Top Supply Chain Issues & Trends for 2017Written by Neal Willis
With 2017 on the horizon, here are some of the top issues we feel will be of particular importance.
Addressing issues ranging from the number of hours a driver can work to a driver’s health and safety record, government regulation continues to play a big role in the industry and is having a huge impact on pricing and capacity. Government regulation will strain capacity in the truckload market and will eventually spill over into the LTL market. The cost of regulatory compliance can be overwhelming, especially to smaller companies, and some owner/operators either can’t afford or simply aren’t willing to absorb the cost of compliance.
The complexity of logistical solutions and of the supply chain itself is becoming more and more evident. Businesses are starting to understand that the supply chain affects every aspect of a company and they are beginning to involve departments, other than just the transportation division, in the decision making process and the development of operational procedure.
The freight industry is trending towards smartphone applications versus older, outdated desktop tools. Practically everyone has a smartphone these days. With access to the internet at virtually any given place and time, more and more smartphones are being used like personal computers.
The increasing complexity of the supply chain brings about some daunting challenges to shippers and carriers alike. Solutions are becoming multifaceted as more and more companies venture into ecommerce. Ecommerce business can often involve residential and other non-typical (commercial) deliveries and carriers have to factor the costs of doing business with ecommerce shippers into their pricing models.
Supply Chain Cost & Labor Force Reductions
As always, there is pressure on businesses to reduce supply chain costs. As technology becomes increasingly important, it continues to facilitate labor force and cost reductions that lead to process and efficiency improvements. As minimum wages continue to rise, so does the pressure from shareholders to cut and keep costs down and some companies are battling labor costs with automation. With fewer people involved in the process, reductions in the labor force can translate into lower production costs.
Collaboration & Integration
Whether through an API (application program interface), EDI (electronic data interchange) or XML (extensible markup language) solution, businesses are integrating rates and sharing information electronically with carriers and transportation providers at higher rates than ever before. Not only does this eliminate the cost of paper and cut down on storage costs, but fewer people handling documents makes the relay of information faster and more reliable. Another big advantage to switching over to paperless processes is the fact that it makes doing business with the carriers much easier and less costly for the carriers themselves, which helps a shipper keep their rates down.
Data & Data Security
Carriers are capturing and using more data than ever to analyze and properly price the business they currently have. LTL freight carriers have been able to drastically reduce the cost of inspecting freight by using new dimensionalizer machines, so inspections are on the rise. Shippers are also capturing more data than ever and now face the challenge of knowing what to do with the data they have. Data has become an important tool in the optimization of inventory and warehouse space and can pave the way to the creation of a balanced and efficient supply chain. Along with big data comes the problem of data storage and security, which is being addressed, in part, with cloud solutions and data encryption.
More and more companies are relying on cloud-based solutions that require less physical space and maintenance than traditional network infrastructures. Cloud-based solutions can facilitate the sharing of information in real time so everyone can be on the same page at virtually the same time. What can be costly, however, and an impending stumbling block with a cloud-based solution, especially for ecommerce businesses, is the possibility of system downtime as a result of equipment and network security failures.