Few industries will be transformed as totally as supply chain in the coming decade.
Fast technological developments are predicted to disrupt existing supply chain processes and have the potential for massive productivity and efficiency gains. This is why agile start ups are already competing for talent in the supply chain industry.
While many of the technologies that will lead this transformation such as IoT, AI, and 3D printing are already being rolled out, it is the expansion of robotics and automation that will ultimately result in the greatest shifts in the appearance and performance of the supply chain workforce and warehouses.
A DAY IN THE LIFE
As a senior operations manager at a large supply chain organisation in 2028, there is a very good chance your day will look a little like this:
- 6am – you wake up and check your phone and see you have two automatically generated notifications from the warehouse. One is related to a missed shipment of parts from one of your Vietnamese suppliers, and the other is an automated alert due to longer than expected average picking times from one of the three picking robot fleets. You make a note to set up a meeting with the robotics technician when you get in.
- 7:30am – you get into the warehouse and switch on the lights, even though the warehouse has been running at 80% capacity all night. Since the warehouse converted to dark operations in 2026, energy consumption has been reduced by 30% but it still takes a while to get used to the idea that the robots can work continuously through the night in pitch black. You head up to the control room and set the warehouse to semi-autonomous mode so that you will be notified in real time of any potential issues that may require human intervention.
- 7:45am – you check the logistics board and see that there is a 90% chance that some components that you’ve been waiting on will be delayed at the port by 72 hours. You talk to your logistics manager and tell her that if the components don’t ship within 6 hours to instruct the GTM software to divert the shipment to the fastest alternate port.
- 9:45am – during your meeting with the robot technician, he tells you the reason a third of your robot fleet has been performing a little slower than usual is due to a fault at one of the robot charging stations. A battery cell is malfunctioning and will need to be replaced. The supplier has the part in stock and it can be delivered by drone within the next two hours.
- 12:00pm – the Hanoi office of one of your main suppliers is now open so you call their distribution manager to see why the shipment was missed. He explains that they were having problems with their blockchain node and were temporarily out of sync with your system. You tell him that they need to upgrade their hardware to prevent the issue as its the second time its occured and that if they can’t resolve it, you’ll need to switch to an alternate supplier.
- 1:30pm – you look at the weekly data from the demand planning tool that forms part of your inventory management system. The cloud based system uses real time inventory and market conditions to forecast the upcoming week and months’ demand for each product category in your inventory. Due to its reliance on highly complex machine learning algorithms, the forecasting accuracy of the system has increased markedly over time. It now provides highly accurate information and is absolutely critical for planning your operations.
- 3:45pm – you take a call from a prospective new client looking to use your organisation for dropshipping its ecommerce retail products. The client is impressed by the low rates you can offer as well as the flexibility you can provide for stocking both small and large batches of products.
- 4:30pm – you sit down with one of your senior engineers to look at some new sequencing simulations he has been working on. Each quarter, comprehensive new sequencing models are run to improve the sequencing and work paths of the teams of picking and packing robots used on the warehouse floor. You decide on implementing one of the new simulations which shows that it will result in a 4% monthly productivity boost.
- 6pm – you set the warehouse management system to full automation and leave the robots to continue working through the night. And switch off the lights.
THE TRENDS THAT ARE SHAPING THE INDUSTRY
While the above snapshot of a day in the life of an operations manager may currently seem a little too unfamiliar, it’s important to realise that all of the technologies detailed above such as autonomous picking robots and drone deliveries have already existed for some time. And are already in use by some supply chain organisations around the world.
The rapid increases in e-commerce sales has led to a dramatic increase in the volume of good stored and shipped from warehouses and distribution centers. This has placed increased pressure on existing processes that are in many cases still heavily reliant on manual labour and paper-based tracking systems.
A recent study of global retail and e-commerce estimates that e-commerce is projected to generate $4.479 trillion in retail sales by 2021, which represents an increase of 140% from $1.859 trillion in 2016. This is forcing the industry to adopt new technologies and implement new approaches. These moves towards automation and omnichannel fulfillment strategies promise vastly more efficient distribution systems that can meet this evolving consumer demand.
The following provides a breakdown of the most important industry trends that will shape the future of supply chain over the coming decade.
