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Technology Trends to Watch in 2019

Technology is driving tremendous change for supply chains across the spectrum. From gaining visibility into purchase orders to connecting end-to-end processes, shippers have a growing number of tools at their disposal to optimize operations. But are they making the most of them?

In a recent customer survey, AGL uncovered several key technology trends that are shaping supply chains in 2019.

  1. Supply chains are falling short of expectations for many shippers.
    In a supply chain environment that keeps getting more complex and unpredictable, it’s no surprise the majority of shippers see room for improvement. In the survey, 71% say there are areas of deficiency in their supply chains and making the appropriate corrections is a struggle.
  2. Many shippers say it’s time to overhaul their processes.
    All the technology in the world won’t make a difference if you’re trying to enhance broken processes. Nearly two-thirds (65%) of the businesses surveyed said that some of their business units could use process engineering. For shippers, mapping the supply chain can be a helpful first step toward optimization. By understanding all the modes, touchpoints and potential bottlenecks across your logistics, your business can find efficiencies and identify the right tools to keep things running smoothly.
  3. Purchase order management is the top reason shippers are turning to technology.
    Understanding what happens between the time an order is placed and when it’s shipped is critical for planning delivery timelines and managing customer expectations. With many production processes involving multiple steps and dependencies, technology can help provide real-time visibility at the product level. More than half (56%) of shippers said they turned to technology for purchase order management, followed by booking management (30%) and contract management (16%). Another 27% say they’re leveraging technology to improve end-to-end visibility – which starts with a clear view into production.
  4. Cost and time are the two biggest barriers to a connected supply chain.
    Among the half of shippers who have integrated their supply chain systems, cost is the main challenge in building a holistic, technology-enabled operation. Nearly one in five (19%) cited expenses as a major barrier to integration, followed by the time required (14%) and software incompatibilities (11%).
  5. Reporting is at the top of many shippers’ wishlists.
    You can’t improve what you don’t measure, and many tech providers are taking the initiative by building reporting tools directly into their platforms. Those capabilities are highly desired by shippers, with 68% saying they would benefit from detailed business analytics and forward-looking recommendations.

Technology is indispensable for the modern supply chain, but technology alone won’t give businesses the advantage they need. By combining technology with well-designed processes and logistics expertise, shippers can prepare for whatever comes next.

Optimizing for Omnichannel

U.S. retail e-commerce sales grew 16 percent year-over-year to top $114 billion in the first quarter of 2018, rising three times faster than total retail sales, according to the U.S. Census Bureau. From T-shirt manufacturers to tire distributors, planning requirements are growing as businesses work to fill demand across digital and brick-and-mortar channels – before a competitor beats them to it. For example, one large tire manufacturer built its own private-label retail business to sell its products online, hoping to entice consumers away from shopping sites like Amazon.

In this omnichannel environment, the traditional distribution model no longer works. Businesses once took a just-in-time inventory approach, planning their supply chain activity around seasonal shifts and campaigns, and ensuring warehouses were stocked with goods. With e-commerce, however, companies can no longer afford to take the time to move items from warehouse to their final destination. When customers can purchase elsewhere with a few clicks on the screen, after all, why should they wait for your company to get their fulfillment in order?

As a result, just-in-time inventory is giving way to just-in-time delivery. Many deliveries are now bypassing the warehouse entirely, with businesses focused on last-mile delivery as they move goods to their final destination. That number of final destinations has also ballooned, creating additional complexity and cost.

To get the right products to market at the right time, the use of air freight has risen sharply. Air freight volumes jumped 9 percent in 2017, the strongest growth in demand in seven years, and have continued to climb an additional 5 percent through April of this year. That demand is creating higher prices, with rates rising 2.9 percent from January to February  – a post-holiday period when rates typically decrease.

An Agile Approach to Omnichannel

Keeping up with the pressures of this environment – while also keeping costs in check – demands an agile supply chain. To get to market quickly, businesses need a solid understanding of their lead times and business requirements, complete visibility into shipment status, and the ability to respond fast when conditions change.

While sophisticated information systems are essential for powering omnichannel supply chains, true agility also requires a deep understanding of the logistics environment. By blending the right technology, processes and expertise, businesses can:

  • Optimize each step of the supply chain journey. Rather than relying on information from carriers or vendors, establishing a centralized platform gives businesses real-time insight into each step of a shipment, from production to customer doorstep. By reviewing accurate historical averages on customer demand, production and shipping times, businesses can spot bottlenecks in their processes and opportunities for improvement. An exception-based system will also alert businesses immediately to delays, so they can adjust shipments on the fly.
  • Respond quickly to changing conditions. When a big customer needs an order right away, businesses need to be able to make decisions instantaneously, like changing the mode of transport. With a technology-enabled system, businesses can quickly see where they have goods available and the best way to route them. This is also where an experienced supply chain partner adds value. A seasoned provider can leverage its network to help find capacity, or recommend creative solutions to transport items quicker. While the solution may involve changing modes or carriers, being flexible can help businesses deliver on time and on budget.

Few businesses are immune from the pressures of an on-demand marketplace. By establishing agile systems and processes, businesses can stay informed and ahead of the curve in a fast-moving environment.