Disruption in logistics: Key trends for 2018

Disruption in logistics: Key trends for 2018

Super-granular address systems, global collaborative networks and automated customs management are set to cause major disruption in the logistics market in 2018. In the world of same-day delivery, B2B and B2C customers alike expect their deliveries to arrive in the shortest possible time. Reliable track-and-trace and hassle-free handling of complaints or returns are taken for granted. As a result, companies need to embrace the latest technologies if they are to keep up. Here’s a look at what’s likely to change over the next 12 months – and how you can stay on top.

Super-granular address systems

In 2018 we’re also going to see the development of alternative geo-referencing systems such as what3words or Locpin. These divide the entire world into a closely meshed grid of coordinates. Each square is assigned a globally unique marking. Over the next three years, this method of address will become increasingly commonplace, adding a new dimension to the customer experience. What3words, for example, uses a combination of three words to designate granular locations, and Locpin a code that can be supplemented with additional information for suppliers, such as details of the correct floor or a contact number. This allows safe access to destinations that are not covered by the classic address system of street, postal code, city, and country, and allows for more accurate targeting at major events like music festivals or in the event of a catastrophe. However, the basic prerequisite for this is that the software is adopted throughout the entire supply chain in order to process the new data. As such, ERP and OMS systems must be able to accommodate the new solutions, as well as Warehouse and Transport Management Systems (WMS/TMS) and the entire complex of the accounting software. In order for a shipment addressed with the new geo-referencing systems to easily pass through the supply chain, the conversion of all software systems in use must take place simultaneously. This is a major challenge for both software vendors and IT teams within the company. It can only be mastered with good planning and sufficient lead time. 

The SME squeeze

Today, some companies are using their supply chain as a tool against competitors: Amazon has achieved an outstanding market position, not least thanks to its revolutionary, fast delivery concept. In the US, Walmart enforces just-in-time delivery with strict contractual penalties: Anyone who delivers to the stores too late or too early will be charged three percent of the value of the goods when the invoice is issued.  That means that smaller suppliers in particular are having difficulty keeping up with the competition, as it’s hard to optimize your supply chain without the global heft of an Amazon or Walmart. To combat this, cooperative models like the global trade network system are an effective and useful way to keep up, placing smaller companies in a network of partnerships that can help them flexibly and quickly resource orders across the world on demand. These models allow rapid expansion of a company’s own supply chain by including new suppliers as well as monitoring and controlling goods movements according to the control tower principle.

Brexit drives trend towards customs automation

With the UK’s withdrawal from the EU, trade relations are undergoing radical change. In companies trading with the EU, the likely end of the free movement of goods will lead to a sharp increase in customs declarations for imports and exports. This entails considerable risks, including incorrect declarations and the threat of rapidly changing legal requirements. Companies need to ensure that they have the right systems in place to cope. The new regime will require a quick transition of workflows and documentation. The sheer mass of customs declarations will also mean that increased process automation is a high priority for many logistics companies.

However, even the best software relies on competent users, meaning that Brexit has a direct impact on staff requirements in companies. Those who are strongly focused on trade with the European Union must ensure that enough customs specialists are hired in order to successfully implement complex export procedures in accordance with standards and regulations.