The requirements of today's market are not only a high level of service, reliability and flexibility, but also achievement of minimum cost. Expert experience has shown that management optimization allows the supply chain to achieve a significant improvement in performance, such as cost reductions in various categories, reduce inventory levels while increasing service levels, improve the accuracy of forecasting and planning quality and so on. The need for modernization is not only dictated by short-term supply chain needs in the economy, but also medium and long-term development plans. The leaders focus on strategic business results, looking for opportunities to turn their supply chains from a source of expenses to a source of competitive advantage. Creating a high-performance supply chain requires three main components: people, processes and technology. However, in view of the fast-paced technical component today can be seen the dominance of technology and its decisive role in the development of the whole industry.
Technologies
The flow of innovations in the world does not stop. Technology has become a part of everyday life, they are now changing our habits and lifestyle. Cloud technology, 3D-printing - a couple of years ago, these words were familiar only to "geeks", and were a real scare to everyone else. Now, many ordinary users store data "in the cloud" (in social networks, vDrop Box), use fitness trackers, "smart" watches. And 3D-printing is now no longer a surprise. This year will appear more devices, which interact with each other, creating thus networks of their own. The combined network will be able to open its resources to a smartphone, wearable gadgets (wearables), consumer and home appliances, automotive devices. Furthermore, sensors placed anywhere in the surrounding space will become an important part of the network. Motion sensors, sound sensors, fingerprint readers, voice, object, and face recognition systems, sensors of energy consumption will be used everywhere.
Cisco technology company predicts that by the year 2020 almost 50 billion devices will be connected to the wireless network via various sensors (including smart phones, office machinery and equipment) (Morgan). Cisco Analysts also believe that the market volume of IoT (Internet of things) for the public sector in the next 10 years will be about $4.6 trillion dollars (Morgan).
"In the post-mobile world, the focus is shifting to the mobile user, which is surrounded by a network of devices that extends far beyond the traditional mobile devices," as explained by the vice-president of the Gartner research company David Kyrle (Kyrle).
In the network of devices an important role will be assigned to mobile gadgets and applications, with the help of which the user will work with the network itself. It will also be possible to connect new devices, such as virtual reality glasses. Thus, a person can create an individual network of devices, which will be comfortable for work and relaxation.
Data in Order
The network will collect information from the environment, generate new information, and share it. Information in the world will become available to all. According to executive director of Google Eric Schmidt, the world is generating more information every two days, than for the entire period since the establishment of early civilization until 2003. Therefore, in 2016 there is another challenge before mankind: to learn how to organize, analyze and manage the data (Siegler).
Gartner predicts the development of methods and technologies that will bring order to the different types of data collected from different sources. Intelligent data analysis and systematization will help transform chaotic flow of information into a meaningful and logically structured system (Kyrle). However, this can be done only if the data is in electronic form. For business, this means digitizing customer experience, supply chain management, transition to electronic document management in general. It is the same with any state: it is impossible to properly manage the data, if there is no e-government, and all the works are carried out in paper form. According to the vice-president of the US company Sutherland Global Services Chuck Brooks, getting rid of "papers" will be the aim of all the developed countries in 2016. At the same time, he recalled that the US government is managing one of the largest document repositories in the world. Every year, one million paper documents are made, and government institutions are responsible for their preservation and safety (Brooks).
Almost Artificial Intelligence
The emergence of artificial intelligence (AI) and augmented reality is no longer considered science fiction, but very real prospect. And if augmented reality will be able to be realized foremost in the field of entertainment (e.g., Google glasses, Lenses filters in the Snapchat app), then the AI will be able to solve many business problems (Buffington 54).
According to Gartner, programs of the so-called deep neural networks (deep neural nets, DNNs) play a key role in the emergence of a new type of AI. They allow creating a system that can educate itself and perceive the world around. DNNs independently analyzes all the unstructured information that people will simply not understand or it will take them a very long time to understand.
