Like all industries, logistics and supply chain management experienced a transformation due to COVID-19. The new normal has required a shift in the business landscape of companies.
In order to respond to the emerging challenges posed by the pandemic, businesses need to conduct in-depth exploration and implement new technologies to ensure compliance with new strategies and processes. We've compiled ten logistics and supply chain management trends to keep an eye on in 2023 and beyond. We'll also explain how they will reshape the industry.
1. Artificial Intelligence
Logistics and supply chain management companies will continue adopting Artificial Intelligence solutions in such fields as intelligent transportation, route planning, demand planning, and others. With the help of AI, companies can identify patterns in data and create insights. Such a predictive model can be used to forecast demands and manage supply.
It will have a more significant impact on a company's economy than any other technology application. According to the Economist research, companies will derive $1.3trn to $2trn a year in economic value by implementing AI solutions in supply chain management.
"Furthermore, artificial intelligence will allow networks to learn and decide more quickly with less human interaction. And that will be at all levels from the network to the picking robot. When you come down to it, these and other NextGen technologies are rapidly building a new logistics network that in short order will be far more agile than they are today" - Michael Zimmerman, a Partner and the Americas Lead for Analytics at the management consulting firm A.T. Kearney.
Blockchain revolutionized the supply chain industry by providing a scalable, immediate solution for order tracking and authentication, and this technology continues to evolve. Blockchain ensures reliable data across the transportation and logistics ecosystem since the entire network contributes to data validation.
As a refresher, blockchain is an open ledger of all transactions distributed among computers in a given network. Technology makes it possible to track assets from production to delivery or from one concerned party to another. This increased supply chain transparency to help reduce fraud and provide more visibility to both companies and consumers, explaining why there are more and more such SaaS ideas and products emerging on the market.
Businesses can now see how their goods are passed through each subcontractor and reduce profit losses from counterfeit and gray market trading and increase confidence in consumers by reducing or removing counterfeit goods' impact.
"Cybersecurity in logistics is just one reason to think about blockchain right now. Another one is the need for a fully transparent supply chain. Just consider the bankruptcy of shipping company Hanjin, for example, or Samsung which has previously lost track of its containers due to a lack of transparency. Blockchain can help in each of these cases." — Martijn Siebrand, innovation manager - digital assets in ABN AMRO Bank.
3. IoT (Internet of Things)
The Internet of things (IoT) is another technology that will reshape the industry. The primary use of IoT is the same as blockchain. IoT provides companies with transparency across the supply chain. It can be done through GPS sensors fitted in transportation modes; it will allow them to track location in real-time. Warehouse sensors help visibility in inventory management, and sensors in points of sale measure demand.
Companies can use this real-time data to proactively service customer demands, minimize downtime, and increase the supply chain's efficiency.
By providing more visibility across the supply chain components, IoT technology can also help businesses increase overall ROI.
“Business goals must always take priority when deciding which IoT technologies to use. Security and compliance are also critical issues. If these aspects are properly managed, supply chains can benefit from the Internet of Things for increased flexibility, faster reaction times to market changes, and new, more competitive supply chain models” — Rob O'Byrne, CEO and Founder of Logistics Bureau - Management Consultants.
4. Enhanced Visibility
Supply chain management and logistics companies are implementing technologies that will provide visibility across the supply chain. Such inventory tracking technology gives control over the process of shipments in real-time and instant-quote capabilities allow consignors to categorize shippers on their market rates a lot faster than it was before.
On the one side, by implementing this new technology, companies will differentiate themselves from other competitors. On the other, industry members have bigger expectations now; they expect services that provide visibility in every process. In the near future, logistics and supply chain companies will either adopt this technology to stay afloat or become irrelevant for their valid and potential customers.
"Visibility is therefore neither a luxury nor a "nice to have", but has indeed become a "must have" - Steven Gerard, Business Development Manager at Transporeon.
5. Warehouse Robotics
Automation is being progressively integrated into supply chain management and logistics warehouse operations, and this trend is likely to continue. One of the fastest-growing fields is warehouse robotics. Experts predict the broader acceptance of autonomous mobile robots (AMRs) for performing labor-intensive tasks while humans would concentrate on more decision-making processes like strategy and management.
It is expected that by 2024, 60% of warehousing activities will be done by robots and situational data analytics to enable storage optimization, increasing capacity by over 25% and cutting work order processing time in half. Artificial technologies and sensors that will provide logistics and supply chain management companies with accuracy and traceability will change modern warehouse operations by bringing many more autonomous robots in the 2020s.
"The coronavirus outbreak has thrust automation into the spotlight like no other time in history and this interest will only continue to accelerate. Based on inquiries, we're about to see robot deployment go through the roof – especially in warehouses" — John Santagate, VP-Robotics, Körber Supply Chain, a supply chain technology provider.
6. Digital Twins
Attention to the digital twins in logistics and supply chain management is growing rapidly due to the improvements in ongoing operations' technical and computational capabilities. And this trend will beсome even more perceptible in 2023 and further on.
Digital twins technology makes it possible to combine both the physical and digital world into one by modeling virtual supply chain replicas with hundreds of details, warehouses, logistics, and product positions. It will continue to gain momentum in the shipment sector due to its capabilities to collect information about products and packages and use this data to predict potential weak places among the chain and solve them. Digital twins will also be used to create accurate 3D models of warehouses and facilities and experiment with layout changes without risks.
