Supply Chain and Logistics Predictions for 2013

Predicting the future has never been easy. Back in 1943, Tom Watson, the president of IBM at the time, said “I think there is a world market for maybe five computers.” And in 1995, Robert Metcalfe, the founder of 3Com and the co-inventor of Ethernet, made this astonishing prediction:

“Almost all of the many predictions now being made about 1996 hinge on the Internet’s continuing exponential growth. But I predict the Internet will soon go spectacularly supernova and in 1996 catastrophically collapse.”

Two years later, Mr. Metcalfe literally ate his words by putting a printed copy of the article where he made that prediction in a blender, then he added some liquid and drank the resulting mix from a bowl.

The bottom line is that even great leaders and innovators like Tom Watson, Robert Metcalfe, and many others don’t always get it right when it comes to envisioning the future. Steve and I take comfort in knowing that if we are completely wrong about our predictions for 2013, we’ll at least be in great company.

Adrian’s Predictions

The biggest challenge with making supply chain and logistics predictions is keeping the list short because there is so much going on in this field. Nonetheless, here’s my abridged list:

1. Big Data, Social Media, Cloud Computing, and Mobile Technologies will continue to dominate the headlines. These are such dominating trends that you can easily take this prediction and break it down into a dozen or more. Simply put, if you look at all of the press releases issued by technology companies over the past two years, the majority of them dealt with one or more of these trends. And we’ll see more of the same in 2013 and beyond, with the greatest innovation coming from the convergence of these four trends. Here are some quick thoughts on each:

Big Data: continued progress with predictive analytics and sentiment analysis, continued challenges with data quality.

Social Media: more startups, more acquisitions, more case studies.

Cloud Computing: the biggest value will come from B2B connectivity and the insights derived from network-level data and analytics.

Mobile Technologies: tablets and smartphones are quickly becoming the preferred computing platform for business professionals, and we’ll see more enterprise applications designed and optimized for these devices in the years ahead.

2. User Interfaces for Supply Chain Apps Will Get a Social Makeover. Software vendors will transform the look and feel of their user interfaces by adding capabilities similar to Facebook and Google + (think of creating “Circles” of your carriers, suppliers, customers, and even other shippers), Twitter (to send short status messages), and Dropbox (for sharing purchase orders, invoices and carrier credential documents). The Holy Grail is a user interface that allows a person to access business intelligence information, execute transactions, and communicate/collaborate with others (via embedded email, chat, microblogging, video calls, and VOIP) all from a single screen.

3. “Siri” Comes to Enterprise Apps. Instead of manually executing tasks with a mouse or touch screen, why not speak them? We already see this in the consumer realm with smartphones, and in the warehouse too with voice picking technologies. It’s only a question of time before speech recognition gets embedded into other enterprise and supply chain applications. A TMS user, for example, can say to the system, “Show me all uncovered loads,” or an inventory manager can ask, “Which stores have less than three days inventory of product X?” and up come the results on the screen. To get a sense of how quickly speech recognition technology is progressing, check out this informative Microsoft video where Chief Research Officer Rick Rashid demonstrates a speech recognition breakthrough that converts his spoken English words into computer-generated Chinese language in near real time.

4. The Robots Keep Coming. Amazon’s acquisition of Kiva was one of the biggest stories this year, which basically underscored the changing nature of automation in the warehouse. But robots and automation are playing a bigger role in other areas too, such as the rise of driverless cars and the use of robots to track inventory in stores. Where does that leave us humans? As Erik Brynjolfsson and Andrew McAfee from MIT state in their book, Race Against the Machine, “Our technologies are racing ahead but many of our skills and organizations are lagging behind. So it’s urgent that we understand these phenomena, discuss their implications, and come up with strategies that allow human workers to race ahead with machines instead of racing against them.”

5. Continued Focus by Retailers and Service Providers on Innovating the Final Mile. Amazon, Walmart, Google, eBay, and USPS all launched or ramped up their efforts to provide same-day delivery to consumers this year (see “On Amazon’ Quest for Same Day Delivery,” “Google, Same-Day Delivery, and Container Tracking,” and the WSJ article, “Same-Day Delivery Becomes a Costly Web Battleground”). Earlier this month, Google acquired BufferBox, which provides lockers for customers to receive packages from online e-commerce retailers (very similar to Amazon Locker). Couple this trend with urbanization and omni-channel retailing, and you can see why innovating “final mile delivery” will remain a priority for retailers and service providers in the years ahead. Optimization and mobile technologies will play an important role here, as will couriers and public transportation.

