Future Trends

Persisting long-term trends create particular challenges for logistics managers and result in increasing demands on their network skills.

E-commerce

The Internet may be considered one of the biggest inventions of human kind. It radically changed the way we buy and sell products/services and gather information about anything we are interested in knowing. Before the Internet became popular, could you imagine buying Christmas gifts online without even setting foot in a store? Could you imagine buying airline tickets online? Could you imagine ordering a pizza online? Could you imagine selling your old clothes and used furniture online? Could you imagine doing school homework online? Could you imagine shopping in your pajamas during the middle of the night? As these examples illustrate, the Internet has dramatically

transformed our lives over the last couple of decades.

The Internet has also revolutionized the way we do business. In other words, physical processes (e.g., shopping in a store, paying money to the store clerk, and getting a sales receipt) often involved in business transactions have been replaced by electronic processes. Generally, electronic processes are faster and more accurate than traditional physical processes because they are performed at digital speed and are less prone to human error. With the availability of electronic transactions and interactions between the buyer and the seller, so-called “electronic commerce” (or “e-commerce”) was born and quickly became entrenched in the fabric of our society.

A change in the business model also means the development of new business strategies (especially supply chain strategies) and the adaptation of emerging information technologies more relevant to ecommerce.

Enterprise Resource Planning (ERP)

If people in different departments and companies within the supply chain all can share the same information, supply chain visibility will be enhanced and thus uncertainty/risk will be reduced. That is to say, the firm’s ability to facilitate smooth information flow across its supply chain can dictate its supply chain excellence and subsequent business success. Typically, such ability is tied to the effectiveness and efficiency of the information technology (IT) the firm uses. Therefore, IT is a key enabler of supply chain management. IT solidifies connectivity among the supply chain partners by linking the point of production to the point of consumption seamlessly. Other roles of IT include the following:

Transformation of unstructured processes into automated, routine processes
Making a free flow of information regardless of geography
Reduction in the labor involvement of business processes
Enabling parallel processing tasks
Tracking physical flows of goods

Among the various IT tools, the one that is known to be effective in linking the entire organization and multiple partners/stages of the supply chain is enterprise resource planning (ERP). Generally, ERP is a cutting-edge software program that helps the firm coordinate and integrate company-wide business processes, including sales, marketing, manufacturing, logistics, purchasing, accounting, and human resources management, using a common database and shared management reporting tools. In a sense, ERP is a “dashboard” that provides some level of central oversight and controls needed to ensure that all of the company’s resources are working together towards the same goal.

Geographic Information System (GIS)

Since the 1970s, geographic information systems have been used to visualize spatial information associated with socio-economic planning, urban planning, market planning, transportation planning, emergency planning, environmental planning, land management, facility location analysis, crime analysis, and distribution network design. With the advent of the Web and advanced computer technology, the use of GIS has been widely spread to many different disciplines, including supply chain management. In general, GIS is a computer system that integrates hardware, software, and data for capturing, storing, managing, analyzing, and displaying all forms of spatial information, including locations and attributes of geospatial features.

GIS allows us to view, understand, question, interpret, and visualize data in many ways that reveal relationships, patterns, and trends in the form of maps, globes, reports, and charts. For example, GIS enables us to identify specific locations in the U.S. that are earthquake prone by mapping seismic patterns and fault lines. As such, it allows us to monitor earthquake activities and then take necessary actions (e.g., early warning to residents living in earthquake-prone areas) to minimize earthquake victims. Likewise, GIS simplifies the data-display mechanism by separating data presentation from data storage and then allowing the supply chain manager to visualize how distinctive one geographic site is from another by superimposing spatial information, such as population density, racial makeup, and temperature/humidity, on an interactive map. Combined with a database management system (DBMS), GIS may also provide a friendly platform for the enhancement of dialogues among supply chain partners.

Benefits of GIS, includes

It can improve the way data is accessed, maintained, and analyzed by organizing geographic information into one seamless map.
It can identify potential sources of problems (e.g., flooding, earthquakes, hurricanes, tornadoes, infectious diseases, water main breaks) on interactive maps.
It can foster better communication and cooperation among the supply chain partners by sharing base map data.
It can enhance logistics efficiency through improved workflows and scheduling based on GIS.
It can help develop strategic action plans in a timely manner. GIS allows the decision maker to identify potential sources of problems well ahead of their occurrence.

