2015 Trends in Supply Chain and Logistics

2015 Trends in Supply Chain and Logistics

2015 Trends in Supply Chain and Logistics

With 2014 now behind us, it is time to look forward and see what 2015 will have in store for the industry. With rapid changes in the economy, business leaders are challenged this year to understand what happened in 2014 and what is coming in 2015. As we get back from the holiday season, take a look at what we have seen in 2014 and what we are looking forward to talking with you about in 2015.

Mergers and Acquisitions of Logistics Service Providers

In the last two months of 2014, there were a few notable acquisitions of logistics service providers. It was announced that C.H. Robinson was purchasing freightquote.com and FedEx was purchasing GENCO. It is our belief that these deals are just the beginning of more deals in the first quarter of 2015.

Many of these acquisitions show that companies are interested in delivering complementary solutions to existing businesses. In 2015, as you are looking for transportation or warehousing partners, it will be important to understand not only the current capabilities of the partners, but what additional capabilities could be gained or lost if that partner is acquired or invests in an acquisition. It is both an opportunity and a risk in many of the projects we are working on in 2015 and something project leaders will need to consider when partnering with logistics service providers.

The Continued Omni-Channel Challenge

Many companies are still challenged by how they either implement or fit into the Omni-Channel conversation. While 2014 saw many retailers continue to succeed at implementing Omni-Channel distribution systems, many companies have either fallen behind the curve or don’t understand how a concept that has been demonstrated to improve customer service will work for their organization.

As 2015 begins, many Blue Horseshoe customers are in the process of implementing or have implemented solutions that drive Omni-channel success. In frontend, backend, and distribution operations, Blue Horseshoe continues to help companies deliver to their customers whenever and wherever the need arises.

Changing Driver Demand

With the suspension of the 34 hour restart by congressional action in December of 2014, we will see the shift in the driver shortage discussion move from over the road drivers to last mile delivery. As ecommerce moves towards enabling same day deliveries, it will require the industry to bring on more local delivery drivers. Also, as part of enabling true Omni-Channel delivery models, many smaller orders will need to be moved between forward distribution points and retail stores to enable rapid delivery to the customer at home or at a pick up location. We believe that this will be done by smaller last mile carriers and not large over the road fleets.

Faster Integration of Cloud Computing

While there are still many opportunities for large scale IT projects, many small and medium companies are still challenged by the risk associated with the change over from a large legacy system to a new software platform. This opens up the opportunity for smaller cloud or SaaS providers and platforms to fill the need gap in systems. The trend this year will be for companies to be able to implement many smaller IT projects faster. With the availability of a variety of cloud based software tools, this will enable companies to test changes to systems and processes without a major investment in one new system.

The challenge in 2015 will be doing as many of these under the same infrastructure platform, so that companies can gain the benefits of having one version of the truth. Blue Horseshoe solutions has been a leader in providing companies with solutions hosted and executed on Microsoft’s Azure cloud. 2015 will see an increase in more companies moving ERP, WMS, and TMS solutions to a cloud based system.

Additive Manufacturing

2014 saw a rapid improvement in the delivery of additive manufacturing solutions to industry. In both 3D printing and customizable product solutions, many industries are reducing the time it takes to get products to market by utilizing 3D printing and other related technologies. While many of the news stores focused on resin based components, 2015 will see the rapid rise of metallic printing as well as discussions about related items such as customized individual books, magazines, and even clothes that are printed and assembled to order.

Autonomous Delivery Vehicles

After the hype of flying delivery drones in 2014, the FAA announced draft regulations that will make it more difficult for many companies to use drones for anything more than flashy marketing. Where the conversation will shift in 2015 is to the use of automation in ground based transportation, continued uses in manufacturing, and warehousing.

While auto makers and major technology companies get publicity for their automation work, there are logistics providers and established research institutions that are actively pursuing autonomous delivery vehicles in operations and on the roads. While most analysts see a long timeline for delivery, 2015 will see a major shift in the discussion from the cloud to the ground as the need for safer and efficient automated deliveries is seen realized and publicized.

Falling Fuel and Energy Costs

One of the big shocks for consumers is the dollar drop in regular gasoline in the last twelve months. This has provided a lot of incentive for more people to travel and has been a great stimulant for the economy over the holiday season.

As more gas and oil is extracted in the United States in 2015, companies will be able to utilize their energy savings to make much needed investments in capital equipment. This can have a major impact on many areas of the economy and will be a major point of discussion in the next twelve months.

One negative is that while regular gasoline continues to decline in the beginning of 2015, diesel prices are not dropping at the same rates. This can hurt large commercial fleets, but it will help continue the conversion to natural gas for shorter haul fleets that have access to lower natural gas prices.

