ARC’s Supply Chain Predictions for 2015: Hits and Misses

At the beginning of the year the ARC supply chain team made supply chain predictions for 2015. This article circles back and reports on how we did.

Very often any predictions you can make for a one year period are not about a brand new thing that will occur, the prediction is really part of a larger megatrend that has not only been going on for some time but will also continue for many years to come.

The megatrends affecting supply chain management include:

The goal of the article was to produce forecasts specific enough so that their validity could actually be checked at the end of the year. We made some specific predictions surrounding these megatrends.

Robotics

The big player in this space was KIVA, which was acquired by Amazon and then stopped supporting the bots they had already sold.

We predicted that that in 2015 we will see new types of mobile robots for the warehouse emerge from other suppliers.

Hit: Grey Orange, a India-based robotics manufacturing company, is producing warehouse robots that look much like Kiva bots. Fetch Robotics has produced a system with two robots that work together. Fetch is a bot with a single arm that ends in a two-fingered gripper that can pick boxes off warehouse shelves and pass them to its sidekick, Freight. Both bots have a wheeled base. Once the order has been assembled, Freight can carry the goods to a shipping station while Freight continues to pick to the next Freight bot that has just arrived. There are other suppliers we have not mentioned here, and still others we know of that are poised to enter the market.

The Industrial Internet of Things

We’ve made the argument before that the Internet of Things (IoT) is nothing new in logistics. In the logistics space, for example, we’ve been taking RF scans and using that data to improve warehouse processes since at least 1975. But IoT is getting a lot of attention, and new investors in this space should mean new solutions.

We predicted we will continue to hear of new IIoT applications emerging, ways to use remote sensor data to improve supply chain business processes, that never occurred to us.

Hit: One interesting example we heard of how IoT and modeling can be combined comes from last year’s Long Beach labor strikes. As shippers shifted volume to other ports they found other shippers were doing the same. Delays by port were changing on a day by day basis. What if models of port throughput were used and combined with AIS Vessel tracking data (a form of sensor data)? If the model understood how many ships were sitting outside a port, how many were headed to that port, the relative sizes of those ships, and the throughput capacity of the port, shippers could have made much better port scheduling decisions.

Big Data

IoT sensors are going to generate Big Data. Big data volumes are going to continue to grow exponentially. Solutions are needed to handle not just the growing volume of data, but also the velocity and variety of data. Complex event processing (CEP) technologies can help to tame data velocity. CEP technologies have been traditionally associated with financial trading.

We predicted that this is the year we will hear of good applications for CEP in the supply chain.

Hit: Actually, we stole this prediction from our colleague David White, who is ARC’s expert on analytics. We circled back to David and asked if he had seen good applications for CEP in the supply chain. He pointed us toward an article called Shipping logistics with event processing.

Omni-channel

Omni-channel investments by retailers have been all over the news. ARC’s research shows that distributed order management (DOM) is one of two key technologies that retailers need, but don’t have, to ramp up their omni-channel capabilities. But DOM is a complex solution, it can’t be easy to implement. In all our years as analysts, the ARC supply chain team has heard only one speech by a retailer on how their omni-channel implementation improved their multi-channel capabilities, and this speech talked about the implementation at a very high level.

We predicted that in 2015 I would finally see a good presentation by a retailer that goes into depth on the costs, benefits, and difficulties associated with a DOM implementation.

Miss: We still have not seen that presentation.

Relentless Competition

The most brutal competition is currently occurring in the shale oil patch where the cost of a barrel of oil plummeted. And yet, from a supply chain perspective, this is among the worst supply chains in North America. Further, shale oil producer’s key partners, the oilfield service companies, also run terrible supply chains. In neither industry are you likely to find practitioners talking about their Sales & Operations Planning processes.

We predict that we will finally see Shale Oil companies and Oilfield Services companies explaining to Wall Street how they are implementing a Sales & Operations Planning to improve operations.

Miss: A Google search fails to find any evidence that this is true. However, the need for S&OP in Shale Oil is being talked about much more by leading consultants than it was a year ago.

The ARC supply chain team will be back with a new set of logistics and supply chain predictions for 2016 in a few weeks.

Comments

  1. […] ARC's Supply Chain Predictions for 2015: Hits and Misses Hit: Gray Orange, a India-based robotics manufacturing company, is producing Kiva knock offs. Fetch Robotics has produced a system with two robots that work together. Fetch is a bot with a single arm that ends in a two-fingered gripper that can pick … Read more on Logistics Viewpoints (blog) […]

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