Tuesday, March 31, 2015

Report Foresees Vast Changes in Supply Chain Technologies Within a Decade

Driverless Vehicles and Drones are the Future According to Accountants
Shipping News Feature

US – WORLDWIDE – Traditional supply chains will radically change over the next 5 to 10 years as a result of new technologies, competition and customer demands, according to a study by the Material Handling Institute (MHI) and accounting giants Deloitte. On average, companies surveyed expect to invest heavily in new supply chain technologies over the next two years, with the top 17% spending over $10 million. One aspect highlighted in the report, titled ‘Supply Chain Innovation - Making the impossible possible’, that affects the freight and shipping industry is the emergence of driverless vehicles and drones.

We have previously expressed reservations regarding the practical use of drones within the supply chain but by 2017, the survey differs and states that 20% of logistics organisations are likely to exploit drones as part of their monitoring, searching and event management activities. By 2030, vehicles capable of driving autonomously are expected to represent approximately 25% of the passenger vehicle population in mature markets. George Prest, CEO of MHI, an international trade association that represents the material handling, logistics and supply chain industry, said:

“In reality, this idea is not new to the supply chain. Autonomous vehicles have been used in material handling applications for years, and many autonomous commercial vehicle (ACV)-related systems are already in use today within the trucking industry. Examples include electronic stability control (ESC), collision avoidance technology and rear- and forward-view camera systems plus related electronic sensor arrays needed for transmitting data between such systems and a truck’s engine, transmission, and brakes.”

Although drones and driverless vehicles have yet to enter the mainstream consumer market, some companies are already exploring how these technologies can transform their businesses, for example in consumer product delivery which is exemplified by companies like DHL, Alibaba, and Amazon to name but a few, which have tested drone delivery systems.

The survey also focused on seven other technologies that are driving next-generation supply chains: inventory and network optimisation tools; sensors and automatic identification; cloud computing and storage; robotics and automation; predictive analytics; wearable and mobile technology; 3D printing. Scott Sopher, Principal, Deloitte Consulting LLP, said:

“I believe that we are at the dawn of an innovation wave that will soon hit the material handling industry. The convergence of big data, faster and cheaper computer power, and the increasing demands of customers will likely accelerate the adoption of innovative products and services in the material handling industry.”

According to the report, firms should embrace this transformation today and focus on investing in new technologies in order to compete and thrive as their supply chains continue to face constant pressure to do more with less. Prest, said:

“The speed at which supply chain innovation is being adopted, coupled with rising consumer expectations for anytime, anywhere service, is stressing traditional supply chains to near-breaking points. Companies that continue to use traditional supply chain models will struggle to remain competitive and deliver orders that are accurate and on-time.

“Companies that are early adopters of the innovations and technologies identified in this report can improve both their cost and service creating a strategic advantage. Our industry makes supply chains work, and MHI pledges to be at the forefront of these developments to help our members and their customers boost efficiency, performance and business results.”

From the survey data, 31% of respondents cited the lack of adequate talent to implement and deploy new technologies as a significant barrier to their implementation. The supply chain workforce crisis is likely to only accelerate as new technologies demand a labour pool with increasingly advanced skill sets. Multiple factors are contributing to the talent shortage, including an aging workforce but the changing skill sets needed for jobs in the supply chain is the biggest factor. The industry needs a sophisticated and well-trained workforce to operate leading-edge equipment and systems.

According to the US Roadmap for Material Handling & Logistics, an estimated 600,000 manufacturing positions in the US are unfilled for a lack of qualified workers. In addition, the Roadmap predicted that, between 2014 and 2018, there will be 1.4 million new jobs in the logistics and supply chain field. Speaking on the skills shortage in the supply chain industry, Prest said:

“MHI has focused on the talent shortage for years and works with universities and other trade associations to address this critical issue. Together with the Material Handling Education Foundation Inc. we have developed curriculum and text book materials for training programs at the high school, vocational-technical school and community college levels. MHI pledges to continue to lead the way in addressing the workforce crisis.”