Six Supply Chain forecasts for 2020
- Feb 06, 2020
The year 2020 begins amid an innovation scenario that accelerates at an unprecedented speed. We are experiencing a digital revolution that is changing the way we live, work and interact. The power of information technology is transforming the reality of business as more of our decisions are based on data and artificial intelligence use cases are providing significant business value. Meanwhile, global movements to protect the planet and operate responsibly continue to grow with relevance.
Innovation and sustainability should guide business in 2020, in different segments. Not only for retailers and consumer goods companies, but also for companies of all types, sustainability is increasingly expected by customers, shareholders and suppliers. In order not to lose opportunities and become competitive in the market, companies must invest in the supply chain and be aware of the main trends in the transport sector.
The watchword is sustainability
Sustainability is becoming a requirement in many sectors. Not only for retailers and consumer goods companies, but also for companies of all types, sustainability is increasingly expected by customers, shareholders and the masses. It is becoming increasingly important in recruiting talent. Environmental responsibility is no longer an exclusive issue for environmentalists and has become an issue for everyday discussion.
Eliminate empty miles
With an increasing focus on sustainability and efficiency, empty containers will become an increasingly popular button in the transport sector. In freight, waste means that more fuel is consumed, more carbon is emitted and drivers spend more hours idling. Empty miles, miles without revenue or inactive miles are an obstacle for industry and the economy, as companies pay more to move goods. Carriers respond to their own expectations regarding empty miles when deciding how much to charge for a specific cargo so that everyone, from shippers to final consumers and, of course, the environment - pay the cost of empty miles.
Politics and trade become increasingly intertwined
In 2019, changes in trade policies were perceived as a distraction. In 2020, they will be addressed as part of the new reality in which we live. Tariffs and commercial regulations will become the cornerstones of business strategy discussions and everyone, from the supply chain director to the logistics manager, will follow developments in commerce as a business issue.
Human intelligence shapes artificial intelligence
A greater link is emerging between the human mind and artificial intelligence. Researchers have advanced studies to better understand how learning develops since childhood. The goal is to improve artificial intelligence and machine learning models to be less linear, flexible, more curious and perceptive. Current machine learning mechanisms need to be fed thousands of labeled images so that they can learn to recognize simple objects or animals, like a cat. However, errors are still prone when images of blurred shapes, similar to that object, are presented.
As supply chains progress towards autonomous processes, machine learning and AI platforms will continue to learn, watching humans and data signals spanning parts, regions and supply chains, to understand the complexities and nuances of global trade. Some workflows move to deleted status, while many other complex scenarios that involve multi-party collaboration and orchestration across the network will require greater learning from their human counterparts.
Supply chain looking inward
In 2020, emphasis will be placed on self-sustainable economies, with the supply chain relying on domestic resources and business partners. This will happen mainly in the USA, China and other developed economies. Production is increasingly inclined to "produce and deliver locally." On the consumer side, there is an increasing trend in the relationship with local brands. In China, consumers are increasingly turning to Chinese brands for clothing, appliances high-tech and cars, ignoring Western names. In the US, companies are bracing themselves for long-term tensions with other global trading blocs and will diversify their supply chains in addition to China, and building new networks elsewhere in many cases closer to home.
The Digital Berlin Wall
Kristalina Georgieva, new director of the IMF, highlighted in her inaugural speech that: "Even if growth accelerates in 2020, current gaps can lead to changes that last a generation - broken supply chains, isolated commercial sectors, a digital Berlin". The Digital Berlin Wall metaphor emphasizes emerging barriers and the impact that technology is having on trade. As the supply chain retreats inward and technology improvements are further entrenched in trade, some of the measures being taken today they may have long-term ramifications in supply chains, with parts or regions stopping.
Global agility and flexibility, focal points for years as globalization has expanded, will take a turn. Resilience and flexibility remain important, but suddenly the ability to quickly integrate and support suppliers outside traditional supply hubs becomes essential as new digital barriers arise. Essential raw materials and inputs can suddenly become unavailable or expensive. The need to act quickly in the face of such risks will be essential to compete.
In 2020, it is more important than ever that companies are fully connected to their partners abroad. Collaboration, visibility and free flow data between the parties are essential ingredients to thrive in an increasingly uncertain and pressure-filled future. Companies that orchestrate their supply chain as a single cohesive network will have agility and speed of execution to detect and respond proactively and meet the needs of their customers. This will be a significant competitive advantage in 2020.