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Which trends are currently shining brightest and which are still gathering the energy needed to burst into life? Download and share our new infographic highlighting the trends transforming our supply chains.

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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.

Chris Irish

Chris Irish

Supply Chain Insight Manager

This report highlights four key supply chain trends that will emerge and develop in 2018. It also assesses how the trends IGD identified at the beginning of last year are impacting the supply chain today.

Amazon has opened its checkout-free Amazon Go convenience store to the public. The store, located in Seattle, uses ceiling mounted cameras and electronic sensors to track purchases, before charging the shopping to the customer's Amazon account.


Source: IGD Research

In-store experience

To enter the store, customers must scan their unique QR code accessible via the Amazon Go app. The customer's Amazon account is then associated with their physical presence in store, which is tracked via cameras and sensors on shelves, as well as a computer vision system. When an item is taken off of the shelf, the product is automatically added to their Amazon shopping cart. As all transactions take place online, customers are free to put items directly into their shopping bag. When they leave the store, their Amazon account is automatically charged, and an electronic receipt is sent to the app.

Whilst the need for human interaction is removed with Amazon Go technology, there are still members of staff in the store. There are chefs preparing fresh food, stockers who replenish inventory, and an ID checker in the alcohol section. There is also a staff member readily available to answer questions and offer assistance with using the app.

Just walk out technology

Amazon has called the technology 'Just Walk Out'. The technology speeds up the shopping experience by removing the need for queues. Dilip Kumar, Amazon Go vice president of technology, said that the premise of the store is "to be respectful of your time as a shopper".

Raising brand awareness

The Amazon Go store illustrates one of the company's values, a passion for innovation. The 1,800 square foot store mainly stocks food-to-go products and Amazon meal kits, along with some household items, reflecting items available in Amazon Pantry. The store also features a limited range of  Whole Foods Market's products, reflecting Amazon's acquisition of the retailer. Amazon currently has no plans to introduce the technology into the Whole Foods Market stores, and it is unclear whether the online retailer is planning to open more Amazon Go stores.

Learn more about Amazon and the leading retail trends by signing up to our free newsletter here 

Canadian retailer Sobeys and UK online specialist Ocado have announced a new partnership agreement. This follows on from a similar tie-up between Casino and Ocado in France at the end of last year.

Ocado will build a new Customer Fulfilment Centre for Sobeys in the Greater Toronto area, as part of an exclusive agreement covering the Canadian market. Following the build, Ocado will supply Sobeys with its proprietary “front-end” website, automated warehouse technology and “last mile” delivery solution.

Sobeys are the second-largest food retailer in Canada, and this deal will enable the company to expand its online business into Ontario, building on its successful ecommerce business in Quebec. You can find out more about Sobeys on IGD Retail Analysis.

Luke Jensen, CEO of Ocado Solutions said “Channel shift to online in North America is gaining pace as consumers increasingly seek the benefits of grocery shopping from the comforts of their own homes, and as retailers attempt to offer services to meet this growing customer trend. We are pleased to be partnering with innovative and forward-looking retailers such as Sobeys. Soon Sobeys, along with Ocado, Morrisons and Groupe Casino will be powered by Ocado Smart Platform, sharing a common goal of harnessing the best technology for grocery ecommerce to win in their markets.”

Presentations

29/01/2018
This report highlights four key supply chain trends that will emerge and develop in 2018. It also assesses how the trends IGD identified at the beginning of last year are impacting the supply chain today.
25/01/2018
Explore how some of the technology and innovations unveiled at CES 2018 will impact supply chain development.
17/01/2018
This is the third and final report in IGD’s Re-linking the Supply Chain series, focusing on the Internet of Things (IoT) in the supply chain. This report presents a roadmap for IoT development, detailing twelve steps to success that will help you move from idea to implementation.

The Internet of Things revolution is well underway; there are a number of challenges to overcome and understanding how to navigate them will be key to making the most of the opportunity.

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