The economy has been volatile to say the least in recent years. Changes are happening rapidly all over the industry. Looking into a crystal ball, what is happening in the future, and how do you prepare for success in 2013 and beyond? 

Thinking out of the box about your processes and operation is absolutely necessary. Evolution is the key, because those that don’t evolve risk becoming extinct. The business world is cluttered with companies that didn’t respond to changing environments, trends, and demographics. The newspaper industry is an example of an industry that didn’t evolve quickly enough in response to the demand for online information. The movie rental industry is another. 

Most recently, Blackberry’s demise with the emergence of smartphones is another great example. In contrast, a company that absolutely thinks out of the box is Amazon. Amazon, an online retailer who started with just books as a business model, saw it coming, saw the evolution and was the first to set themselves apart with the introduction of the Kindle. Just remember what Albert Einstein said regarding the definition of insanity: You can’t continue to do what you have always done and expect a different result. Therefore, if your bottom line is bleak, distribution cost rising, shipping cost escalating, it is time for a re-engineering and to start a new evolution of your distribution center network.

A trend that is affecting many in the supply chain is smaller orders with faster service. Where traditionally, retailers would buy a full truck load or full pallet once every month, they are now buying cases and smaller deliveries three times a week. This huge shift in the demand and supply of goods is resulting in a new design of processes, facilities, partners, and transportation modes. 

This trend is causing collaboration from trucking companies, LTL truckers, and carriers. Collaboration will become more and more important as the industries change much more rapidly that in the past. Vertical industries such as retail, pharmaceutical, electronics, fashion apparel, and many others are learning that the key to a successful supply chain is agility. Agility may require more partners, such as 3PLs and transportation companies.

The growing parcel industry is changing rapidly as the online retailers are scrambling for business. Online sales generated $202 billion in revenue during 2011 and are projected to grow over 60% during the next five years. Two day delivery will not suffice with the new demographics emerging as an impactful buying generation. Two day delivery is not quick enough or acceptable; this generation demographic wants the products they order NOW! They are the entitlement generation and will go elsewhere if they don’t get the service they expect. Therefore, the online retailers are searching for ways to deliver product faster.

The top two initiatives on the list of retailers in 2013, as reported by the Retailers Association, are service innovation and improved delivery to customers. Online retailers, along with brick and mortar retailers, will be focused on innovation and creating better customer experiences in order to grab market share.
CSCMP reports in its State of Logistics Report that logistics cost increased by $1.2 billion in 2011 and is equivalent to 8.3% GDP. Transportation cost rose 10.4% in 2011; some of the rise in cost is attributable to the increase in fuel cost, loss of capacity, and increase in fees. The transportation industry continues to be hit by several areas that will have a dramatic impact in the future. Hours of service for the trucking industry has had tremendous impact, along with new CSA regulatory laws and aging truck drivers decreasing the pool of available drivers, which has caused concern. The aging transportation infrastructure in the United States will continue to impact the transportation industry including our roadways, rail, and ports.

The key to success in the future will be agility. The ability to respond quickly and to be agile with products, services, and processes will lead to success. Collaboration will have significant impact in the future as companies who have been adversaries in the past look to partner for mutually beneficial opportunities. Technology will continue to impact our futures. The need to stay informed and abreast of new changes will become more impactful as the industry responds in a more rapid pace than ever before.