In 2016, the "smart" machines, and applications that work independently, as well as robots (partially autonomous vehicles) will increase in number. Vehicles will appear without drivers, but with virtual personal assistants (as, for example, Google Now and Apple Siri) (Cucchiekka abd Koh 34). These systems are constantly being improved and developed and, according to Gartner estimates, the trend will continue for the next 20 years.
Technological Development
Therefore the following technologies will determine the future of SCM:
Fast and affordable internet. This must be available at any warehouse even if it is outside the city accessed from any wearable gadget. A key role in the transformation of logistics is given to wearable devices. Imagine the goods that manage their own delivery, taking a lot of problems off warehouse workers. Or they will even be able to evaluate the traffic situation and choose the best route! Tracking, remote control, analysis and automation with the help of wearable devices will change the rules of the game in the whole transport sector. Tesco warehouse workers in the retail chain are already using the "smart" bandage to collect and manage orders. These bandages help to distribute the orders between employees (based on established standards) and find the right product in stock (Friedemann).
Cloud technology (TMS, WMS, SCM system). Applications can be purchased for the supply chain. There is no need to buy special computer hardware, as an ordinary laptop will be enough. You can pay for the technology in use, you can pause a service, have access to the application via the Internet from anywhere in the world, thereby minimizing the risk and cost of ownership (Brooks).
Social networks. Soon specialized "logistics" social network will appear. People will search for suppliers and carriers, put up ratings, reputation and look up for joint projects (No athor).
Big DATA. SCM can be controlled by taking into account economic, political, climatic, social factors, as well as finding hidden patterns in demand. Due to the Big DATA transport companies can better manage traffic on a daily basis by analyzing data on transport operations. "Internet of Things" will display data processing to a new level, providing carriers with valuable information, and thus, giving them leverage in the process of management, "- said John Manners-Bell, Director General of Transport Intelligence (Friedemann 141).
Properly structured and analyzed data is the key to new opportunities in the field of logistics. With their help, personnel can discover new non-obvious routes and use-up the untapped resources in a complex supply chains. In addition, the analyst will help to make the transport systems more flexible, allowing to quickly reschedule or re-plan delivery routes in the event of unforeseen complications. For example, if it turned out that it is necessary to bring more goods than initially stated, it will be possible to know which vehicles are nearby, or to build a bypass route, if the main road is blocked (Buffington 93). It is also possible to predict demand with the help of big data. For example, the weather forecast will help the supplier of goods for a barbecue to predict a sharp demand for the products and bring a sufficient number of grills on the first sunny days.
Geolocation. Soon geolocation accuracy will significantly increase – the accuracy will be by up to several centimeters, and transport can be managed online.
Internet of Things. For example, the pallet will "inform" the car, what goods were loaded onto it, thanks to a specially built-in system.
It is expected that by 2020 the number of network-connected devices will exceed 50 billion. The world of devices connected to each other is a storehouse of opportunities for all sectors of the economy, including the trucking industry. "Smart" devices connected to a single information space, can store important data - such as technical requirements, the names of customers and delivery addresses (Kyrle). For example, a "smart" pallets and containers for the transport over long distances significantly facilitate the tracking of goods transported or search in stock. Such systems not only make it easier to find, continue with the distribution and dispatch of orders to warehouse employees, but also help manufacturers to efficiently perform maintenance tinning and processing of goods at the end of their useful life. Over time, most of the processes in logistics can become semi-automatic. Cargo transport tracking with the help of network-connected devices will remove the anxiety associated with delivery. Moreover, in this way it will be possible to check whether the vehicles is in need of repair, and receive information about mistreatment of goods (Kyrle).
Drones. Amazon is already using drones to deliver goods to the end user, the robot driver does not make mistakes and can accomplish complex online tasks. Robotic transport system will soon operate. Switzerland has already planned a construction of an underground automatic freight transport system (Han Nabben).
