Change will flow throughout all supply chains in 2018, regardless of products or services offered. Meanwhile, the push toward e-commerce is growing, with more than $100 billion in growth expected over the next seven years. Supply chain managers and executives should be mindful of these additional (read our first post of the top supply chain trends for this year) 2018 supply chain trends as the year progresses if they hope to stay competitive.
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Omnichannel Supply Chains Will Become Standard
Omnichannel is perhaps the biggest of the 2018 supply chain trends. 2018 will see more supply chains pursue omnichannel strategies, eliminating inconsistencies and disparate systems and creating a cohesive, shopping experience for consumers. Although consumers may see a single stream of products, this represents a major change in the basic principles behind which supply chains operate. Existing systems will need integration, and checks must be installed throughout existing processes to ensure orders are fulfilled appropriately, says Steve Banker of Forbes.
Companies Will Focus on Integrating the Long Tail of Supply Chains to Incorporate all 2018 Supply Chain Trends
The long tail supply chain will also see big changes throughout 2018. According to Talking Logistics With Adrian Gonzalez, due to the complexity of integrating the so-called long tail of suppliers, carriers, customers and other trading partners, companies have followed the 80/20 rule to keep costs down. However, new systems and standards will effectively reduce these costs. Instead of focusing on a small portion of the top-moving products, supply chains can focus more on the 80% of products that their competitors tend to ignore. In addition, companies will begin the process of focusing on offering effective, efficient product returns and liquidation services. Better returns management and reverse logistics are essential to keep pace with the growing demand for e-commerce.
Supply Chains Will Use More 3PLs
As explained by Amy Wunderlin of Supply & Demand Chain Executive, capacity will be a major driving force behind innovation and change in supply-chain in the coming year. Capacity is already tight, and the driver shortage is only expected to worsen. Rather than paying sky-high rates and feeling helpless, supply chain entities can double down efforts during negotiations by partnering with third-party logistics providers (3PLs). In addition, greater use of 3PLs, which usually offer better benefits, pay and freight rates than national carriers, may help actively reduce spikes in freight rates.
Warehouse Managers Will Work More on Attracting New Talent
Across the supply chain, the skills gap is quickly becoming a major problem. While much of the debate focuses on the driver shortage, it is important to note that the driver shortage is a subset of the skills gap. The next generation simply is not interested in positions within the supply chain, so supply chain managers will need to take steps to attract new, fresh talent to their organizations, and since talent is key to effective procurement management, says Marc Wins of Procurement Academy, manufacturers will need to locate talent well-versed in digital technologies and systems to ensure a continuous flow of inbound products.
This is the solution to the skills gap. Companies will be looking for younger, motivated talent throughout 2018, and they will be offering unique benefits, such as paid training, tuition reimbursement and mentoring programs to encourage more people to pursue careers within the supply chain. Incentive programs and continuous feedback from upper-level management can also help encourage retention and attract new talent.
Supply Chain Networks Will Respond to Potential Increases in Tariffs
The Trump administration has made no qualms about its disinterest in existing trade agreements, favoring a policy that brings manufacturing and supply chain positions back to the US. However, the possibility of complete withdrawal from existing free-trade agreements is a source of great concern for supply chain leaders. As the agreements that cover international trade grow and adapt in the coming year, supply chain networks will need to respond to regulations that may arise. Of all of the 2018 supply chain trends, an increase in tariffs or a backing off of existing trade deals is not yet fully known and hard to plan for.
Tariffs may increase, and fines or penalties for businesses that do choose to source operations overseas may become reality. In response, supply chains will increasingly focus on moving operations back to the US throughout the remainder of the year, also known as reshoring, as well as fine-tune overseas operations and negotiate new service level agreements (SLAs) with their respective partnering companies, explains Steve Banker of Forbes. Restructuring of basic business processes is also likely in light of the passage of the tax cuts and jobs act.
Supply Chains Will Go Digital
2018 will be the year in which more supply chains abandon older supply chain management strategies and principles in favor of digital processes and technologies. According to Wunderlin, supply chain entities will develop specialized teams to focus on innovation and better ways to deploy digital technologies. In addition, more companies will continue to invest in innovation, and in a recent survey, 94% of supply chain respondents cited competency in technology as a distinguishing factor when considering outsourcing supply chain processes, including the use of third-party logistics providers (3PLs).
It is not enough for supply chain managers to invest in technologies available today. They must take a proactive a step in watching for technologies on the horizon, such as drones and autonomous trucks, or their competitors will quickly siphon customers away.
Supply Chains Are Growing More Complex and Interdependent
Supply chains will continue to grow more complex and interdependent as 2018 progresses. The days of operating as an individual company are ending, and supply chain managers must look for ways to partner with other companies to avoid going broke. Of course, they have an arsenal of technology solutions at their disposal, so our next post will focus on the top supply chain technology that will reign supreme alongside these 2018 supply chain trends.