‘It’s difficult to make predictions, especially about the future’, said physicist Niels Bohr.
Looking at the future of supply chains, prediction is especially hard, as we try to peer through the fog of short-term issues to perceive the underlying fundamentals.
Any supply chain manager, listening out above the day-to-day noise generated by continually evolving markets and requirements, will be rightly concerned about bigger geo-political issues. Brexit, US-China tariffs wars, relations with Russia, to name just a few, will affect supply chains in that;
- We may see a reduction in globalisation and increased ‘re-shoring’.
- Rows about anything from intellectual property to local labour laws may put some supply sources ‘out of bounds’.
- Companies and nations will win or lose, temporarily, in the great trading game.
But this is ‘normal’ and it doesn’t truly affect the fundamentals of how supply chains work.
Other technical and societal trends may however, have a much more transformative effect. Like the ‘shared economy’, for example.
Here you would no longer buy things like cars, white goods, production equipment or warehouse space. Instead, you rent, borrow, share and ‘hot desk’ by the hour. This will move the focus of supply chains from primary production to servicing. That would also mean issuing goods or facilities, pulling them back, refurbishing/upgrading and then reissuing them.
This trend will also be supported by 3D printing, or more general ‘additive manufacturing’.
The idea is that you create the object locally and on demand. Why transport basic goods around the world when you can cheaply download the file? Why store spare parts centrally and transport them, when your field service agent can ‘print them off’ as required?
This feeds back to the shared economy where goods are designed to be repaired and upgraded. It would be a fundamental shift from the current model of unrepairable obsolescence. But consumers, at least in the first world, who want to reduce their footprint on the planet are demanding it…
Supply chain life cycles
Talking about product life cycles, which notoriously diminish every year, what about supply chain life cycles?
Products, and companies, even successful ones, now have profitable zones measured in months. Yet, commitment to supply chain contracts, and assets such as warehouses and transport fleets, are in years?
Pop-up retailers and restaurants are another example of a sharing economy concept. These exploit short-term opportunities and mean ‘fixed assets’ need to get more flexible.
This will have implications for commercial leases and how you design and fit out a warehouse. For example, how quickly/cheaply can you reconfigure the racking, the mezzanines, the conveyors or AGVs to meet a new tenant’s requirements. Not to mention trucking implications: specialist vehicles or swap-bodies?
The physical Internet
Thinking about this gives credence to the ‘physical internet’. Physical shipments in standard packages can be totally, flexibly and automatically aggregated, disaggregated and optimally routed through the power of the Internet of Things.
Just as you don’t care which satellites the different data packets of your email have bounced off, you won’t mind how your goods found their most efficient routes to you…
Sounds very Sci-Fi, but it is technically achievable. It would also support shared economies, pop-up operations and highly flexible, agile supply chains. These will be needed if short term geo-politics goes pear-shaped, as it very well could.
But, and it is a big but, this all depends on supply chain players getting digitalised. Our current arrangements are based on human-defined processes and capacities. The new supply chain will be powered by affordable, accessible, shareable, secure but awesomely powerful IT systems.
Companies such as TGMatrix are building the blocks for these new systems. They do not just adapt to current supply chain pressures but allow for completely new thinking about what a supply chain really is and could be…
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