It wouldn’t be December, and we wouldn’t be analysts, without some predictions for the coming year. Here’s what we see in our crystal balls for 2011.
Adrian’s Predictions
I’m going to keep my list of predictions short this year. The fewer predictions I make, the fewer opportunities I have to be wrong.
- More “Software-as-a-(Self)-Service” solutions will emerge. I wrote about this trend earlier this year, whereby software vendors are introducing relatively simple and targeted applications that users can quickly download and implement themselves for a very low fee. It is one example of how software-as-a-service (SaaS) will continue to evolve. Time-to-value will remain an important decision factor for companies in the year ahead as they evaluate software solutions, and this new class of applications is a good starting point for some companies. But as I highlighted in my previous posting, software vendors have to overcome some hurdles first (e.g., reduce cost of sales).
- More shippers will consider SaaS TMS coupled with managed services. This is another example of how software-as-a-service TMS will further evolve. I wrote about this topic earlier this year in “Time-to-Value: Developing a SaaS Equivalent for 3PLs.” Simply put, as shippers evaluate their transportation management strategies, they now have another option to consider in addition to implementing a TMS (either in-house or as a service), upgrading or replacing their current TMS, or outsourcing everything to a 3PL.
- More companies and solution providers will recognize the importance of B2B connectivity. It’s not new, it’s not sexy, but B2B connectivity is coming out of the shadows and becoming an important factor in creating an end-to-end supply chain solution (see here, here, and here for several postings related to this topic). This year, IBM acquired Sterling Commerce and Highjump acquired TrueCommerce. In recent years, Oracle and SAP have also established partnerships with other B2B connectivity providers (E2open and Crossgate, respectively). I expect some more acquisitions and partnerships related to connectivity to occur in 2011.
- Greater adoption of social media technologies in supply chain and logistics processes. Some of the examples I highlighted this year—“Mobile + Social Media = Supply Chain Innovation” and “Rethinking CRM: Social Media at a 3PL”—are just a sign of more things to come.
- Transportation rates are going up. Rising oil prices and tightening capacity (due to various factors, including CSA 2010) will be the main culprits.
- Currency risks will continue to impact supply chains. In his keynote speech at the CSCMP Annual Conference this year, Secretary Gutierrez highlighted currency as a key supply chain risk moving forward (read my write-up here). About a month later, Pascal Lamy, the Director-General of the World Trade Organization, also voiced his concern about what was happening on the currency front (read my comments here). Bottom line: If you have a global supply chain, keep a close eye on monetary policy in 2011.
- Increased M&A activity, especially in the 3PL industry. The recession threw a wet towel on 3PL M&A activity in 2009 and the early part of this year. But as Ryder’s announced acquisition of Total Logistic Control (TLC) last week shows, things are beginning to heat up again. In the technology space, I’m going to make an audacious prediction: HP and/or Dell will acquire a leading enterprise software vendor (I’ll let you speculate which ones) to keep pace with Oracle and IBM. The worlds of enterprise software, hardware, and (I would argue) B2B connectivity are coming together.
Steve’s Predictions
I find my contribution to this annual posting particularly difficult. There are new and emerging trends that are clearly visible, but how do you put a boundary on them and make predictions that are verifiable for the coming year? In other areas, the trends are so obvious that making predictions seems trivial. Nonetheless, here is my best attempt at making nontrivial, verifiable predictions.
- The use of robotics in the warehouse will increase. I am confident that robotics will change the face of warehousing, and it’s safe to predict that companies will implement more robots in warehouses in the coming year. But what will the growth rate be? I predict double-digit growth, but without doing a market study in this area, I won’t be able to verify this prediction. Therefore, I’ll consider doing a study in the second half of the year.
- The Business Intelligence (BI) capabilities embedded in logistics software will continue to improve. Demand for BI capabilities is high, and vendors are slowly improving their capabilities in response. BI solutions that provide real-time analytics are becoming more common, and I am confident that by the end of next year all of the major software vendors will have improved their BI capabilities. I am also fairly confident that for the great majority of vendors, the improvements will be incremental rather than revolutionary. Software vendors with network-based TMS solutions (aka software-as-a-service solutions) are starting to provide analytics based on benchmark data that are particularly interesting to users. I expect this trend to continue.
- GPS-style track and trace solutions will converge with routing and even fleet maintenance solutions. This year we saw the emergence of solutions that use historical data from GPS devices to make better predictions on traffic congestion and thus provide better routing. The next step is to better integrate routing with real-time traffic data generated by a network of connected GPS drivers in metropolitan areas. We will see increased sales of these converged solutions next year, along with new entrants. But the market will still be small by the end of 2011. In short, this trend is still in the very early stages, so making solid predictions is a bit difficult.
And as the economy continues to improve, certain predictions can be made:
- Global trade will increase in 2011. This will lead to double-digit growth in the Global Trade Management (GTM) solutions market next year. Meanwhile, the Warehouse Management Systems (WMS) market will go from negative growth to a rate well above inflation, and the Transportation Management Systems (TMS) market will approach double-digit growth in 2011.
- Next year will be the best year for new hires into logistics management positions in several years.
- Now that we are out of the recession, interest and work by companies in Supply Chain Risk Management will wane. How could this be measured? We could track the number of companies enrolled in the Supply Chain Risk Leadership Council in 2011 as compared to 2010 (there are 15 “council members” at the end of 2010). In contrast, the Supply Chain Council’s SCOR model has been enhanced by the addition of risk and environmental management and human resource skills requirements for each supply chain process. I expect enhancements in this area to continue.
Politics and regulatory reform – or the absence of regulatory change – will continue to impact the field of logistics.
- CSA 2010 will lead to a reduction in the number of drivers. But the predictions of some industry analysts that 150,000 to 200,000 drivers will be purged will prove to be much exaggerated. Small trucking firms will have a harder time hiding because of the new portal FMCSA is developing that better documents carrier safety records, and some will go out of business and blame the portal. However, the FMCSA site is so hard to navigate, that far fewer carriers will go out of business than is forecast.
- I again predict no progress on “green” legislation. With action in the US blocked by a divided Congress and acrimony between the parties, no carbon limit legislation will emerge. And without that legislation, other nations will be unwilling to get tough. Also, I predict the EPA will not regulate carbon emissions in any way that will be detrimental to shippers and carriers because the Obama administration is focused on growing the economy and reducing unemployment.
