Finding new ways to serve customers better is more important than ever. To stay ahead of the competition, businesses face a stark choice – to lead or to lag behind. To lead requires an awareness of significant trends and their likely impacts.
Trends have a habit of rippling through industries and the businesses that operate within them, presenting both challenges and opportunities. Trend analysis helps businesses prepare for change, but it’s only useful if it prompts action.
Each trend should be viewed through multiple lenses, considering a number of potential impacts - this is where real insights emerge. For example, last year IGD highlighted the exploration of Blockchain as a key supply chain trend. Blockchain is a technology with enormous potential, but understanding it isn’t enough. We must also consider how might Blockchain might be deployed to make supply chains more resilient, responsive or customer-centric. Assessing all these impacts helps to reveal the bigger picture.
It is equally important to consider how trends might create or help solve challenges. Using the Blockchain example again, it’s sensible to question if you have the skills needed to exploit the opportunity. If not, how will you secure them?
Ultimately, effective trend analysis should help you to set a course and take the right actions to either benefit from or mitigate the impact of the trends identified.
Trends transforming the global supply chain:
The online-offline space invasion advances
For retailers that have both physical stores and online operations, the profitability of operating in both spheres remains in question. Solutions to this predicament are unlikely to please customers, so retailers continue to operate as is while waiting for others to make the first move. Retailers are making improvements where possible, including making better use of “spare” store warehouse space to assemble or consolidate online orders.
This evolution may force a change in the way stores measure success. In the above example, a low footfall store close to a large online customer base could see its stock rise and its value to the organisation re-defined.
On the other hand, we continue to see online retailers move in the other direction, expanding their physical presence through development or acquisition. This trend resonates globally with Alibaba and JD.com doing so in Asia and Amazon and Walmart leading the way in the US. A significant driver is the desire to diversify the customer offer, but equally important is the physical infrastructure that moves goods closer to customers.
It appears then, that primarily online retailers are searching for the same end as their offline competitors – the right combination of online-offline trade. What is the answer? Expect the search to continue in 2018.
Supply chain skills to take a sideways step
Organisation, problem-solving, negotiation – these are just some of the skills it takes to succeed in the supply chain. Such skills will always be needed, but as the food and grocery industry evolves, so do the skills needed to thrive.
We know technology will play a bigger role in our personal and working lives. It is being used to carve out growth where opportunities seem limited. Primarily, this happens when technology is used to do things differently. So, what does this mean for individuals in supply chain roles? Operating in and adding value to a department heavily influenced by technology requires expertise in change and project management as well as a broad network, which will take time to cultivate.
At the same time, businesses need to be proactive to prevent a de-coupling of the required and available resource. Intimate knowledge of the business strategy, skills gap analysis and securing budget will help businesses activate plans at the right time.
Crunch time for cyber security
The digitalisation of organisations and the wider supply chain continues, with many investing in Enterprise resource planning (ERP) systems capable of connecting teams and individuals.
The cloud is an increasingly popular place to store information. The fast, flexible access it offers is helping to pave the way for smarter ways of working. But digitised “things” are windows into businesses, and the more we digitalise, the greater the cyber threat, both from a risk perspective – how likely you are to be targeted? As well as from an impact perspective – the extent of damage an attack can cause.
The global nature of such threats and the speed at which they spread blindsided many organisations in 2017, inflicting huge financial damage. NotPetya and WannaCry are two examples of destructive ransomware attacks that struck.
NotPeyta infected computers in more than 100 countries, disrupting hundreds of thousands of computers used by organisations and institutions. It’s primary aim being to disrupt national infrastructure. WannaCry was the first example of a truly global ransomware attack. It encrypted data on computers, demanding ransom payments in Bitcoin cryptocurrency. It’s estimated to have affected more than 300,000 computers in over 150 countries inflicting damage estimated in the hundreds of millions to billions of dollars.
As a result of attacks like this and the damage they cause, expect more resource to be directed at the key area of cyber security in 2018.
The snowballing sharing economy
Fixed overheads and money tied up in assets are undesirable at the best of times. In a low-margin marketplace, they are intolerable. But there is another way and against this backdrop, and its appeal is growing.
Sharing has occurred in logistics for years, with businesses with close relationships making tactical decisions to share assets on a relatively small scale. Until recently, we’ve lacked the capability to “share” assets on a larger scale, but technology is moving things on.
The sharing economy model allows businesses to operate on demand, putting customer satisfaction at the heart of an operation, but it does require a shift in mindset. Working with others opens a world of opportunity to create value, which it isn’t possible to unlock alone.
This trend is making industry expertise and connections less important, with the technology doing the legwork. Think Uber or Lyft - a well-designed, scalable piece of software that delivers significant cost savings is a compelling proposition. This is what powers the sharing economy and it looks set to take-off in 2018.
These four significant trends are what we predict will influence the supply chain over the coming months. Have you performed your own trends analysis? If so, bear in mind that identifying trends is the first step and the actions you take to address and prepare for opportunities is where the value is.
We’ll be tracking these trends in 2018, producing research and insight to help you capitalise on them. Be sure to visit Supply Chain Analysis to keep up with all the latest developments.