According to an analysis of U.S. Census Bureau data, the average warehouse worker wastes nearly seven weeks each year in unnecessary movement. This represents more than $4.3 billion in lost labour costs. Automation will play a major role in addressing this inefficiency. It will also result in reductions in injuries as well as reducing the reliance on human workers to perform mundane tasks.
By 2028, in large distribution centres we can expect the vast majority of activities will be automated. This will include goods receiving, putaway and picking, packing, and dispatch. This will be achieved through use of a combination of automated trucks, self driving forklifts, conveyor systems, and picking robots, that will allow inventory to pass completely through the distribution centre with little direct human intervention.
While task-specific robots such as welding robots in the automotive manufacturing industry have been in use for decades, the latest generations of robots have far more advanced capabilities. Improvements in AI and dexterity mean that robots can “learn” new tasks as well as improve their performance over time. This provides the foundation for robots to be utilised all along the supply chain, especially in highly repetitive or dangerous tasks.
Control of the picking robots and on site vehicle marshalling will all be managed from a central control room where it will be possible to oversee the entire distribution centre operations. Some sub-processes or complex tasks will still require some level of human intervention but the majority of these activities will be undertaken by management teams making strategic and tactical decisions. Nearly all procurement, manufacturing, storage, and distribution tasks will be handled by automated methods.
While the wide scale use of robots in distribution centres has so far mainly occurred in very large Chinese and US locations, robotics use in Australia is ramping up too. The Telsyte ANZ Robotic Process Automation Study 2017 found that the Australian robotics market, which is currently worth around $216 million, is set to rapidly expand to $870 million by 2020.
In addition to the reduction in warehouse staff and increase in robots and automated vehicles operating on warehouse floors, one of the most obvious changes by 2028 will be the lack of a real need for warehouse-wide natural or artificial lighting. Because robots and automated vehicles navigate via a combination of laser, radar, and non visible light guidance systems, electric lighting and windows simply become unnecessary financial costs and security risks. So outside of the central control room, the warehouse is likely to be a busy but dark place.
INTERNET OF THINGS
While robotics will be the main game changing technology for labour reduction, automation will transform all aspects of the supply chain. Improvements in IoT and sensor technologies will allow seamless machine to machine communications and will mean entire end to end processes such as procure-to-pay and order-to-cash can be completely automated. McKinsey research indicates that the potential economic impact of IoT applications will be in excess of US$11 trillion by 2025 and as much as US$3.7 trillion of this will be related to factory environments.
Comprehensive and integrated IoT systems across the length of the supply chain allow for the enablement of truly informed manufacturing. This means that all products, people, and processes can be connected and information shared in real-time. This allows for improved decision making or AI controlled efficiency improvements that create smarter, more streamlined, and more automated processes.
Both NFC chips and RFID tags will be used to accurately tag and track all items within the supply chain. Companies will make widespread use of NFC chips, barcodes, and RFID tags to connect products, software, and hardware systems to the cloud, allowing for greater insights to be drawn from internal workflows. NFC chips that can be read by smartphones also provide an enormous opportunity for brands and organisations to better engage with and understand their customers.
By 2028, autonomous vehicles that have already been undergoing extensive testing over the last decade will have heavily penetrated the logistics industry. With regards to autonomous trucks, in the early stages of rollout, truck drivers will initially transition to being vehicle managers that will oversee the operation of the truck so that they can intervene in certain situations when needed. But this will soon transition to completely driverless trucks handling the majority of heavy road freight.
While there are still some regulatory and safety issues that need to be addressed before jurisdictions allow full level 5 autonomy, ten years is ample time to iron out the legal and safety concerns preventing the transport by air or land of fully autonomous trucks and drones. It also allows plenty of time to refine the technical aspects of the transport vehicles themselves, even though the majority of this technology is already sufficiently developed to allow for fully autonomous operations.
Airborne drones will become an even more common sight overhead as smaller shipments are increasingly handled by drone. This will require countries to adopt changes to existing air-traffic regulations and will likely result in designated corridors for unmanned aerial vehicles (UAVs) being created to manage safety and traffic issues. By 2028, the current experimental programs being undertaken around the world for pizza and parcel deliveries will be expanded through the use of much larger drones that can handle heavy freight payloads.
