From driverless trucks to big data –supply chains face a challenging future

Now that more than half of humanity lives in cities, it is time for the supply chain industry to adapt to more urban and digital consumers. But how will we do that?

The supply chain is in a period of unprecedented change. This has been stimulated by a number of global factors, including a volatile political and economic environment, increasing urbanisation in Europe, a dramatic change in consumer behaviour - the preference for convenience, online shopping and home delivery, hard discount popularity, smaller more frequent shopping, etc. - a shortage of logistics, the growth in automation and a considerable shift toward digitalisation.

As an industry, we are largely unprepared for the rapid pace of these changes. However, I believe understanding and embracing these trends will be critical for the future development of the logistics industry. Here are a few areas which I think will have critical significance:

  1. The importance and visibility of data within the supply chain cannot be ignored. Over the last few years, I have seen an increased appetite for more rigorous and in-depth data from our customers and partners. Rapidly changing technologies, combined with more accurate data, are allowing for greater collaborations within and between organisations. For example, collaboration and greater data visibility can facilitate better deployment of transportation solutions in order to minimise empty miles and the waste associated with them.
  2. Automation across the supply chain has steadily increased. In our business, I can already see that we are moving toward a point where we will not be able to service the future needs of the consumer without it. We will undoubtedly see the implementation of automated trucks within the next decade to not only combat the shortage of drivers but also to address issues of access to congested, urban areas. In April 2016, Uber announced the acquisition of Otto, a San Francisco-based startup that has developed a kit that can turn any big rig into a self-driving truck.Otto’s equipment currently costs about $30,000, but the cost is certain to fall significantly in the coming years.
  3. Driven by urbanisation, today’s consumers have moved away from the traditional large weekly shop in out-of-town retail parks and we are now seeing a shift toward smaller footprint stores in urban areas as well as online shopping. The whole supply chain is trying to adjust their models of operation to improve the economic and resource challenges of this consumer behaviour, by introducing solutions such as “click & collect” and delivery subscriptions. The ability to manage a growing number of distribution models and retailing formats in a cost-effective and efficient manner will require us to think and operate differently.

We also have to consider the future impact of global geopolitical uncertainty, including the dynamic between the UK and the rest of Europe.

How does the supply chain address these changes?

I can say with some certainty that the transformation of the supply chain is already here, and for many businesses, this will be an opportunity to reinvent themselves.

The supply chain will have to take responsibility for adjusting to consumer patterns. In order to deliver to densely populated areas more regularly and more efficiently, manufacturers, retailers and hauliers/logistics service providers will need to develop an asset and infrastructure supply chain model that is collaborative.

Underutilisation- operating a half-full truck- needs to become a thing of the past. A co-operative approach of multiple companies ‘booking pallet space’ for their products within a shared truck, will soon be a reality, and in some cases, it already is.

Our business is paying close attention to the rapidly changing environment and trends in order to ensure we are ready to support our customers into the future with the right products, solutions, and data insights. At a fundamental level we are better positioned than most to collaborate as we manage high quality, standardised shipping pallets and containers for customers across the globe who collectively benefit from our ‘share and reuse’ model as opposed to each one investing and managing their own proprietary equipment. We are also already working extensively to respond to the trends listed, for example, we are bringing members of our supply chains together to improve the efficiency of transportation through collaborative logistics solutions. We will need greater collaboration across all the players in our industry to help supply chains address the growing complexity and become more responsive and agile without the addition of unnecessary cost and waste. I believe 'shared' needs to become the default – this will be the only way we will be able to build a sustainable, efficient and seamless supply chain, capable of meeting the demands of consumers in the next decade.

By Michael Pooley, President, CHEP Europe, Middle East and Africa

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