6. Further Blurring of the Lines Between 3PLs, Tech Providers, and Consultants. Over the past few years, we’ve seen 3PLs offering technology-only solutions to customers, software vendors introducing managed services, and consultants offering technology and managed services in addition to their standard project-based services. As I said in a recent posting, a successful 3PL today is an operations manager, a consultant, and a technology provider all rolled into one. You can say the same thing for software vendors and consultants.

7. Increased Adoption of Alternative Fuel Vehicles. Frito-Lay, UPS, Ryder, Sunny Delight, FedEx, Waste Management, Staples, AT&T, and Mohawk Industries are among the many companies that have started using alternative fuel vehicles — including natural gas, electric, and hybrids — in their transportation operations. The rising cost of diesel and sustainability goals have been the main driving forces, and they’ll continue to lead other companies in this direction in the months and years ahead.

8. More Programs and Partnerships to Address the Talent Shortage Problem. There is a shortage of supply chain and logistics talent in the industry. One way to address this problem is for companies to partner with local universities and community colleges to create training programs that align with their talent requirements. The partnership between TNT Express and Tilburg University is one example. Other examples include the AllianceTexas logistics park and its partnership with the Tarrant County College Corporate Training Center, which trains people to become certified logistics associates (CLA) and certified logistics technicians (CLT), and the partnership between MIT and the Zaragoza Logistics Center in Spain. Software vendors are also donating their solutions to colleges and even high schools to give students hands-on experience using supply chain and logistics software before entering the workforce.


Steve’s Predictions

Omni-channel retail is a trend we have been talking about for a few years, prematurely for the most part. Retailers, particularly big box retailers, are facing pressure from two directions — Walmart’s low prices and Amazon’s e-commerce driven convenience. This year several of these retailers began reinventing themselves by embracing omni-channel commerce, which aims to deliver a seamless consumer shopping experience through all available channels — i.e., mobile devices, personal computers, bricks-and-mortar stores, catalogs, and so forth. For omni-channel to be successful, retailers need to address the appallingly bad inventory accuracy that exists at many stores. For years, retailers have bought automatic identification (AutoID) solutions to improve inventory accuracy in their warehouses. Next year retailers will make big investments in AutoID solutions to use in their stores.

When a solution provider has done something particularly innovative or successful, you can be sure that others will do the same. These types of predictions are easier to make, and here are two that fall in this category:

This year Infor (an ARC client) took a real step forward with its innovative new user interface. The Infor solution blends traditional process flows, in-line analytics, and logical opt-in social community groups. Social media is something that many logistics professionals still struggle with, but I suspect that many of them who view the Infor solution will be as impressed as I was. I believe we will see other software vendors providing the sincerest form of flattery by copying the look and feel of Infor’s user interface.

Kiva is another successful company that others will copy. This material handling robotics firm was purchased at a high price by Amazon. We are already seeing material handling firms making questionable assertions that they also provide robotic solutions. But I think we will see innovative new autonomous, mobile robotic solutions emerge and gain traction in the coming year.

Now here are a few predictions that I am certain of, although it might take longer than a year for them to come true.

Mobile and autonomous robots will change the layout and look of warehouses. Traditional warehouses have 40 foot ceilings; robots can operate in facilities with much lower ceilings or even in multi-floor buildings. I believe we will begin to see traditional strip malls bought and modified (by adding new truck doors) into robotic warehouse facilities. This will often prove to be much cheaper than building a brand new warehouse.

The biggest optimization hole in logistics is around the difficulty of arranging for collaborative, multi-party backhauls. Too many trucks still go out full and come back empty. I believe transportation management systems with a multitenant architecture and new LinkedIn-style logistics communities will begin to provide us with a real solution to this problem.


So, do you agree or disagree with our predictions? What predictions are on your list? Post a comment and let us know!

Editor’s Note: You can watch a video of Adrian discussing his 2013 supply chain and logistics predictions at Talking Logistics.


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