In the past few years, supply chains shifted from operating on their own schedule to accommodating customers’ need for faster, more efficient processes. From one-hour grocery deliveries to Amazon’s epic race against FedEx, 2019 was an eventful year in retail logistics. With 2020 beginning, here are a few hot logistics trends to keep an eye on.
Digital Twins Come of Age
Digital twin technology is a replica of a product, system, or facility used to connect the digital and physical worlds. In a sense, it’s using technology to test equipment in a virtual space. Grand View Research projects that digital twins will be worth $26 billion by 2025.
Though using digital twins for logistics is still in its infancy, forward-thinking retailers will explore this technology for tracking products through supply chains and optimizing logistics infrastructures such as warehouses. Supply chain giant DHL, for instance, recently launched its first digital twin warehouse in the Asia Pacific region.
In the coming year, expect digital twin technology to grow from individual applications to eco-systems that connect operations assets and supply chains.
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With its promise of solving problems such as payment disputes, cargo theft, and quality control issues, blockchain in 2020 will be worth watching. Innovative retailers will embark on individual and cross-industry collaborations to harness the value of blockchain. Target is already working on a blockchain-powered solution, dubbed ConsenSource, to boost transparency within its supply chains. If you’re considering leveraging blockchain to improve your own processes, make sure to identify a promising use case for this technology in your business. Blockchain initiatives will be open-sourced, so ensure you’re equipped to foster a culture of collaboration, as you’ll have to work with suppliers and even competitors to implement solutions that meet your business needs.
Urban Fulfillment Centers
As urban consumers demand same-day and multi-hour delivery, retailers will continue situating fulfillment centers in densely populated urban areas to improve the customer experience and drive brand differentiation. 80% of executives indicate that urban fulfillment is a growth area for their company, and since eCommerce retailers require three times the logistics space as traditional brick-and-mortar stores, it’s safe to predict a high demand for industrial real estate in 2020.
Consequently, retailers and real estate developers will convert old industrial properties or warehouse facilities into last-mile logistics centers, creating a shift toward vertical solutions such as multi-story warehouses. Amazon and Home Depot, for example, recently leased a three-story warehouse in Seattle.
Retailers will continue to adopt shared-services models and leverage crowdsourced delivery to enable same-day and multi-hour delivery. Without question, retailers’ urban expansion strategies will drive significant changes to the competitive landscape. In 2020, delivery speed will be an increasingly important factor to brand loyalty.
Supply Chains Continuing to ‘Go Green’
Following consumer demand for greener products and processes as well as the implementation of regulations such as the UK Clean Zones, retailers will introduce more sustainability into their supply chains. Here’s a glimpse of what’s to come in 2020:
Retailers will opt for carriers with SmartWay status—the US Environmental Protection Agency’s program that advances supply chain sustainability—to send a clear signal to suppliers, customers, and the broader public about their environmental responsibilities. Last-mile deliveries account for around a third of all urban traffic, so retailers will begin implementing zero-emission transport such as electronic bikes and vans for eco-friendly deliveries. Additionally, retailers and carriers will pilot alternative fuels as an emission reduction strategy. Not only do consumers want more sustainable products, they increasingly opt to support companies who are green from production to delivery. Half of Britons are more likely to shop with retailers that offer eco-friendly delivery.
Businesses can’t ignore the growing siren call to protect the planet, so start thinking of ways to make your supply chain more sustainable.
The Rise of Robotics as a Service
The advent of cobots, or collaborative robots (along with their high cost), will contribute to the rise of the Robotics-as-a-Service (RaaS) subscription business model. ABI Research estimates RaaS’ yearly revenue will rise from $217 million (as of 2016) to $34 billion in 2026.
RaaS models offer brands a scalable way of adopting robotics in warehouses with no additional infrastructure requirements and little training. We can expect to see a shift from single-use machines to cloud-based upgradable platforms. Robot technology vendors will start offering subscriptions based by the hour or by the robotic action performed.
As one example of these advancement in the real world, PR Newswire reported that Rakuten Super Logistics, a national leader in eCommerce order fulfillment, is automating its US warehouses by deploying robots that leverage a cloud-based RaaS management system. Expect to see more companies adopt RaaS in their supply chain as success stories emerge.
Cognitive Supply Chains
Another current trend is cognitive supply chains powered by artificial intelligence. Unlike traditional supply chains, cognitive supply chains can understand implications and trade-offs, determine optimal outcomes, and automatically execute transactions in real-time. Following the availability of real-time data from multiple sources, companies will work on incorporating cognitive capabilities into their supply chains to better address customer habits and business challenges. In 2017, more than half of outperforming supply chain executives said their top investments over the next three years will be in cognitive.
Beyond emergency response and asset management, cognitive computing will provide predictive maintenance, product quality initiatives, and supply chain customer experience.
For companies to successfully introduce artificial intelligence and cognitive computing into their supply chains, they must have access to the right data to solve business challenges and a team with a strong AI skill set.
The Future Belongs to Those Who Act Ahead
Retail logistics is in the midst of a radical transformation driven by game-changing technologies. The future has always belonged to those who think ahead—now, it belongs to those putting tomorrow’s methods into practice today.