Supply Chain & Travel Logistics

Part
01
of three
Part
01

Supply Chain & Travel Logistics: AI

Artificial intelligence plays a critical role across the supply chain for the logistics industry. Importantly, artificial intelligence has been adopted at divergent rates across autonomous vehicles, assisted driving, and package delivery. AI adoption has been driven by retailers and customers in the logistics industry.

Low adoption of AI

  • As an emerging technology, logistics companies have not largely adopted AI. Heavy capital investments are largely to blame for low interest by use of AI by logistics companies.
  • Significantly, only 21% of logistics firms in a McKinsey's survey had engaged in deploying AI solutions after initial testing phase.

Customer driven AI adoption

Retailer driven AI adoption in the supply chain

AI for Autonomous vehicles

AI for package delivery


Part
02
of three
Part
02

Supply Chain & Travel Logistics: Export Trends

Some trends pertaining to exporting for customers in the supply chain and logistics industry include big data, blockchain technology, and automation will transform logistics, the influence of politics on the exports and supply chain - travel logistics, cross-border payment in international exports and logistics, supply chain visibility in exports and relationship with the customers, and strategic alliances by mergers and acquisitions in the logistics industry. Below is a deep overview of the topic.

1. Big data, blockchain technology, and automation will transform logistics :

  • The small and midsize exporters and importers have begun using blockchain, big data, and automation technology for faster and safer supply of products worldwide.
  • This will reduce the time and personnel involved in recording communications within the supply chain.
  • Also, this will enhance the service quality by adopting long-term ramifications for customer experience as a whole due to an enhanced operational reactivity and fluidity.

2. The influence of politics on the exports and supply chain - travel logistics:

I- Britain’s exit from the EU is causing disruption. This has/will lead to:
  • 63% of the participating EU companies are planning to move some of their supply chains out of the UK.
  • Costs would go up without the trade advantages, leading to higher export costs from the UK.
  • The slowdown in manufacturing growth amidst fears over trade shifts resulting from Brexit.
II- China domination over global manufacturing and its trade war with the US. The effects of this would be:

3. Cross-border payment in international exports and logistics:

  • This year, 2019, small to midsize exporters and importers are having payment flexibility when it comes to cross-border payments, while the freight companies are getting paid faster.
  • For the logistics industry, cryptocurrency has made it easier for cross-border, international payments, this is, cryptocurrency payments are safe and private compared to the last decade trend of credit and debit card payments.

4. Supply chain visibility in exports and relationship with the customers:

According to an international company A & A which specializes in international logistics, exports, and imports, supply chain visibility:
  • Gives insight into what’s happening at each point of the supply chain.
  • Helps companies optimize fleet routes, manage warehouse stock, reduce dead mileage, and monitor inventory.
  • Ensures efficiency of the whole supply chain process of the company, this is, from procurement to delivery.
  • Involves taking inventory management to another level by the use of mobile point-of-sale systems.
  • In the logistics segment, it is more crucial to the e-commerce sector because of the surge in omnichannel shoppers.

5. Strategic alliances by mergers and acquisitions are taking over in the logistics industry:

Strategic alliances have a significant effect within the logistics in relation to the export business, this is:


RESEARCH STRATEGY:

In order to find the trends in the supply chain and logistics industry. We had to adopt a business-oriented strategy to breakdown all the sectors and business areas related to our topic of research. We used the research and business tool called PESTEL tool. A PESTEL analysis is a framework or tool used by managers to analyze and monitor the macro-environmental (external marketing environment) factors that have an impact on an organization. The result of which is used to identify business trends in order to avoid and to tackle threats and weaknesses.
The word PESTEL consists of the initials of the following:

P Political
E Economic
S Social
T Technological
E Environmental
L Legal

After we defined the strategy and research segments, we started to search for trends in each segment. We have chosen the segments that have more impact on the topic of research. For instance, in technology, all the sources we checked highlight the blockchain as well as the use of big data to automate the export/import business in the logistics industry. This shows big data, blockchain technology, and automation is a major business trend in the supply chain and logistics industry. In politics, there are many political events that might disrupt the export/import business, however, for more quality and precision, we looked for issues that cause problems at the international markets for both small and large-sized companies. Some political trends include Brexit of the UK and the Chinese-American trade war.

Part
03
of three
Part
03

Supply Chain & Travel Logistics: Challenges

The biggest challenges facing the supply chain and logistics industry are blue-collar labor shortages in transportation and warehouses that are not easily addressed even with the rise of automation and the foreign influences such as the China and the US negotiations and concerns surrounding Brexit. Other challenges surround visibility, technology and supply chain alignment, and environmental issues. Digitization leading to a digital supply chain, increased incorporation IoT, blockchain technologies, and warehouse execution systems are solutions the industry are employing to address these challenges.

FOREIGN RELATIONS AND ECONOMIC DOWNTURN


LABOR SHORTAGES

  • The current and future transportation labor shortages are being exacerbated by the strong e-commerce industry since the rapid growth of online shopping is creating a strong demand for delivery drivers. The e-commerce boom is also creating labor shortages in warehouses and they are finding it increasingly difficult to fill openings.
  • Collaborative transportation management is one solution as shippers and LSPs open visibility to their capacity in their network to others. They also expand their transportation ecosystem and unlock underused capacity and reduce deadhead miles.
  • Warehouses are increasing automation to fulfill direct-to-consumer transactions and other more adaptable and scalable solutions. Automation will only fulfill some of the labor demand and increase wages for workers because companies have to effectively recruit and retain workers.
  • There is also a challenge in the industry to find and retain people with technical and analytical skills to effectively manage and improve the supply chain. Successful companies will attract junior talent by allowing rotation through the organization to learn and develop new skills internally. Additionally, companies should identify potential partners for specific competencies and blend internal and external results.

