Editor’s Note: Today’s blog is from our friend Kevin Hill with Quality Scales Unlimited who shares his expertise regarding the key trends in supply chain and transportation management.
Supply chains, both international and domestic, are under constant pressure to reduce their costs and enhance performance at the same time. It is a challenge that is giving supply chain executives headaches and all the while squeezing their profit margins.
6 Key Trends in Supply Chain
1. Smart Technology
Trends in supply chain are rapidly increasing the use of smart technologies to help with supply chain management. The more data they have, the more they will be able to know which steps to take so that all the information gathered can be turned into information that is meaningful and can be used for decision making.
2. Opportunities for New Markets
Many of the high-tech markets that were termed ‘emerging’ are now fully developed. This means that the world has opened up to countries like China, India, Brazil and Russia open for business. To be able to deal with tariffs and customs, many supply chain companies have partnered with third-party logistics providers who help them manage in-country transportation, distribution, and warehousing. This is the value of having a transportation network.
3. Management Professionals in Supply Chains
Highly skilled professionals are making their way into supply chain management leading to a talent explosion. Universities are churning out young people with excellent training, diverse skills, and a global perspective. They are adding significant value to the organizations they work for and making substantial contributions to the organizations’ bottom line.
4. Changing Retail Supply Chains with Ecommerce
E-commerce is steam rolling ahead, and retailers need to make the necessary modifications and embrace omnichannel strategies to make money. This means that they will need to provide multiple channels or delivery and charge for them. The options that they will need to encourage are click-and-collect options as well as locker deliveries.
5. Stagnation of Air Cargo and Sea Freight Rates
Even though there have been concerted efforts to reverse the downturn experienced in the year 2015, most shipping lines have not succeeded in reversing the trends in supply chain. Revenues, and in turn profits, took a turn for the worse in 2015 due to stagnating volumes and over-capacity. Even with improved economies of scale, underutilization still proved to be a problem. Unfortunately, 2016 does not seem promising where an increase of volumes is concerned. Before there can be profitability and sustained improved rates, capacity will have to be taken out.
Air cargo rates will also remain static. With increased capacity and an economic environment that is uncertain, the rates will continue to be depressed. However there is good news at the moment because of the drop in jet fuel costs, improving the financial performance of the air cargo companies.
6. Managing Risk
To mitigate the risks of the supply chain, it needs to be nimble. 49% of executives in an industry survey said that they considered themselves to be excellent leaders indeed, where risk management was concerned. They, however, assessed themselves much lower in response execution and event management.
When an event occurs, the most important thing is to be able to bounce back. This is regardless of whether the event was a problem in speed to market, a natural disaster or a breach in cyber security. One of the main ingredients is communication, and it was found that 53% of leaders who are considered high tech were planning to improve how they collaborate with their suppliers. 40% of these were interested in improving the visibility of the supply chain.
UPS carries out risk mitigation in several different ways. Visibility is one and in this aspect, they have a control tower system that covers their time sensitive, high-value shipments around the world and monitors them 24/7. If there is a delay that was unforeseen, specialists can intervene without regard for mode. Financial risk mitigation at UPS comes in the form of in-transit financing and cargo insurance that is provided by UPS Capital.
Top 3 Benefits of Driverless Vehicles
1. Cost Effectiveness
Drones and driverless vehicles tend to be cheaper to run and are more efficient since they have the ability to optimize fuel as well as the cost of maintenance. Further, they may be able to lessen the constrained demand for truck drivers who are qualified.
2. Augmented Safety
With automation, human error is reduced even though there is still a resolution for the legal implications of having a driverless vehicle becoming involved in an accident. Safety will also need to include measures to ensure that the trucks are not overloaded. A truck scale can help your company avoid having to pay overweight truck fines and avoid losses that may be brought on by underutilizing the truck.
3. Stress reduction
Drones and driverless vehicles free up people’s time so that they can focus on other tasks that are more important. In trucking, this works by allowing the driver to take a break and to connect with the environment. Stress and sleep deprivation are some of the risks that truck drivers, particularly those driving over a long distance, take and this often leads to accidents. Daimler has developed a driverless truck and a license to test it on public highways has been granted in Nevada. This truck may offer the solution many have been waiting for.
Daimler is hoping to have an operation truck in the next ten years, but other companies are working with a timetable that is shorter than that. A Dutch group of businesses collaborates with a 5-year timetable on a project that is testing vehicle platooning. This system requires a convoy of trucks with electronic systems. The truck driver in the first truck then drives all the vehicles using automated systems that adjust to the speed and following distances. Even though the other trucks will have drivers, they are only there to provide backup in the event of an emergency. Should this be successful, it is expected that gas mileage will improve by about 15%. Currently, highway regulations do not allow for driverless vehicles, which is an obstacle to growth in this area. However, even this is experiencing gradual change.
Kevin Hill heads up the marketing efforts and provides technical expertise to the sales and service teams at Quality Scales Unlimited in Byron, California. He enjoys everything mechanical and electronic, computers, the internet and spending time with family.