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WORLD OF INDUSTRIES - LOGISTICS 3/2017

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WORLD OF INDUSTRIES - LOGISTICS 3/2017

LOGISTICS MANAGEMENT 02 200% 150% 100% 50% 0% -50% SKU growth in a multiindustry environment Active Items 0% 4% Sales In summary, the rewards can be high enough to encourage businesses to invest the time and effort required to overcome the barriers, especially when they have exhausted all of the opportunities to improve internal efficiencies but remain under cost and service pressure. Collaboration in the future 187% 32% -22% Source: Terra Technology. “2015 Forecasting Benchmark Study”. Whilst the current business environment can explain the recent increase in the number of collaborative initiatives, the pace of change and cost challenges will continue to drive companies to work together. There are five fundamental reasons which explain why collaboration will continue to evolve and grow: 1 The climate change conference organized by the United Nations in Paris in December 2015 was a turning point in public opinion. The drive to reduce the carbon footprint will relentlessly put greater pressure on the users of conventional energy resources. Not surprisingly there is already substantial evidence that companies with good sustainability programs are rewarded with higher valuation of their stock prices in the capital markets. This pressure will increase the need for collaboration between companies to further improve the sustainability of their supply chains by reducing empty truck kilometers and the resulting emissions. 2 Growth since 2010 Churn Items (Shaded Area) 2010 2011 2012 2013 2014 Environmental sustainability Big Data exploitation New items Sales / Item The ability to analyze vast amounts of data generated by current technologies enables business to develop capability to better predict their supply chain challenges. The opportunities are many, but most probably one of the biggest will come from data sharing and analysis. For example: the analysis of shared POS data for different brands of the same product category, will better predict sales patterns and trends. Collaboration will enable the exploitation of the benefits that this new capability will offer. 3 Technology is developing at an exponential rate. Digital enhancements will continue to reduce the costs of communication and coordination of activities, and make it easier for companies to find external solutions. In parallel, it is going to be more difficult and cost prohibitive for individual businesses to continually upgrade to the latest technologies from the Internet of Things, sophisticated artificial intelligence algorithms, through to the robotics revolution. This will foster the development of supply chain models with a level of collaboration and even a much more sophisticated “co-creation” of solutions than the one that exist today, these new models will be more effective in dealing with the development of these new technologies. 4 The exponential growth of e-commerce and the increasingly transparent pricing of products drive the need for business to find ways to differentiate themselves from their competitors. Product and service differentiation, which is also valued by consumers as part of a trend towards personalization, drives SKU proliferation. (Image 02). Product differentiation is best done close to the consumer, at a late stage of the logistics operation. To make these operations cost efficient, companies will need to collaborate to design cost efficient scalable processes and develop shared facilities or 3PLs resources. 5 Another unstoppable trend is the development of business models where different actors share resources. In our economies there are lots of underutilized resources which, as an example, has enabled the development of business models based on sharing products and services e.g. shared cars (Getaround), car trips (Sharing Trip) or storage (Share My Storage). It is forecasts that by 2025, the collaborative rental economy will be the same size as the traditional rental model. The implications of the Shared Economy and its effect on the current logistics operations should not be underestimated. For example Carmaker Daimler, with Miebach’s support, has developed the Car2share Cargo project in which, through smartphones, tablets and on-board applications, they are conducting pilot tests of a type “Uber” service with Mercedes Benz vans for customer home deliveries. Supply chain collaboration is the future Businesses that do not grasp and exploit collaborative benefits will be at a distinct disadvantage to their competition, particularly when their customers and consumers are already collaborating. Photographs: Miebach, Fotolia Processing: VFV Grafik www.miebach.com Technology developments SKU Proliferation The rise of the collaborative economy WORLD OF INDUSTRIES – INTRALOGISTICS & DISTRIBUTION 3/2017

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