3 MIN. READ
International trade uncertainties and businesses struggling to find solutions to labor shortages in the warehouse and trucking sectors continue to affect the product supply chain in the United States. Those may seem to be insurmountable obstacles, but the rise of cloud-based technology promises to provide retailers with a growing arsenal of tools to meet the challenges.
An increasing number of uses of data gleaned by the technology present new avenues for cutting costs, improving efficiency and allocating resources. That lets retailers provide customers with the convenience they’re becoming accustomed to expect in getting their products.
Supply Chain Evolution
The shift of customer expectations is forcing retailers to become more responsive and adaptable in how they manage their supply chains. Some of the most-integral components of the evolution will be new technologies such as:
- Drones, robots and driverless trucks
- A focus on supply chain visibility enabling retailers to allocate resources better
- A “sharing economy” in which on-demand warehousing and logistics allow a high degree of flexibility
- Evolving customer channels that will focus on the broad shift from conventional brick-and-mortar stores to online shopping
An important factor affecting the stability of the supply chain is the negotiations between China and the United States. Recently, the two countries imposed tariffs on each other in a retaliatory fashion, disrupting the supply chain and a plethora of industries along with it.
Although tariffs and trade agreements such the North American Free Trade Agreement and the U.S. Mexico Canada Agreement have had a dramatic impact on the supply chain, other economic factors such as sanctions can also contribute to a potentially disruptive political situation.
The complex web of tariffs and trade agreements can, and does, undoubtedly interrupt the supply chain, but there’s another, more prosaic factor to consider: the labor shortage in key sectors.
One area of imminent concern to those coordinating the logistics of efficient supply chains is the shortage of truck drivers. According to the Bureau of Labor Statistics, the average age of a U.S. truck driver is 55, which means the shortage is bound to intensify as the drivers reach retirement age.
Growth of eCommerce and New Technologies
A driving factor behind the labor shortage is the proliferation of eCommerce, which is causing a change in customer expectations. A dramatic shift in the retail paradigm is underway, with customers expecting extreme convenience from online and brick-and-mortar retailers, in turn creating a bottleneck in the supply chain.
The possibility of using driverless trucks to deliver goods and mitigate the driver shortage is an exciting development, but it remains difficult to implement, primarily because of legal concerns.
Technology itself is changing the way the supply chain operates. The term “digital supply chain” was coined to describe the software, data storage, automation and related technologies used to streamline the supply chain and increase efficiency.
Although there’s no broadly accepted definition of the term, it’s often understood to include a component of digitization, which is communicating and storing information in digital format, often with the goal of producing analytics to help retailers allocate resources efficiently and save money.
Focus on Enhanced Transparency
A key advantage of digitization is enhanced transparency. The internet of things (IoT) enables retailers to manage warehouses more efficiently through real-time data from warehouse control systems (WCS). The systems receive data from automation, evaluate it according to guidelines and respond in near real time to meet objectives.
The advent of machine-learning (ML) and artificial intelligence presents another key development in the evolution of supply-chain management. ML has a wide range of potential applications in the process and can be applied to WCS as well as supply-chain planning and visibility.
With the increasing importance of adaptability and responsiveness on the part of retailers, collecting, analyzing and using IoT data will be integral to cutting costs and improving efficiency.
Today’s retail context requires an approach that uses cutting-edge technology and flexibility to provide customers with the convenience they’ve become accustomed to, the foundation of which is efficient supply chain management. Although there are larger factors disrupting the supply chain, such as political tensions and a labor shortage, companies can use emerging technologies such as ML and cloud-based technology to mitigate the impact on the bottom line.
Although those nascent technologies are still being explored, they offer the promise of a future in which companies can manage inventory more efficiently and adapt more quickly to the demands of customers.