Supply Chain Talent and Leadership Gap

It seems like every major supply chain publication had articles about supply chain talent in 2014. The reason is that companies big and small were challenged to find the next generation of supply chain leaders and it is a major cause of concern for the industry.

As colleges and universities continue to graduate more talented young people, there is still a gap between what is being taught and what the industry demands. This was summarized in an article (http://www.dcvelocity.com/articles/20140825-too-great-expectations/) by Chris Elliott of Blue Horseshoe’s Strategy Division in both the CSCMP Supply Chain Quarterly and DC Velocity Magazines.

While 2014 saw a lot of discussion about young talent, 2015 will see the shift to supply chain leadership. As the economy and stock markets are improving, more industry leaders are taking the opportunity to shift to new roles or retire. This is creating a major gap in leadership that most companies are not ready to fill. This leadership gap will require companies to look strategically at how they hire, manage, and retain the best supply chain leadership. This is not an easy task and we believe that many companies will need help developing a strategy for their leadership over the next year.

Advanced Analytics

You could not avoid hearing about big data and the cloud in 2014. It seemed like everywhere you turned, a TV, magazine, or bookshelf was displaying messages about cloud computing, security, and the amount of data that is available to businesses and consumers. In our strategy consulting practice, we saw the effects of big data first hand. With every client we worked with we found ourselves having to work with data sets that have become increasingly larger. As the data sets got larger, we saw a challenge. Many of our clients did not have the capabilities to analyze these massive data sets.

That will be the major issue that the industry is facing in 2015, the challenge of analyzing all of the data we are collecting and storing. While many companies claim that they have advanced analytic systems and can query massive data tables, many don’t have an idea of what they are supposed to be measuring or improving. That is the next step for this year, taking all of the data you have and turning it into an actionable plan for improvement.

Supply Chain Agility

Most developed supply chains have key performance metrics that they use to track their business daily, monthly, or yearly. In a retail environment, one standard performance metric is the percentage of orders that were processed and shipped within 24 hours of order receipt. While performance metrics are great for measuring stable operations, what happens when things are not stable? How can you be prepared for an unprecedented demand, a major work stoppage, or disruption in supply?

With trends, disasters, and disruptions being unpredictable, we see companies needing to go beyond performance metrics and start to look at the key infrastructure changes needing to be made to respond to a number of challenges. From droughts, to revolutions, to the opening of new markets like Cuba, how will companies respond to the challenges and opportunities made available in 2015? It is companies that focus on agility as well as performance that will succeed.

Infrastructure Challenges

As 2014 ended, we were again talking about issues with West Coast ports in the United States. Similar issues with single points of exit and entry can be seen around the world and the improving economy will continue to strain ports, railroads, and roadways that support our ports. Outside of the ports, growing populations and increased consumer demand around the world continues to strain transportation systems.

While many countries continue to invest in their infrastructure, we are still challenged with aging roads in the United States and underdeveloped transportation systems in many of the developing markets. This can cause headaches as one major incident, either man or nature made, in a region could cause a ripple effect across a transportation system.  It will be important for civic and industry leaders to consider infrastructure issues as they look at their supply chain strategy in 2015.

Increase in Technology Investments

After the global recession of the last few years, many companies have delayed updating their legacy systems. This delay has stymied the improvement for many operations, because they are trying to build agile, modern systems on aging hardware and software that is no longer supported. Based on feedback we have gotten from clients, we think that 2015 will be a breakout year for technology investments. With all of the challenges that companies face, they cannot create automated systems, develop agility, or create advanced analytics without updated software and systems running their business. Where many companies have focused on ad hoc systems the last few years, 2015 will see a major push to consider massive system and infrastructure improvements in a lot of companies.

Demand for Global Partners

With all of the changes we see for 2015, businesses are going to need global partners that can help guide them to making the required changes to their business to succeed in 2015 and the years to come. While many solutions providers have cut back on personnel and focused on short term gains, growth orientated companies need to work with solution providers that are investing in their own future, are focused on large, strategic projects, and are able to deliver cutting edge solutions that push the boundaries of what is possible in supply chain solutions.

There are not many companies in the market place that are choosing to see a global demand and deliver the solutions that companies need to compete in a changing marketplace. As 2015 begins, we think that the trends indicate a need to align with supply chain partners that will be able to move the needle forward and help move companies to become more automated, agile, and able to analyze the demands of a changing world.

The company that can help you meet your opportunities is Blue Horseshoe, and we hope that one of your tasks for 2015 is to choose us for your supply chain strategy, design, and technology execution.

Additional Articles:
2015 Supply Chain Trends – In Review

2016 Supply Chain Trends:
Top Supply Chain Trends 2016 – Part I




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