Navigating the technological disruption of shipping and logistics

April 22, 2016 Tradeshift Editorial Team

Supplier management

Bleeding-edge technologies will revolutionize the supply chain in the near future

The Hyperloop, a conceptual high-speed mode of transport theorized by Elon Musk, is proof that the transportation industry will be disrupted in a massive way. The perfect mix of science and technology, Hyperloop uses vacuum tubes to push capsules containing cargo or passengers between locations at speeds exceeding 550 mph, cutting hours of travel time down to minutes.

Not long ago, it was a mere idea Musk wrote about in a whitepaper. Fast-forward to Davos 2016, Hyperloop Transportation Technologies announced it has received a permit to begin construction of a five-mile stretch of a full-scale passenger and freight Hyperloop system next to California’s I-5 highway. The company says it will be ready in just 36 months.

Shaking up the Supply Chain

The Hyperloop and other emerging technologies are increasingly gaining airtime in supply chain circles. Some are going so far as to say they’ll completely redefine logistics, presenting new means of transportation and delivery that are cheaper, faster and more reliable. The allure of these new technologies boils down to the economics of moving goods at hypersonic speed. Hyperloop, for example, includes the ability to transport standard shipping containers, while avoiding many of the hassles of overbooked cargo ships, closed ports, and bad weather. It will also be less prone to accidents and casualties, given the system’s isolation from other traffic.

Bibop Gresta, deputy chairman and COO at Hyperloop Transportation Technologies, said in Davos in response to a question on how afraid traditional shipping players should be of this technology, “Moving goods at the speed of sound is disruptive by definition. It is not about speed only, because the freight industry is about how cheap you can move kilograms per minute. So we are the cheapest system on land.”

Further, in terms of easing traffic congestion, Engadget makes a great point: “A huge cause of congestion on roads is freight traffic—eighteen-wheelers carrying cargo containers from ports to warehouses. The Port of Los Angeles is one of the largest points of entry for containers into the United States, and much of that is taken east by road. Imagine if, instead, containers were pushed via Hyperloop to a new logistics center in Nevada; it would cut thousands of road journeys each year. Yup, Hyperloop could even do something to reduce LA’s notoriously awful traffic.”

In only a few years, CPOs and CFOs, along with purchasing & logistics departments, may very well be working with companies like Hyperloop Transportation Technologies and other newcomers in what will be a redefined, renewed industry. We’ll see the beginnings of a new infrastructure that supports supply chain processes such as order collaboration and shipment generation. The key will be to ensure the speed at which the processes take place and the data they generate match up to the speed of the Hyperloop itself. Technology like a global supplier management platform that can handle all supply chain interactions, including those mentioned above, will be essential for a supply chain in hyperdrive.

Putting Drones to the Test

While drone delivery has captured headlines thanks to widely publicized proof of concepts by companies like Amazon and DHL, there are many technological and legal obstacles to overcome before it becomes commonplace. Specialized scenarios will take root first (and some already are) such as delivery of drugs to remote locations or supplies to disaster zones. DHL, for example, does this via its Parcelcopter unmanned aerial device – it started delivering medical supplies in 2014 to the remote German island of Juist.

So what do manufacturers and retailers think? According to the 2015 3PL Selection and Contractingreport conducted by Eye for Transport, 31 percent want to see logistics companies use drones for product delivery. However, almost no company is ready. The same study found that only 1.5 percent of 3PL companies can actually execute or provide knowledge and recommendations for the technology.

The opportunity for drones may be in warehouses and distribution centers, and industry leaders don’t see the future too far off for when these will be put more commonly into play. Peter Sondergaard, senior vice president and global head of research at Gartner, told an audience of supply chain executives that he predicts that five years from now drones will be standard in the supply chain, “By 2018, five percent of companies with complex picking operations will pilot mobile self-navigating and smart warehouse robots.”

3D Printing Becoming More Mainstream

Many manufacturers and retailers are using 3D printing in their businesses to print working replicas of parts and products using plastic, metals and other materials. Nike, New Balance, and Adidas, for example, are in a heated race for who will create the next great running shoe via this technology. Entirely 3D printed products, such as prosthetics, toys and iPhone cases, are also increasingly popping up. A report from the World Economic Forum, “Deep Shift, Technological Tipping Points 2015,” suggests we can expect a fully functional 3D-printed car to be in production within the next seven years.

On-demand production has huge implications for the supply chain, not to mention favorable environmental results via reduced transport, pollution, and production waste. 3D printing can also reduce dependence on large factory employment, particularly in developing countries where resources may be scarce. Manufacturers can build new business models around the technology that can help accelerate product development, reduce cycle times and find new ways to reduce costs.

We’ve entered a period of radical change in shipping and logistics. Everything from material handling to inventory management to supply chain management to procurement will be impacted by technologies like Hyperloop, drones and 3D printing. These innovations will help drastically increase the interconnectedness across companies and processes, and have the potential to slash costs, timelines and processes. They’ll put the supply chain on hyperdrive and usher in a new era for the industry. Here’s to welcoming the change with open arms.

About the Author

Tradeshift connects buyers, suppliers, and all their processes in one global network. We help you transform the way you work with suppliers today – and adapt to whatever the future brings.

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