"Ultimately, digital twins have been a key force behind the improvements in supply chains and the digitalization of industries has increased margins and operational performance in good times, whilst allowing industries to adapt better in the bad." — Ravi Gopinath, Chief Cloud Officer and Chief Product Officer at AVEVA.
Over the last few years, drones have moved closer to their own mainstream logistics sector, and they will have an even more significant impact on the industry next year. Drones are autonomous robots that can be operated either remotely by a person or intelligently by computers.
Freezing of the aviation and grounded fleets due to the pandemic has contributed to the growth of autonomous flying drones in a humanitarian effort to beat the crisis. Drones have been used to deliver COVID-19 test samples and medications. Drone's speed and frequency of deliveries let companies meet customer's expectations more effectively and quickly help them with evolving problems. If the situation with COVID continues, integrating drones into supply chain management will be more critical than ever.
Despite all the advantages of autonomous flying drones, the most severe retarder for the deployment is legislation. Regulations of the flies are critical due to the damage that drones can cause. Collaboration between drone startups and government allows creating guidelines that will regulate this sphere and build a new perspective sector for logistics companies to explore and develop in the nearest future.
According to the research, the global Drone Package Delivery Market is expected to reach $6,051 million by 2026 and grow at a compound annual growth rate (CAGR) of 42% from 2020 to 2027.
"We think about it not just as a point-to-point delivery, but as a network. What can you do if you have many stations of these flying drones? What can you do with a system like this in the developing world, in our cities, in our megacities? We're convinced that it's going to be the next big paradigm in transportation" - Andreas Raptopoulos, Founder & CEO at Matternet.
8. Contactless Last-mile Delivery
As a response to the COVID-19, logistics and supply chain companies have stepped up to the challenge of making deliveries safer by providing their employees and customers with contactless last-mile delivery.
To maintain safety, last-mile delivery companies have enabled digital payment modes to minimize contact with customers. They are also partnering with retail outlets to enable hyperlocal deliveries to optimize routes for quicker deliveries. Many retailers have converted their unused facilities in stores to last-mile delivery warehouses.
Moreover, businesses start to use dynamic route optimization software, which allows them to integrate new orders into the system and schedule deliveries accordingly. As a result, drivers get updates about the best possible routes that can be optimized even after the change in delivery. It enables on-time deliveries of high volume parcels and also saves fuel costs.
Usually, the last-mile delivery costs are substantial: from 40 to 50% of a company's logistics costs. Therefore, it is critically important to optimize this element, mainly because retailers are positioning their products to reduce long-line haul and increase last-mile volumes.
"The first key trend is something that really has never had the same attention [before], which was the safety and health of the people operating in the last mile and the people they interact with. That was really a game changer with COVID. We started talking about contactless delivery and really keeping the drivers, as well as the customer, safe. That's something that fundamentally changed" - Christian Floerkemeier, VP Product and CTO for Scandit.
9. Autonomous Vehicles
Lux research has named autonomous vehicles the number one emerging technology to watch in the 2020s. Autonomous vehicles have become closely associated with the logistics and supply chain management, but they can also be used in more specific areas like fleet maintenance. Therefore, autonomous vehicles will be one of the most discussed trends in the industry next year.
According to McKinsey, 65% of the United States' consumable goods are trucked to market. With full autonomy, operating costs would decrease by about 45%, saving the for-hire trucking industry between $85 and $125 billion. In addition to improved operational efficiencies, autonomous trucks and vehicles can help lower freight costs, improve truck utilization, reduce logistics costs, improve fuel efficiency, and, of course, reduce delivery times.
"I see autonomous vehicles as being a longer-term, but important, technology in the future of freight transportation" — Craig Harper, EVP, COO at J.B. Hunt.
10. Predictive Analytics
One of the biggest trends reshaping logistics and supply chain management in 2023 is predictive and advanced analytics platforms. They use data to identify patterns for risks and opportunities within a particular set of conditions. Based on this information, companies make decisions and anticipate specific future events. These solutions bring benefits to different types of operations within the supply chain.
Companies can use this technology to gain the visibility needed to determine which of their trucks were wasteful, predict fluctuations in transport demand, detect unexpected conditions, proactively plan linehaul and make improvements on sustainability in last-mile delivery. Predictive analytics has become a necessity for logistics and supply management companies if they want to be competitive and tech-savvy.
"Moreover, through clean supply chain data and predictive intelligence, companies will be able to drive competitive advantage and increased profitability from its supply chain" - Adam Compain, CEO and Co-Founder of ClearMetal.
COVID-19 has changed the way logistics and supply chain companies conduct their business. When, how, and how quickly the economy can restart will impact the way the industry will move and recover. Until then, companies will need to adapt to this new reality and get ahead of these technology trends to keep up with.
Adopting disruptive technologies and implementing enhanced software are becoming more critical to success than ever before. At Upsilon, we keep digital innovations under our radar to create the best solutions for logistics and supply chain companies. We have a proven track record of developing custom software for logistics, and if you have a project (or an idea) on your company's roadmap in 2023 and further, we will be more than happy to assist. For more details about Upsilon's custom software development services, don't hesitate to contact us, and our business development specialists will gladly provide a consultation.