VISIBILITY

  • It is put that 89% of logistics providers see a lack of visibility as being the primary obstacle in providing better service. As an example, it is estimated that 30% of perishable goods spoil before they reach their destination. While it is measurable, it is not visible to know at what point in the process this is occurring to be able to address the problem.
  • Better visibility can address concerns such as theft, loss, legal responsibilities, asset tracking and more. Good visibility can remedy other challenges such as missed opportunities for consolidation, reduced transportation costs, negotiations for lower rates, and inabilities to streamline. It can also hold suppliers and transporters accountable and be able to create transportation provider scorecards.
  • To address issues with visibility, companies are using turnkey asset tracking, IoT, 3PL vendor support, and digital technologies such as cloud transportation management systems among others. The improvement of visibility will also result in benefits such as automated ordering, quotation, and route optimization.
  • Many digital supply chain initiatives are extended supply chain visibility. Pfizer's digital supply chain was implemented to gain real-time shipment visibility by replacing its existing disparate systems, intermittent phone calls, and emails. They developed the Pfizer Trackit app to track shipments of 15,000 stocks and to keep units using data from Pfizer and supply chain partners. It also allows customers to access "timely and accurate data".

SUPPLY CHAIN ALIGNMENT

  • Imbalance in supply and demand results in waste or excess supply.
  • AI, machine learning, and predictive analytics can be used to address these misalignments to measure demand and ensure more efficient supply processes. Good analytics and reporting along with machine learning can help to continuously improve processes at every level of the supply chain.
  • Managing all the different links in the supply chain is a very complex process because depending on the product, it can span hundreds of stages, multiple geographical locations, invoices, and payment processes. It might also require several individuals and entities involved and extend over months. Currently, there is a lack of transparency in supply chains that lead to confusion among customers to know the true value of the products. It is also vital to have transparency in the investigation of possible illegal or unethical practices.
  • Blockchain technologies are being explored to increase the efficiency and transparency of supply chains to be able to address these issues that are positively impacting everything, from warehousing, to delivery, and to payment. It records every transaction making it highly transparent and secure.

ENVIRONMENTAL ISSUES

  • About 90% of the damage caused by CPG companies to the environment and 80% of greenhouse gas emissions came from the supply chain. But still, fewer than 20% of supply chain managers report that they have visibility into sustainability practices. CPG companies have to reduce greenhouse gas emissions by at least 90% by 2050.
  • Supply chain managers need visibility to know how suppliers are extracting or producing raw materials to ensure that they are following sustainability guidelines and that they can use blockchain technology to capture and verify supplier sourcing practices.
  • Optimizing transportation routes is the best way to reduce fossil fuel consumption, as well as the use of artificial intelligence, in conjunction with GPS devices, to maximize these benefits.
  • Environment issues such as California wildfires and rising sea levels, among others, are also having an impact on supply chain and logistics companies' efficiency, quality, and speed. There is a supply chain technology that can help predict these risks and allow managers to try to mitigate the impact and make alternate plans.

RESEARCH STRATEGY:

We examined reports from credible sources such as Forbes and experts in the field of supply chain and logistics to gather information about the common supply chain and travel challenges for 2019. We then searched for supply chain and logistics industry trends to cross-reference them with the identified challenges and determine why they are considered challenges. Finally, we conducted a search for information regarding the possible solutions for each of the identified challenges and how companies are implementing these solutions to overcome the challenges.

Sources
Sources

From Part 02
Quotes
  • "The supply chain will be more reliable, as importers and exporters will have the ability to communicate quickly with global suppliers and automate complicated tasks to minimize human error and eliminate redundancies. That trend will most likely continue in 2019 as small and midsize importers and exporters even the playing field against larger counterparts by leveraging big data and blockchain technology."
Quotes
  • "Blockchain is especially useful for the logistics industry because it could benefit many players at once: manufacturers, shippers, customers, suppliers, auditors, etc. Blockchain technology allows suppliers and customers alike to track and trace products, and auditors to check transactions. As information stored in the blockchain can never be altered, it cannot be manipulated by third parties and is, therefore, more secure than most other solutions. Indeed, research shows that 20% of logistics companies are already implementing blockchain solutions."
Quotes
  • "FTAs are helping European businesses compete more successfully and export more to countries and regions outside of the EU. They also give better access to raw materials and vital components from around the world. This increase in trade then grows the job market and economy, and gives consumers a wider choice of products at lower prices."
Quotes
  • "The global trend of the last decade toward widespread credit and debit card use, as well as the introduction of cryptocurrency as an alternative form of payment, will accelerate in logistics. In 2019, most shippers will choose to pay for the shipment of goods with major credit or debit cards, as freight companies and other intermediaries are pressured to offer this payment convenience. This will help everyone, as small to midsize importers and exporters will have payment flexibility, while freight companies can get paid faster."
Quotes
  • "Proper analysis of supply chain data can significantly improve business forecasting and decision making. It can also optimize the use of resources involved in inventory management, storage and transport. Supply chain visibility gives insight into what’s happening at each point of the supply chain. It’s extremely important for the efficiency of the entire supply chain process, including procurement, manufacturing, transport and delivery. "