But what will be the top supply chain trends in 2017? Let’s take a look at our predictions:
2017 is highly likely to see the beginning of a trend of more goods being manufactured in America, and less being imported from China and Mexico.
There are two key reasons why this is likely to happen:
Firstly, consumers are increasing expecting next-day, same-day, or even same-hour delivery times for the goods that they order, which is forcing businesses to focus on efficiency and speed across their entire supply chains. When speed is a significant competitive advantage (and as a product lifecycles shorten), importing products from other countries becomes highly inefficient. Instead, more goods will be manufactured and stored within the United States, increasing the number of internal deliveries.
Secondly, President-Elect Donald Trump is serious about reducing America’s reliance on imports and boosting American industry, and although not everything he says is likely to turn into policy, we are likely to see action taken in this area. This new, more protectionist outlook will reduce the amount of trade America does with China and Mexico by levying tariffs on imported goods.
These tariffs will further reduce the benefits of manufacturing abroad, and it is likely many large businesses will be re-examining their supply chains and manufacturing strategies at the beginning of 2017.
Total global retail e-commerce sales hit an estimated $1.9 trillion in 2016, and are expected to increase to $2.35 trillion in 2017, a 22% year-on-year increase. With the supply chain for these goods reaching all the way to the customer’s house, it is obvious that these increases (which are set to continue, reaching $4 trillion by 2020) will have a big effect on the way goods are delivered.
The increase in regional warehouses for key areas, which we saw in 2016, will continue, and traditional delivery methods will increase. However, we will also see some heavy investment in more creative delivery methods:
Although the current FAA regulations make drone deliveries problematic it is clear that at some point these technologies will have a significant impact on supply chains. For 2017 it is unlikely we will see these in mainstream practice, but we will see investment, research, and pressure for regulatory changes that will open up these technologies for use in the future.
Automation has been putting pressure on jobs in manufacturing for years, but thankfully some of this slack has been taken up by the increase in warehousing and logistics positions. Now, these two employment areas are also under threat from future advances:
In 2017 it is safe to predict that these two advances won’t reach fruition – but they will get a lot closer. As the fully-robotic supply chain draws closer, investment will increase as companies seek to be first-to-market. Supply chain businesses will also start thinking about their own strategy for the “robot revolution.” How will your public relations and brand image be affected by replacing human workers with robots? Is your business able to transition your workers into another role?
The robots aren’t quite here yet – but when they do, supply chains will change very fast.
One of the toughest parts of supply chain management – forecasting – will start to become easier in 2017 through machine learning. Current technology relies on traditional algorithms and a static model to plan, control, and execute common supply chain activities. But, as conditions fluctuate ever faster due to economic and political turbulence, these models quickly become out of date, leading to expensive errors.
Machine learning will allow dynamic models that will change and adapt to new information automatically. Using machine learning, supply chain management models will take advantage of data obtained through online marketplaces and social media sites to create a model that continually updates, becoming more accurate and efficient over time.
The supply chain trends we will see in 2017 point towards an ever-increasing reliance on machines within our supply chains: machine learning and investment in automation and driverless vehicles are likely to define not just 2017, but much of the next few years. The economic and political factors that will herald a return to “Made in America” will ensure that jobs are protected through 2017, but tough choices between man and machine are approaching.