Artificial intelligence technologies will be further embedded into every aspect of supply chain.
AI is responsible for powering the algorithm-based decision making and data analytics that underpin GTM software as well as the performance and deep learning capabilities of autonomous vehicles and robots. AI technologies enable the benefits of near-continuous production as well as the opportunity to reduce human error, staffing costs, and helps improve the working life of the personnel working in warehouse and distribution centre environments.
AI already facilitates the anticipatory logistics used to reduce delivery times and boost efficiency by anticipating demand before an order is even placed. Global supply chain managers will be increasingly reliant on these kinds of AI technologies to avoid bottlenecks and make proactive decisions in response to increasing volumes of distribution as consumer demand for e-commerce goods continues to increase. The immense amount of big data in supply chain will serve to further inform and guide AI.
Blockchain technologies are well suited to the supply chain industry because they provide a permanent, transparent, and secure record of transactions and events. This trustless environment suits both suppliers, distributors, and the end client because no one individual or organisation can control or alter transaction or shipping records.
By integrating with IoT technologies such as NFC chips or sensors, blockchains are also ideally suited to goods tracking and verification at all stages along a supply chain. This allows organisations to have a continuous, verifiable record of environmental conditions. Factors such as temperature or humidity can be tracked and recorded to keep produce fresh or to indicate exactly where an item was stored or transported outside of set parameters. This technology also allows the end customer to verify where their Fair Trade coffee or sustainable tuna is sourced from.
Blockchains also facilitate low cost and fully automated payments systems. This enables rapid and direct payments to be made directly to each stakeholder along the entire supply chain, whether it be the produce farmer, transport company, bank, or end purchaser.
And because blockchains operate via digital currencies or tokens, these are true borderless, global payments. This means that very low transaction costs can be applied whether the payment is to a supplier around the corner or on the other side of the world.
Advances in the materials used in the additive process as well as increases in the size of 3D printing equipment means that far larger and more complex items can now be produced on demand. By 2028, this will allow for a large increase in the types and volumes of products produced at locally situated manufacturing centres or even in store in the retail sector.
3D printing also has huge potential for improving the cycle time of generating new product prototypes. While production teams relying on traditional tooling techniques might need to wait many weeks for prototype parts to developed, revised, and redeveloped, 3D printing technologies allow design iterations to be applied to moulds within hours. This not only speeds up production and lead times, but allows for closer engagement of manufacturing and product design teams.
REDUCTION IN OFFSHORING
Despite the long term globalisation trend that has occured in the last few decades, the next decade will likely see a reduction in levels of offshore production. This will occur as manual labour across the supply chain is gradually replaced by automation, which will slash labour costs and offset many of the benefits that came with offshoring. Despite ;high upfront capital costs for robotics and automation systems, operational costs will be only a fraction of those of human labour and these costs can also be offset by models such as robotics-as-a-service. This will result in a push towards moving supply sources closer to domestic markets as transportation costs become a much larger proportion of total distribution costs.
Forecasting the future is always a tricky business, especially in dynamic and rapidly evolving industries such as supply chain. But disruptive shifts are already occurring that paint the picture of how innovative players in the industry will be running their operations.
Robotics and automation will take over the traditional manual tasks such as picking, sorting, handling, storing, and transporting goods. Autonomous vehicles within warehouses will handle the goods to ultimately be delivered by automated trucks or drones. This will lead to major boosts in productivity per worker, cost reductions, and increased speed to market.
Supply chain professionals will make greater use of machine learning and AI assisted decision making and move more towards overseeing and management tasks rather than performing them directly. There is no doubt that the life of a supply chain professional in 2028 will be fast paced, multifaceted, and heavily reliant on the latest technology developments.
Bastian Consulting can help you find out more about the exciting trends occurring in supply chain and where the industry is headed. It has a deep industry focus on senior level supply chain roles in the APAC region. Managing Director, Tony Richter, is an expert in the supply chain industry with 7+ years executing senior supply chain search across APAC. He works only with a small portfolio of exclusive clients and uses a transparent, credible, and focused approach to establish trust with all his clients and candidates.