The use of drones in the supply chain management is one of the most discussed topics. According to research conducted in 2017 20% of the transport companies will use drones for surveillance, research and solving problems related to the organization of events. DHL has already begun to use drones to deliver goods (Brooks). The drone Parcelcopter developed by the company last year was already delivering urgent medical supplies to the German Justus island in the North Sea. Depending on weather conditions, a distance of 12 kilometers the device overcomes in 15-30 minutes. For now the drone carries only medicines to pharmacies island, but it is an excellent illustration of the potential of unmanned aerial vehicles for the timely delivery of goods.
Of course, drones do not solve all the problems. The well-known expert in logistics Alan McKinnon focuses on the fact that the use of drones will remain limited due to the low flight range, high costs (including energy among others), security issues and the problems associated with sending cargo return flight. However, drones have enormous potential to deliver small valuables or just badly needed goods, such as medicines or blood donations (No author).
Artificial intelligence. Is required to solve highly complex problems.
3D-printers. This approach will completely change the supply chain. For example, Adidas has developed technology for 3D-printing of individual sneakers. In this case there is no need for complex SC networks, and supply of materials will become top priority in order for the product to be produced (Cucchiella and Koh 111).
3D-printing allows to make production according to individual orders directly in the field and very quickly. Many of the products it makes no sense to produce in large quantities far from consumers. At the forefront is the software, and the production moves to the territory of the customer or the shop. Three-dimensional printing opens up a world of "digital warehouse" where objects are not stored, but their three-dimensional models are in the computer-aided design (CAD) format. The desired item can just be printed in 3D, or ordered from "stock", and then get to the nearest 3D-printing workshop where it will be produced.
An estimated 30% today of manufactured products already includes 3D-printing elements. By 2020, this figure could rise to 80% (Cucchiella and Koh 119). “3D-printing will not be the revolutionary factor that will change everything overnight. Most likely, it will take its place alongside the traditional production technologies, complementing rather than replacing them,"- says Darren Travers of AEB International, the company-supplier of IT solutions in the field of trade and logistics.
Virtual and Augmented Reality. A person will not need to physically move to choose a product, to communicate, or to inspect the warehouse.
All of these technologies will change the supply chain in the future. There will no longer be demand for logistics: the goods will be realized over the Internet, sent directly from the manufacturer, or printed with the customer in the store. For supply chain managers to remain in demand, they need to (Friedemann 65):
- Optimize global chain;
- Enhance and expand their profile: economics, finance, marketing;
- Be aware of the latest trends in the field of IT;
- Be fluent in English.
In addition, the experts must the theme Theory of Constraints (TOC) in the supply chain.
The main problem of the supply chain - is the response time to fluctuations in demand. Therefore, there is a surplus of goods (overstock), or not enough (out of stock). The reasons for these differences is that the chain used to harmonize the sales plan. The manufacturer, after the release of goods aims to sell it, according to the forecast. When this does not happen, then he starts to push these products through the supply chain. When there is a surplus, the supply chain shows problems such as the additional costs of storage of goods, additional interest loans, obsolete inventory, write-offs, reduction of the normal product sales. The result - sales, which adversely affect the company's earnings, as customers are waiting for lower prices and do not stop to buy in other periods (Friedemann 68).
Shortage of goods leads to lost sales, reduced customer loyalty and loss of customers. To solve these problems, processes in the chain must be managed based on the theory of limits: limit input (raw materials), the limitation of production capacity, market restriction. As a result, if a company comes power limit, after applying the algorithm TOC (theory of constraints), the company usually comes to market constraints.
One of the algorithms of TOC: maximum use the limitations: each customer buys what he wants, and implements buffers for inventory management throughout the supply chain by pulling the system, that is, to request and order the goods as demand receipts.
Why develop technologies
Here are a few trends that irreversibly affect the supply chain in the future (Brooks).
The new model of development. Supply chain management today is not ending in exports from Asia to North America and Europe. Exports will become trajectories variability. The development of urban infrastructure is a powerful stimulus of the evolution of supply change management and logistics.
Flexibility. Delivery methods are becoming more diverse. This allows consumers to choose for themselves a comfortable method and timing (Han Nabben).
Proximity to the customer. Investments in logistics are constantly increasing. Delivery is getting closer to the customer: opening new warehouses, offices, points of issue.
