The coronavirus pandemic has forced organizations to abruptly rearchitect their supply chains in the wake of stringent lockdowns, border closures, and sudden halts in operations. Shortage of manufacturing components from China and global cargo restrictions have adversely impacted the automotive, pharma, electronics, and consumer goods industries in 2020. The ripple effect of the pandemic on the logistics sector – the backbone of global trade – has fueled rapid supply chain innovation.
The year that was 2020
The logistics sector is all about supply chain resiliency for efficient movement of goods globally. The pandemic hit where it hurts most – freight capacities across land, ocean, and air transportation. The aftereffects are likely to vary across commodity groups and countries. A recent McKinsey study projects a decline of around 13% – 22% during Q2 and Q3 20201 with logistics and transportation companies reporting significant dips in volume. eCommerce logistics emerged as the silver lining – with global online retail sales revenue estimated to reach US$ 6.54 Trillion in 20222. As the year draws to a close, experts are bullish about trade volumes gradually picking up. This is the right time for logistics players to rapidly transform digitally.
What’s trending in 2021?
The supply chain industry is responsible to ensure the upkeep of international markets and global economies. In the wake of the pandemic, business continuity, optimized operations and sustainability have emerged as key areas that require organizational attention.
- Supply Chain as a Service (SCaaS)
With outsourcing taking a predominant role across industries, business models developed around ‘Supply Chain as a Service’ (SCaaS) will be the new norm. Supply chain outsourcing will be employed for higher connectivity, improved global product reach, lower costs, and enhanced customer service. Companies unwilling to accept this change may face stagnant business growth and confinement to local regions instead of benefiting from a wider reach.
- Digital Supply Chain Networks
Technology has enabled supply chains to remain well-connected with product and service data, technical systems and solutions. With enhanced inter-connectivity, supply chains can imitate the physical world with a virtual prototype, enabling key decision makers to monitor, control and interact with multiple resources at once. Instead of being a linear business activity, supply chains are increasingly becoming circular via Digital Supply Chain Networks. These digital supply chain networks facilitate faster information access, use of smart equipment to perform manual tasks, and aid with improved decision making and increasing business value.
- Elastic Logistics
Elastic logistics are flexible supply chains that enable businesses to align their activities to varying customer demands. Using data analytics and AI technologies, businesses can predict demand for products, and then budget and plan their organizational activities accordingly. Elastic logistics ensures that critical resources such as vehicle and inventory planning and warehouse workforces are used optimally, thereby enabling time and cost savings.
- Circular Supply Chains
With the increased focus on sustainability and environment-friendly products and services, companies are beginning to reuse and recycle, thereby transforming their linear supply chains. The unused/pre-used products will now come back to manufacturers to be re-used in new products, creating circular supply chains. This will allow companies to achieve their sustainability goals, create less waste and cut back on environmental damage. Companies will benefit from reduced costs by reusing finished products as raw materials to create new products.
- Green Logistics
Green logistics is about reducing the use of energy-heavy assets and replacing them with eco-friendly resources. For example, most products will be delivered by electric and autonomous vehicles or drones to reduce fuel consumption. Warehouses will replace conventionally run appliances with solar powered gadgets. Ultimately, these efforts will keep a check on the carbon footprint and help companies achieve their sustainability objectives.
Technological transformation will be the hallmark of 2021
While a significant portion of the global workforce moved to remote work in 2020, technology became the key enabler in reducing strain on supply chains. Technologies such as Artificial Intelligence (AI), Robotics, the Internet of Things (IoT) and Machine Learning (ML) witnessed a rapid rise in adoption levels towards the later part of 2020. In the coming years, we will see a massive push of technology adoption in the logistics sector.
Below are the top four technology trends likely to disrupt the global logistics landscape.
- Knowledge Graphs
Data will continue to rule technical advancements but with the emergence of newer data trends that are more business-oriented and disruptive. One such example is knowledge graphs that will simplify the increasing complexities of modern supply chains. These graphs combine data from various departments, functions, locations, stakeholders, and regions to provide graphical and analytical visibility into warehouse and supply chain operations. Knowledge graphs help organizations analyze vital data points, merge data models, avoid missing data points and generate new insights. Logistics organizations can harness knowledge graphs to ensure more timely deliveries, choose the best routes, reduce vehicle maintenance, enable better fuel planning and transform reactive models into proactive ones.
- Robotic Automation
For the logistics and supply chain industry driven by manual labor, automation can help speed up business processes, improve accuracy and save costs. With Robotic Process Automation (RPA), the workforce can handoff manual and repetitive tasks to bots and simply oversee their performance. There are already several organizations that have invested in warehouse and business process automation. For such organizations, optimizing bot performance is extremely crucial, necessitating a dedicated center to monitor, control, optimize and troubleshoot bot performance. A Robotic Operations Center (ROC) can help generate timely bot performance reports to ensure smooth running of processes. Simply put, by combining the power of RPA and ROC, you can meet your business goals.
- Digital Supply Chain Twins
A Digital twin is the digital equivalent of any physical space, place, equipment or machinery. You can view, monitor and control large physical spaces using their digital supply chain twins. You can supervise logistical activities and supply chain operations in real time using digital twins. Organizations can gain new perspectives, identify enterprise-wide shortcomings and challenges, and avoid repetitive errors. In the long run, you will save time, the costs of maintenance & repair, and benefit from a more efficient supply chain.
Although it might seem like a monstrous task to set up a digital twin, you can always start with the basics. This will motivate you to build a digital replica of your business process and operations for improved benefits.
Visibility is viability. Blockchain enables real-time visibility of your entire supply chain. To embed blockchain into your current business and technology environment, you need to gather, collect, digitize the data and then work on it. This data needs to be cleansed and standardized and made accessible to everyone involved in your operations. To get every internal stakeholder on the same page, you need to provide them with the exact same information for utmost transparency. For time and cost sensitive shipments and cargos, confidential data and other similar elements, you can assure security and efficiency.
Digital transformation will help logistics and supply chain organizations navigate the increasing complexity of modern landscapes and supply chains markets. The right strategy, platforms and people will drive maximum productivity and efficiency, allowing you to focus on innovation to better position your firm for the future.
2021 will offer numerous business opportunities through digital transformation for logistics and supply chain organizations. Contact us to get started.