2015 Logistics Trends A Personal View 2nd International Logistics Development Conference Beijing, PR China Professor Stephen Rinsler FCILT, FRSA, FIOM, MCIPS April 2015

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Visiting

Professor Stephen Rinsler

• Director, Bisham Consulting –‘Solutions that Work’ • Honorary Secretary and Trustee, CILT • Visiting Professor Nanjing University, PR China • Associate Independent Transport Commissioner, UK • Advisor Cranfield University • Editor/Author eg Global Logistics 7th Edition (Kogan Page)

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Trends in Supply Chains (1) • High Volume, palletised movements (Consolidated) Low Transactions Palletised Movements Consolidated

Internet Purchasing

High Transactions Parcel Movements Disaggregated

• Low volume but high numbers of transactions (disaggregated) parcel movements • Greater product return using parcel networks

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Trends in Supply Chains (2) • More data and Big Data • Different movement technologies • Global risk changes and effect on supply chains

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Major Issues in Supply Chain • • • • • • • • •

Parcel deliveries Product Return Faster and more frequent product development Skills Data mining and analysis Where are your customers? Where do you produce? Global risks and Cost Pressures Environment 21 April 2015

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Parcels • Lot’s of them

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Parcel Deliveries • Alibaba, Amazon driving retail change – Single parcel deliveries • pick and pack operations: labour intensive – Order 2 colours, 2 sizes and send back what you do not want • Handling returned product • More small vans – More congestion – Greater use of oil: Cost

• Omni-channel deliveries 21 April 2015

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Omni-Channel Deliveries • Traditional horizontal supply chain is disappearing Manufacture

Warehouse and Distribute

Order

Customer Choses/Pays and Takes/Collects

Delivery to point of Customer Choice

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Faster, more frequent product development

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Faster, More Frequent Product Development • Smaller production runs • Harder to forecast sales – New technology may not be liked

• More retooling, more start-up runs – More waste – Long supply chains are inefficient – Be close to market

• More obsolescence

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Product Return • • • • •

Very inefficient Very costly, high labour input Many ad hoc processes to recover product High levels of damage Increased obsolescence

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More data (than we need) • Supply Chain already data rich • Now transaction rich as well (more parcels, more deliveries, etc) • Big data processing and storage bandwidth available

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More data (than we need) Data Data Data Data Data

Information

Knowledge

Strategy/Solutions

Data

Action

• Skills for data mining and analysis are specialist and rare • Skills to take data and make information, even rarer • Evidence: Data is rarely structured and clean 21 April 2015

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Different Movement Technologies • • • • • •

More efficient engines Larger boats, vehicles: but we need more small vans? Drones Robots 3D Printing Click and collect (Urban answers for now?)

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Different Movement Technologies Efficiency

Larger Engines Higher Pressures Better Km per Litre

Larger Boats Size

Larger Planes

Larger Trucks

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Different Movement Technologies Efficiency

Larger Engines Higher Pressures Better Km per Litre BUT

Size

Smaller Orders Larger Boats Larger Planes

Larger Trucks

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Different Movement Technologies • Drones Will they be allowed in urban areas? Can they be safe enough? • Robots Is the investment driver: Accuracy? No training? No people?

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Different Movement Technologies

©

• 3D Printing • Possibly the most disruptive technology for many years

• Three-dimensional printing makes it as cheap to create single items as it is to produce thousands and thus undermines economies of scale. • It may have as profound an impact on the world as the coming of the factory did....Just as nobody could have predicted the impact of the steam engine in 1750—or the printing press in 1450, or the transistor in 1950—it is impossible to foresee the long-term impact of 3D printing. • But the technology is coming, and it is likely to disrupt every field it touches. The Economist, in a February 10, 2011 leader

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Where do you Produce? • Internet allows for buy: anywhere/fulfill anywhere • Produce anywhere • Warehouse and fulfil orders anywhere • Deliver to anywhere, anyhow: air/sea/road • Deliver mostly in 1-5 days

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Where do you Produce? • • • • • • •

Order from anywhere Process order anywhere Produce anywhere Warehouse and fulfil orders anywhere Deliver to anywhere Deliver mostly in 1-5 days Decision: driven by net cost, net of tax, but also by Skills Availability

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Global Risks • Disruption to trade – Politics – Trade blocks – Currency fluctuations – Volatility in pricing of shipping, etc

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Global Risks • Disruption to Supply Chains – Piracy – Greater armed interventions in Africa, Middle East – Weather: Tsunami, earthquakes, floods, hurricanes/tropical storms

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Cost Pressures • Boards of Management still do not understand Supply Chains • The final delivery link is so often ‘free’ • Consumer makes poor choices for delivery • Margins are under great pressure in retail – Therefore pressure pushed down to suppliers – Pushed down to transport providers (3PL)

• Not enough investment in skills, in people, in Digital linkage, in IT, in equipment other than in property

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What is Needed? • More investment in good workers and managers: more training, higher level training • Better salesmen/ solution makers that emphasise, value and flexibility rather than just price • Investment in the use of data: squeeze the strategies/ solutions out of the information gained by good analysis of data • More collaboration, joint use of assets, joint movements • Simple explanation o the cost of Home Delivery 21 April 2015

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What is Needed? • This is a great industry, let us nurture the next generation of great managers

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CILT • The Chartered Institute of Logistics and Transport in China started this programme some years ago with the CILT(UK) • The vision is to move the programme forward to interact with Industry and Government to provide Chinese programmes that meet your needs • Good fortune as a Territory Organisation

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