Go Supply Chain examines what 2016 will bring for the logistics sector.
The start of a new year inevitably brings a variety of articles that attempt to determine the trends that dominate the industry presently and will continue to influence things over 2016. Here is my viewpoint for the year ahead.
1. Solutions for adaptive delivery
Business are tackling the competition by providing inventive and flexible delivery solutions, this is setting a high standard within the industry. Recently I received a card in the post from a parcel delivery firm that offered the seemingly pre historic options of ‘re-deliver tomorrow or collect from the depot. These days the least we expect is a text message informing us that ‘Your parcel will be delivered by John at 11:11, or reply back to re-arrange delivery to your local collect store’. Retailers are going the extra mile, for example, Argos are using their bigger stores as hubs to facilitate same day click and collect, as well as having the option of same-day delivery in the evenings. The customer assumes and expects this level of flexibility and this is beginning to filter into B2B and I foresee this continuing.
2. Scarcity & Shortfalls
Business have to live in the fear of driver shortages and seasonality affecting their customer service. The rapid increase of e-commerce has seen an increase in pressure levels on parcel networks, especially over the festive and New Year sale month, and there are times where next day deliveries are simply not feasible. Practical discussions are essential to establish what is realistic at these critical periods and ensure expectations are managed.
With regards to the shortages of drivers, this appears to be a result of an increasing number of drivers verging on retirement combined with the sector underestimating the increase in training requisites. It is apparent that this is now at a breaking point and will begin to reflect in prices over 2016.
Another awkward area is the market for distribution centres, JLL reported midyear that active demand was outstripping supply of grade ‘A’ warehousing by a ratio of 2.3: 1. Whilst travelling the country, I am aware that the market seems to be advancing, with some unsubstantiated building occurring, but in the meantime for the year ahead the outlook will continue to be strained with the effects of the credit crisis still lingering.
A positive outlook (If you are a logistics consultant) rests in the increased requirements for, and a shortfall of, diagnostic and problem solving skills, especially when paired with on the job know how that yields efficient utilisation to logistics issues. The constantly changing landscape of the logistics industry is keeping logistics consultants and 3PL solutions departments swamped.
3. On-demand Warehousing and Transport Systems
A trend where there are no shortages is in the production of superior systems solutions with minimal up-front costs – This is a show of confidence that is encouraging businesses to be buoyant in incorporating systems solutions, and bringing small firms on board with the benefits. In my mind this refers to on-demand WMS and Vehicle Routing systems being given on a pay-as-you-go basis, allowing the set up to redeem its investment from the beginning and segmenting the typical business-case barriers surrounding investment in IT.
4. ‘Big Data’
Finally, I am touching upon the topic of ‘Big data’. This is not a new concept, especially for logistics consultants, who constantly analyse large data sets to gain insights. Nonetheless with rapidly developing technology and improved software, in addition to increased data capture and realisation of its benefits, ‘Big data’ is beginning to make ripples. There are many studies which have shown improvements on an operational level, client experience and new business paradigms. A prime example of this is within social media. The power of big data is completely evident on a site like Facebook simply by looking the ‘people you may know section’ – big data is what is used to give you such accurate results.
All of the above are points that can be explored in much further depth. I hope this has provided a flavour for what 2016 will bring.