SMC3 keynote takes a deep dive into the “Brave New Supply Chain World”

In a wide ranging keynote speech at this week’s SMC3 Jump Start conference in Atlanta, Adrian Gonzalez, head of Adelante SCM, touched on many things and developments within the supply chain could be viewed as keys to the future.

The theme of the keynote was appropriately titled the “Brave New Supply Chain World, which took a deep dive into things like 3D printing, drones, the ongoing Amazon effect, and emerging technologies, among other things.

Regardless of the type of technology being utilized and by which supply chain stakeholder, be it a shipper, carrier, or 3PL, Gonzalez stressed it can be costly to be late.

“When you look at everything that is happening in the industry….drones, blockchain, driverless truck, one of the questions I get is: ‘what is real and what is hype?’” said Gonzalez. “The key is to engage with these technologies and trends at the right time. There is so much being thrown at the industry at one time that it’s hard to separate what is real and what is not.”

When looking at technologies or trends impacting supply chain and logistics, one thing that is clear, according to Gonzalez, is that customers are directly at the center of the supply chain universe and are driving supply chain processes.

“Costs are always important, but what’s really top of mind today are the service dimension and the customer experience,” he explained. “That is where visibility comes in, too. I have asked companies if they view logistics as a cost center or a competitive weapon for a long time, and last time the response was 50-50. But five-to-ten years ago, 80 or 90% would have said cost center.

And he added that shrinking gap is on display in many ways in the form of the so-called Amazon effect, which has had a ripple effect in the form of more industries putting the customer at the center of their supply chain universe and reorienting their processes, technologies, and people to provide that improved customer experience and use that as a way to differentiate themselves in the industry.

“When I ask supply chain executives what is the biggest challenge they face today, the number one answer by far across all industries is not so much change, which has always been the case in supply chain and logistics with things not always going to plan and exceptions are the norm, but it is keeping up with the rapid pace of change,” he noted. “That has been the main challenge. Things are changing so fast that it’s hard for us to keep up….and to change processes in a timely and efficient manner.

One way in which supply chain organizations have approached that is to bring in people with different skills, backgrounds, and experiences to help them compete and manage more effectively in this environment, with Gonzalez citing how data scientists are becoming more popular in supply chain and logistics.

What’s more, he pointed to themes in supply chain and logistics that are becoming both more challenging and more of a reality in running things from an operational perspective, including:

same-day delivery and the shrinking map and time windows in which to deliver;
the on-time in full policy being used by retailers like Target and Wal-mart, which is becoming much more challenging;
smaller, more frequent and time-definite shipments;
omni-channel distribution;
capacity and spot market challenges; and
regulations, among others
“When looking at these challenges and things like drones, driverless technology, 3D printing, and other stuff, it helps to break it down into some basic questions when thinking about the future,” said Gonzalez. “What are we shipping? From where to where? How do we ship it?”

With e-commerce’s continued growth, he said the parcel shipping is becoming a bigger piece of the shipment pie, due to increased B2C activity. And rather than deliver large pallets to DCs, he said there has been an increase in drop-shipping, which has been a change in operations that had been in place for many years for organizations that had typically been more pallet-focused.

With an eye on the future, Gonzalez rounded out his presentation by focusing on different technologies and how they factor into what may be next.

One of those things is 3D printing, which, he said, could one day be as normal as a TV or a refrigerator in a house.

Other things he pointed to included changes in packaging, with bubble wrap being shipped without air and air subsequently inserted at a DC, which translates into one truckload of this type of bubble wrap being the equivalent to 47 truckloads of typical air-filled bubble wrap.

The increased focus on last-mile delivery, which Gonzalez called a “new battleground” and a new area of investment, which is driving interest in ownership from both retailers and providers, as the last-mile is the part of logistics that touches the consumer.

Drones and driverless trucks were both cited by Gonzalez, too, and he added that driverless will have a larger impact in the industry before drones will.

“The technology is more ready, whereas with drones it is a much more difficult puzzle to solve, with more variables,” he said.

Regarding blockchain technology, despite the early traction it has gotten, Gonzalez said it is still too early to gauge its impact. He described blockchain as a technological platform, asking if blockchain was a better mousetrap than what is currently out there today.

“When you look at the technology, the greatest value proposition of blockchain lies today in the supply chain for sectors like food, pharma, and high-value goods,” he said. “We are seeing some of that happening in pilot programs. My fear is that people will view it as a silver bullet solution for supply chain visibility. But the challenges related to supply chain visibility are not related to just software. There is still a lot of [bad] data and data across multiple different standards and computers, with different nomenclatures. There is the challenge of aggregating and cleansing data. Blockchain does not solve that.”

Gonzalez also spoke about the digital freight marketplace, which has been viewed in some circle as Uber for trucking or freight forwarding for the 21st century. He noted how this space has received a lot of venture capital funding, as well as seen a steady stream of start-up activity.

“It will take a lot more than a software or a mobile app to transform the industry, because at the end of the day we all know this industry is based on relationships and trust and a lot of other things,” he said. But what it does say is that it is a growing force in the industry and waking up the incumbents to say if you are not looking at new technologies and are complacent with the status quo, you will end up failing because if you are not looking at the way technology can make your processes in the way shippers and carriers communicate and collaborate and transact efficiently and effectively, you are going to be left behind. It is forcing industry leaders to invest in technology.”