Global Logistics Trends

29/08/2020 1 By indiafreenotes

The supply chain management system thrives on the coordinated effort of the suppliers, the manufacturers, the transporters and the distributors to make the product available to the end user. In this entire setup, the ultimate objective is to give a finished product to the customer on his demand. So in order to achieve this goal, each party involved in this process must understand the importance of its role and thereby adhere to it diligently.

A global supply chain management system is not limited by the geographical boundary of a particular area or nation but addresses a company’s global operations. Why do companies go for global operations? The reasons can be many. One major reason is business expansion. This is the driving force that makes a company decide in favour of a global operation. However, fierce competition and demand for better products at affordable prices have made many MNCs to relook and redesign their global operation system. The idea is to provide better products to consumers thereby increasing their market share. So every MNC tries to have a time bound system in place to oversee everything starting from getting raw materials to manufacturing, inventory, order management and ultimately distribution and delivery to the customer. The whole process is integrated and functions in a seamless manner.

The global supply chain management system has to be a cost effective and efficient way of doing business. The entire process starting from procurement of raw materials to the distribution of the finished product has to be cost effective. Therefore many companies open up overseas manufacturing units and service centers to manufacture products on time and provide timely service to its customers.

The positive trends:

  • Better brains at cheaper cost: In some countries, a company can have a cheaper labour cost as compared to some other developed nations. This is a lucrative option for a company. That is why many MNCs have outsourced a part of their operation to other countries where they can reduce the cost of operation without compromising on quality.
  • Better Products for Consumers: As it is a global market and each company is trying to increase its market share, the key to success is increasing their customer base. So companies try to manufacture better products at competitive rates to gain new customers and to hold on to the old ones.
  • Improvement in technology: In order to survive in the fiercely competitive global market, companies have to invest in technology and quality operations thereby giving better products to the consumer.
  • Better Performance: This global exposure makes every company to enhance its product quality and improve performance. They have to continuously explore avenues to manufacture better products and provide the customers what they really need on time, every time.

The global supply management system opens up new business vistas not only for the parent company but is also responsible for providing each trader to give his best so that the entire chain works in a coherent and seamless manner. In this system, each one benefits provided each one contributes on time.

Technological Trends

Blockchain Technology

The emergence of blockchain technology has enabled logistic companies to failsafe digital contracts. The use of this upcoming technology allows the different stakeholders of the logistics industry such as manufacturers, suppliers, customers, auditors, warehouse managers, and others to create a transparent and efficient system for recording transactions, tracking assets, and managing all documents involved in the logistics process. The implementation of the blockchain technology is one of the most prominent logistics trends gaining traction in the global blockchain technology market in transportation and logistics industry as it can increase the efficiency and transparency of supply chains and is expected to impact everything from warehousing to delivery top payment positively during the next few years.

Digitalization of the Logistics Industry

With digitalization shaping almost all the industries across the globe, logistics industry is no exception. Rising digital literacy and consumer awareness about the usage of different online platforms for making customized purchasing decisions, the digitalization of the logistics industry has emerged as the key trend gaining utmost traction. The use of digitization in the logistics industry is further expected to bring about significant reduction in procurement and supply chain costs while giving a considerable boost to the overall revenues. The integration of digital channels in the logistics industry is another critical logistics trends further allowing the logistics service providers to lend transparency to the customers while optimizing solutions for increased safety and efficiency.

Emergence of 3PL and 5PL

The proliferation of third-party logistics (3PL) and fifth-party logistics (5PL) is expected to accelerate the global logistics market during the predicted period. During 2017, the 3PL was able to contribute the highest to the global logistics market share. 3PL is responsible for encompassing a broad range of end-to-end transport and logistics needs including transporting goods, maintaining inventory logs and travel insurance, and offering a shield against property loss. Furthermore, according to Technavio’s express delivery market in Brazil, 3PL is one of those advancements in supply chain outsourcing, which provides decreased procurement expenses as well as reduced delivery times.  The rising complexities in the global supply chain market are further ensuring the adoption of 5PL, wherein, providers of 5PL solutions often link e-businesses to achieve minimum cost targets.

Efficient Last Mile Deliveries

With the continuously increasing proliferation of e-commerce companies, the provision of efficient last mile deliveries is witnessing a major upswing to become one of the most critical aspect of creating differentiation of services among the competitors. Furthermore, getting a package within the same day of delivery is almost common in the present days, resulting in the growth of the same-day delivery market in the US. Businesses are also witnessing a greater emphasis on including same day delivery options across industries including pharmaceuticals and food and beverages. Furthermore, along with the same-day delivery, the consumers are also expecting a higher level of services while encouraging large retailers including Walmart and Amazon to add DIY last mile delivery divisions in their own companies instead of outsourcing. Consequently, the continuous efforts of logistics companies to offer efficient last mile deliveries is another logistics trends expected to offer promising logistics market’s growth during the predicted period. The need for getting the orders not just right but perfect will also allow companies to offer ultimate customer satisfaction.

Integration of Drones and Smart Glasses

The rising integration of drones and smart glasses in the logistics industry has improved the flexibility and speed of delivery, in turn, impacting the growth of last mile logistics market during the predicted period. Self-driving vehicles, autonomous vehicles and trucks have been able to maintain high reliability and same-day delivery in both urban and rural areas. Furthermore, integration with smart glasses backed by augmented reality will make deliveries in the transportation and logistics industry much easier by hands-free route searches, face recognition for error-free deliveries and personalized deliveries. The adoption of AI integrated smart glasses will increase the operational efficiency of first and last mile logistics along with flexibility and speed of delivery.

Adoption of Data Analytics and Big Data Logistics

The use of Big Data and Data Analytics in the logistics industry is allowing several stakeholders involved in the business to make informed purchase decisions. Companies are now using big data to anticipate busy periods, potential future supply shortage and other insights for making strategic decisions to improve their market positions and offer a significant competitive advantage over other counterparts. Furthermore, as per the Council of Supply Chain Management Professionals, over 90% of shippers and third-party logistics firms predict that data-driven decision-making is extremely crucial to supply chain activities as the big data improves quality and performance by offering effective supply and demand forecast, inventory management, route optimization, and efficient labor management, in turn, boosting the growth of the global third-party logistics market during the predicted period.

Logistics Automation and IoT

Automation has been gaining traction in the logistics industry as well with the continuous adoption of Internet of Things (IoT). The inception of logistics 4.0 is one of the key logistics trends transforming the global supply chain market. Shortcomings including transportation delays, operator errors, poor monitoring of cargo, outdated IT failures, and thefts are being overcome by the integration of IoT in the logistics industry. Furthermore, this next generation of successful supply chain management is expected to leverage IoT and edge computing for yielding real-time automated insights. For instance, US-based Union Pacific has introduced an IoT-based system to predict equipment failures and reduce derailment risks by using visual and acoustic sensors on tracks. Such rising adoption of logistics automation and IoT has boosted the emergence of connected logistics.