Through The 2020 Lens: Eight Supply Chain Predictions

The year 2020 approaches with promise amidst a backdrop of innovation and transformation occurring at a speed never witnessed before. We’re experiencing a digital revolution that is changing the way we live, work and interact with one another. The power of information is just beginning to blossom as more of our decisions are based on data and use cases for artificial intelligence are delivering significant value. Meanwhile, global movements to protect the planet and operate responsibly continue to grow in importance.

Here’s a look at some of the emerging trends and themes you can expect to take shape in 2020.

Supply Chain Digital Twin

Today’s supply chain companies have to be prompt and be prepared for whatever comes their way. However, a lot of them still don’t have access to real-time data and responsive planning systems required for efficient planning and meeting ever-growing customer demand. Hence, the concept of digital twin is rapidly gaining traction in supply chain management, globally as well as in India. A digital twin allows companies to realize the theoretical ability to sense, shape, and respond to customer-demand variability in real time. By leveraging Internet of Things (IoT) and creating a digital mirror of supply chain operations, companies can gain the visibility they need to transform their business into an intelligent enterprise.

Sustainability Required

Sustainability is becoming a requirement in many industries. For not only retailers and consumer goods companies, but businesses of all stripes, sustainability is increasingly expected by customers, shareholders and the masses. One major initiative, the IMO 2020 low-sulfur mandate, kicks in on January 1st. As refiners pave the way, Asia plays an active role in achieving this compliance rate whereas worldwide, the rule is expected to be followed by around 80%-90% in the initial months of 2020.

Eliminating Empty Miles

With a growing focus on sustainability and efficiency, empty containers will be an increasingly hot button across the shipping industry. In freight, waste means that more fuel is consumed, more carbon is emitted, and drivers spend more hours sitting idle. Empty miles, non-revenue miles or deadhead miles are a drag on the industry and economy, as businesses pay more to move goods. Carriers account for their own expectations for empty miles when deciding how much they charge for any particular load, so everyone from shippers down to end consumers – and, of course, the environment – ultimately pay the cost of empty miles.

Politics and Commerce Become Increasingly Intertwined

In 2019, shifting trade policies were perceived as a distraction. In 2020, they’ll be addressed as simply part of the new reality we live in. Expect geopolitical volatility and relations between countries to become increasingly abrasive. Tariffs and trade regulations will become mainstays in business strategy discussions and everyone from chief supply chain officer to logistics manager will be keeping tabs on trade developments as a matter of doing business. Uncertainty will remain the norm for the foreseeable future with nationalism and trade conflict acting as the source of much of the friction.

Human Intelligence Moulds Artificial Intelligence

Greater linking between the human mind and AI is emerging. Researchers have advanced studies of the human mind, including infants, to better understand how learning develops at an early age. The goal is to enhance artificial intelligence and machine learning models to be less linear and ridged, and more curious and perceptive. Current machine learning engines require feeding thousands of labelled images to teach machines to recognise what simple objects or animals such as a cat looks like. Yet errors are still prone when images of blurred shapes resembling that object are presented. As supply chains progress towards autonomous processes, machine learning and AI platforms will continue to learn by observing humans and data signals that span across parties, regions and supply chains, to understand the complexities and nuances of global trade.

Upheaval of Industry Norms

In November, Maersk announced a pullback on ocean vessel investments, stating an intention to focus on land services as part of a broader initiative to drive growth. “We need to grow in acquisitions on land warehouses and customs house clearing services,” Chief Executive Søren Skou said. “We have invested around $1 billion already on the land side supply chain and we are looking to put in hundreds of millions more over the next year.” In 2020, expect more upheaval of standard practices as businesses seek new ways to innovate and serve customers within the confines of a tense trade environment.

Technologies dominating the future

To stay Industry 4.0 ready and win market share in today’s quickly morphing environment, companies are grabbing the opportunity to utilise advanced technologies in identifying critical needs and making strategic decisions. They are building organisational capabilities and actively adapting processes and culture to open new and potentially lucrative doors in the growth inducing industries. The global supply chain is continually advancing in technology, with AI, ML, IoT, Robotics and Automation revolutionising the logistics realm, helping organisations integrate the processes and systems, speeding up growth and efficiency. Considering the level of functionality and security offered by cloud systems, the market for cloud based SCM is expected to grow, it is expected to reach $7.03 billion by 2023.

Next Steps

Moving into 2020, it’s more important than ever for businesses to be thoroughly connected to their overseas partners. Collaboration, visibility and free-flowing data between parties are essential ingredients for thriving in a future that is increasingly uncertain and pressure-packed. Those companies that orchestrate their supply chain as a single cohesive network will have the agility and executional speed to proactively sense and respond to meet their customers’ needs. This will be a significant competitive advantage in 2020 and beyond, separating industry leaders from the laggards.

This article was authored by Mr. Ranga Pothula, MD and GM India Business Unit, Infor.

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