Six Supply Chain Trends That Will Impact Manufacturing in 2018

In one word, the big trend in supply chain management for 2018 is “digitalization.”

Manufacturers and their supply chain vendors, distributors and retailers are shifting toward digital technologies that improve efficiency and real-time visibility for all processes. This allows for quicker decision-making as variances arise within the supply chain. The same technologies making manufacturing “smart” today—the Internet of Things (IoT), automation, robotics, big data—are also transforming supply chain management. These processes help reduce global supply chain risk through improved quality management, compliance and supplier collaboration.

Many of these technologies support the broader Internet of Things, “which is set to revolutionize the supply chain with both operational efficiencies and revenue opportunities,” wrote Daniel Newman, principal analyst at technology research and analysis firm Futurum, in a recent Forbes.com article. “In today’s market, the supply chain isn’t just a way to keep track of your product. It’s also a way to gain an edge on your competitors and even build your own brand.”

Below are six top supply chain trends that should have big impacts on manufacturers in 2018:

1. Working in the cloud

Although manufacturers have been moving to the cloud over the last five years, the pace has recently quickened. According to International Data Corporation (IDC), approximately 80 percent of supply chain interactions will happen across cloud-based commerce networks by 2020. The cloud is essential for maximizing data analytics and supply chain projections. It is imperative to connect with suppliers through the cloud, because there is “so much information that needs to be shared with terminal constituents,” stated Kimberly Knickle, research vice president of IT priorities and strategies at IDC.

2. Forecasting and inventory

Internet of Things sensor technologies provide far more accurate inventories than humans can, and much more quickly. For instance, Newman pointed out that Amazon uses WiFi robots to scan quick response codes on its products to track its orders. “Imagine being able to track your inventory—including the supplies you have in stock for future manufacturing—at the click of a button,” said Newman. “You’d never miss a deadline again and all that data can be used to find trends to make manufacturing schedules even more efficient.”

3. Driverless vehicles

Automation, sensor technologies and the IoT are making driverless vehicles feasible in supply chain environments. Not only does this make operations safer and more efficient, it also helps reduce labor costs. Several companies are testing the use autonomous vehicles, especially in warehouse settings. “With the introduction of several autonomous vehicles over the last few years, 2018 could be the year when many questions surrounding the feasibility of using driverless vehicles are answered,” stated Chris Stutzman, purchasing manager for MCL Engineered Solutions.

4. Asset tracking

Newman pointed out that racking numbers and barcodes used to be the standard method for managing goods in the supply chain—however, with IoT, these methods will eventually become obsolete. “New RFID and GPS sensors can track products ‘from floor to store,’” he said. “Manufacturers can use these sensors to gain granular data like the temperature at which an item was stored, how long it spent in cargo and even how long it took to fly off the shelf. This type of data helps companies get a tighter grip on quality control, on-time deliveries and product forecasting.”

5. Blockchain

Blockchain is a computerized master ledger within a network (global or private) that is used to exchange information and maintain the history of transactions. An increased number of manufacturers are using it as a way modernize inefficient systems such as faxes, paper documents, phone calls and emails—all of which are prone to errors and slow. According to IDC, within the next three years, roughly one-third of manufacturers and retailers will be tracking goods through blockchain. In January 2018, Maersk and IBM announced a joint venture to launch a blockchain-based electronic shipping system that will digitize supply chains and track international cargo in real time. “This could save the global shipping industry billions of dollars a year by replacing the current electronic data interchange and paper-based systems, which can leave containers in receiving yards for weeks,” according to Computerworld senior reporter Lucas Mearian.

6. Robotics

IDC predicts robots will be used in about 50 percent of fulfillment centers by 2019, increasing productivity by about one-third and helping offset labor shortages. Collaborative robots are becoming easier to program and can be adapted to meet the needs of the supply chain, working side-by-side with human workers. They can also handle dangerous or repetitive tasks in distribution centers and warehouses, allowing human operators to take on more challenging and rewarding work.

Better Customer Relationships

These trends, of course, improve efficiency and quality throughout the supply chain, reducing costs and speeding up time to market. However, perhaps the top benefit of a digitalized supply chain is improved communication and decision-making. Real-time data obtained through asset tracking of vendors allows companies to adjust production schedules, as well as identify sub-par vendor relationships that are interfering with production. “According to IBM, up to two-thirds of the value of a company’s products or services is derived from its suppliers,” said Newman. “That’s a huge incentive to pay closer attention to how your vendors are handling the supplies they’re sending you, and how they’re handling your product once it’s made. Higher quality goods mean better relationships with customers—and better customer retention overall.”