Each of my past outlooks have suggested major trends that will impact all supply chains. Each of these has included thoughts about increasing volatility in all business processes of the supply chain – buying, making, moving, distributing, and selling. No company is spared either the uncertainties of demand or with supply; the changing socio-political world of international economies; or the mission critical problems of talent shortages and unpredictable customer behaviors. My predictions last January for these trends have not only been borne out, they have exceeded our expectations in the degree and severity of impacts.
This year I will focus solely on one huge trend — that of e-commerce. This may end up the greatest change ever in both the consumer and business markets. The explosive growth — led by Amazon and Alibaba — is impacting everyone around the globe. While all together it represents 30 percent of business transactions today, it is expected to double that by 2023.
Consider what this exploding growth over this year and the next few will cause:
- The real estate industry cannot keep up with supply, as demand for new and different facilities grows.
- The technology industry cannot develop and bring to market enough long life solutions, as needs change and disruptors expand.
- The supply chain industry cannot develop sustainable processes and waste reduction capabilities fast enough to satisfy regulatory bodies.
- The suppliers’ industry struggles with providing adequate commodities and components at profitable prices.
- The order fulfillment industry cannot automate fast enough to handle multimillions of orders daily at profitable prices.
And the list can and will go on.
So, what will supply chain leaders have to do in 2019 to mitigate the risks and deliver quality results?
- First, they and their companies will acquire, merge, and borrow enough capital to do better to match demand with supply. Business executives have learned that high-performing supply chains are the critical success enablers in the e-commerce world.
- Second, they will work toward gaining more agility, in order to change proactively and faster. This will mean more equipment and facility leasing and less buying, with less time to develop and introduce new technologies, new automation, and more.
- Third, distributed logistics will become the primary operations model for all companies, whether for consumer or business needs. Locating products closer to end-customers or businesses is proved to satisfy buyers, users, and consumers, in speed and in costs.
Tompkins International launched a new business in 2018 — MonarchFx — which is based on and supportive of these strategies. Distributed logistics, together with automated operations, smart logistics, and superior technologies, will prove to be the preferred path to dealing with the volatilities of 2019 and beyond.