Intelligent Transportation Systems

An intelligent transportation system (ITS) generally refers to the use of advanced information and communication technologies to improve transportation efficiency, mobility, and safety. Examples of such technologies encompass satellite navigation, wireless sensor networks, Bluetooth protocols, inter-vehicle communication protocols, broadband wireless communication devices, ultraviolet and infrared radiation tools, conformal imaging, highway advisory radios, in-vehicle en route guidance systems, intelligent cruise control systems, agent-based systems, smart cards, fiber optics, real-time simulation tools, mobile robots, interactive television, closed-circuit television (CCTV), personal digital assistants (PDAs), and global positioning systems (GPS).

Also, there is a range of ITS-enabling technologies that enhance the effectiveness and efficiency of ITS. Exploiting these technologies, ITS enables vehicle drivers/operators to avoid traffic congestion, receive inclement weather warnings, get the real-time route guidance, detect road obstacles/hazards ahead, enhance night vision, avoid vehicle collisions, and pay tolls electronically.

The potential areas for further ITS applications may include seamless intermodal connections, terminal workforce scheduling, terminal congestion controls, yard management, emission reduction, noise abatement, and bidding on load bundles.

Radio Frequency Identification (RFID)

Radio frequency identification (RFID) can be used just about anywhere unique identification is needed for tracking purposes, ranging from clothing tags to credit cards. RFID transmits signals containing product information using electromagnetic or electrostatic spectrums. Although its role is similar to that of a barcode, RFID eliminates the need for line-of-sight reading that the barcode requires.

In other words, RFID can read product information from greater distances (up to 10 feet) than barcode scanning without direct physical contacts. This capability allows RFID to read data in harsh environments (e.g., oily or dirty surfaces) or chaotic circumstances (e.g., cluttered warehouse settings). Generally, RFID refers to a wireless device that carries data in transponders (i.e., “tags”) attached permanently to an asset (e.g., item, container, case, pallet) to read data stored on a microchip using radio waves.

Data stored in the RFID tag can provide unique identification for manufactured items, goods in transit, physical locations, vehicle identities, and humans. RFID tag can take several different forms, as

Active tags—These tags carry their own power source and broadcast their own signals to communicate with readers.
Passive tags—These tags will be activated to broadcast data once they are within the electromagnetic field of the reader’s antenna.
Semi-passive tags—These tags contain a tiny battery for logging the data received from the connected sensors.

RFID has the following drawbacks:

It is far more (10 to 50 times more) expensive than one-dimensional barcodes.
It requires a specific RF tag and transponder device, some of which are not widely available.
There is a lack of uniform tag standards due to varying technology and data content standards.
There is difficulty in reading liquid and metal products.
Sunk costs are involved with old legacy systems.

Artificial Intelligence

Artificial intelligence (AI) was introduced to develop and create “thinking machines” that are capable of mimicking, learning, and replacing human intelligence. Since the late 1970s, AI has shown great promise in improving human decision-making processes and the subsequent productivity in various business endeavors due to its ability to recognize business patterns, learn business phenomena, search information, and analyze data intelligently.

Due to such promise, AI can be used as an effective decision-aid tool for solving many supply chain problems. Generally speaking, artificial intelligence is the use of computers for reasoning, recognizing patterns, learning or understanding certain behaviors from experience, acquiring and retaining knowledge, and developing various forms of inferences to solve problems in decision-making situations where optimal or exact solutions are either too expensive or difficult to produce.

AI encompasses a variety of tools:

Artificial neural networks and rough set theory (“thinking like a human”)
Machine learning, expert systems, and genetic algorithm (“acting like a human”)
Fuzzy logic (“thinking rationally”)
Agent-based systems (“acting rationally”)

Though still limited, an increasing application of AI to supply chain management decisions stem from the fact that supply chain management requires the comprehension of complex, interrelated decision-making processes. Because these processes often call for the creation of intelligent knowledge bases, AI fits the bill as a tool for managing supply chain knowledge. In particular, an agent-based system has emerged as one of the most popular AI tools for tackling various aspects of supply chain decision problems.