Multichannel. Modern customer is actively using all possible channels and means for the purchase. Supply chain management is to keep up with retail. Multi-channel strategy is also relevant and effective.
Information Technology. The development of supply management requires the introduction of advanced technologies. This is one of the main areas for investment today and in the future (Han Nabben).
Continuity. For a quick-to-market products and to minimize risks, it is necessary to monitor the continuity of the process and develop the logistics outsourcing (Brooks).
Stability. Today, more and more consumers prefer the "right", a proven commodity. Shipping should also be reliable, because it is an integral part of a successful bid.
Transparency. Logistics Availability of information allows you to monitor the supply at any time, which is beneficial for planning (Brooks).
Many advanced technologies are used in shipping and storage. Logistics processes are numerous, multi-faceted and dynamic, they require constant development of the means of their implementation. Therefore, people must not be surprised if one day the parcel will not be picked up by a person from an online store but a miniature drone will deliver the order.
Conclusion
The world is constantly developing and business is not standing still. The client and his needs have become top priority for businesses to meet the expectations. However, apart from quality, the fast-paced present is seeking to accommodate the client with a swifter response and faster delivery. This can all be achieved through a better and more technologically advanced supply chain management. The future is full of surprises that will enable supply chain managers use new technologies to make a better job. The new technological advances that are now currently being discussed are the improvement of wearable gadgets, better and more open access to internet, Big DATA, Internet of Things, use of drones, implementation of artificial intelligence, augmented and even virtual reality, 3d printing and much more. This will allow a faster and easier work of the supply chain manager responsible for the timely logistics and delivery of goods to the client. Technologies must be developed for the business to be more client oriented, show its flexibility, thus increasing competitive advantage, and at the same time proving stability and transparency in business dealing. World development is demanding that the whole society and business changes, thus a new model of development in the sphere of supply chain management is also required. Technologies are the answer and the best possible solution.
New technologies in supply chain management will allow the company to achieve long-term competitive advantages, which are due to, for example, the possibility of participating enterprises of the supply chain to focus on core activities, reducing market risks by means of effective coordination in the chain and the constant flow of information. The consistent focus on customer processes and their desire determines the possibility of increasing the level of service and customer satisfaction. Total coordination of the supply chain makes it possible to reduce turnaround time and delivery, increase level of trust and loyalty of consumers. After all, this is what present-day business is all about.
Works Cited
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Buffington, Jack. Frictionless markets: the 21st century supply chain. Cham, Switzerland: Springer, 2016. Print.
Cucchiella, Federica, and Lenny Koh. Sustainable future energy technology and supply chains : a multi-perspective analysis. Cham: Springer, 2015. Print.
Friedemann, Alice J. When trucks stop running : energy and the future of transportation. Cham New York: Springer, 2016. Print.
Han Nabben, Damco. 12 Trends that are Shaping the Future of Logistics. SupplyChainDigital. 2014. Web. Retrieved from http://www.supplychaindigital.com/logistics/3610/12-Trends-that-are-Shaping-the-Future-of-Logistics
Kyrle, D. The Internet of Things. The Connected Home: Impact on CIOs and Business Leaders. Gartne.com. 2016. Web. Retrieved from http://www.gartner.com/technology/research/internet-of-things/?cm_sp=sr-_-iot-_-btn
Morgan, J. Cisco Connected World Technology Report. Cisco.com. 2014. Web. Retrieved from http://www.cisco.com/c/en/us/solutions/enterprise/connected-world-technology-report/index.html
No Author. The future of Supply Chains – 7 Key areas of Technological change. Adaptalift Logistics & Materials Handling Blog. 2016. Web. Retrieved from http://www.aalhysterforklifts.com.au/index.php/about/blog-post/the_future_of_supply_chains_7_key_areas_of_technological_change
Siegler, MG. Eric Schmidt: Every 2 Days We Create As Much Information As We Did Up To 2003. TechCrunch. 2010. Web. Retrieved from https://techcrunch.com/2010/08/04/schmidt-data/
