadly to a host of supply chain issues, but the area that will benefit most directly could be transportation.

Fleet management systems use data from truck operations to improve utilization and reduce downtime in future deployments.

A number of digital solutions are emerging to enable the industry to make better use of available transportation resources and close the service gap.

One such example is the cloud-based Transportation Management System (TMS) which can provide the insights and data to optimize resources of a company’s transportation fleet.

In addition, the adoption of IoT, in the form of fleet management systems, allows data from truck operations to improve utilization and reduce downtime in future deployments.

The biggest opportunity, however, lies in the emergence of digital freight platforms, which are essentially online marketplaces that connect shippers with carriers, streamlining processes, optimizing costs and expanding the available options.

So far, DHL Supply Chain has heavily invested in these types of innovations to help shippers think beyond today’s shipment and strategically plan for the future, while still solving the challenges of today.

Increased complexity will continue to challenge the industry in 2019. However, new digital solutions are reaching a level of maturity that warrants widespread adoption.

This could allow the industry to take significant steps forward in the areas of speed and productivity, while effectively managing the challenges created by talent and tariffs.

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