Cloud Computing

Cloud computing is a new leading-edge technology that allows the user to get access-hosted computing services over the Internet from any computer, anywhere, without installing the necessary infrastructure and software. As such, computing technology is hidden behind a “cloud” and invisible to its users, but can be accessed on demand through a client/server system. Cloud computing differs from traditional computing in that it is used on demand, typically by the minute or the hour. It is also elastic—a user can have as much or as little of a service as they want at any given time—and it is inexpensive, because the user needs nothing but a personal computer with Internet access.

Cloud computing with on-demand service architectures shared by many users can encourage open collaboration among supply chain partners because it makes IT more affordable, accessible, and compatible, thereby making information sharing among the supply chain partners more reasonable.

Social Media

Dissatisfied with traditional information portals and keyword search engines such as Yahoo!, Google, and AOL, a growing number of Internet users have tried to index and search for information in revolutionary ways. One of those ways may include the sharing of necessary information through social media and user-generated online content, including blogs. A rapid pace of advancement in this kind of communication media and technology facilitates quick exchange of information among customers, employees, and business partners located in different parts of the country and globe.

For example, one of the online social media networks, Facebook, with approximately 550 million users across the globe, can help multinational firms (MNFs) develop an interactive communication platform that goes well beyond the interaction between back-office functions and client-facing functions through its web of friends, families, colleagues, and acquaintances. This platform can be a foundation for the MNF’s customer relationship management (CRM), advertising tools, branding, business transactions, and information-sharing activities, and may reshape future supply chains.

Ubiquitous Commerce

As we have experienced through the use of our cell phones, mobile technology allows us to stay in touch with each other for virtually 24 hours a day, 7 days a week, from anywhere in the world. As such, this technology dramatically enhances connectivity among us. The extension of this mobile concept from “person-to-person” to “business- to-business” can revolutionize the way supply chain partners communicate and interact with each other. Generally, mobile commerce (or m-commerce) refers to the ability to conduct business transactions in ubiquitous environments using wireless handheld devices such as cell phones and personal digital assistants (PDAs).

Based on the Wireless Application Protocol (WAP), mobile commerce can provide faster, more secure, and scalable e-commerce access without even needing a place to plug in mobile devices. Leveraging the technological advances in mobile devices, including their speech recognition capability, we can use mobile commerce to review bank accounts, order products/services, pay bills, and check financial news, traffic updates, and sports game scores on a handheld device, anywhere, at any time.

Smartphones

Generally speaking, a smartphone is an electronic hand-held device that combines traditional voice services with built-in computing capabilities, including email, fax, pager, Internet access, camera, MP3 player, video player, television, and organizer. With such capabilities, a smartphone allows us to perform a variety of tasks: web browsing, personal information management, online banking, LAN connectivity, data entry, data storage, remote data transfer, remote control of home/business electronic systems, office document editing, and interactivity with unified messaging.

Drone (Unmanned Aerial Vehicle) Technology

A drone is an unmanned aerial vehicle typically guided by wireless GPS, cameras, and/or (inertial measurement) sensors. It is capable of delivering goods from point to point without a pilot.

Drones are best known for their military applications during the Afghanistan war, but the technology has advanced a lot in recent years and has gotten more affordable for logistics applications. As a matter of fact, DHL started experimenting with the drone technology to ferry medicine to a sparsely populated island off the northwestern coast of Germany. Following suit, both Amazon and Google plan on exploiting drone technology to replace some of the traditional ways of delivering parcels to remote locations.

Drones have limited load capacity of 8 to 10 kg can still be a challenge, drones can revolutionize air freight delivery services, particularly for reaching small, remote, sparsely populated areas where access to nearby airports is limited. If the current technological deficiencies associated with detection, safety, and flight stability can be overcome, the drone technology can be used to shuttle small packages (e.g., medical supplies, spare parts, books) from central depots or major airports to local pickup centers and residential homes.