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3 Trends Driving Logistics Automation

Editor's Note: If you are interested in becoming an expert on Supply Chain Management (SCM), take a look at Flevy's Supply Chain Management (SCM) Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.

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Technological advancement has come a long way.  Artificial Intelligence is taking charge of a number of repetitive logistics tasks.  Organizations are benefiting from Automation in streamlining their cumbersome processes and cutting down delivery times.

Automation is profoundly affecting the way Logistics are handled.  It is disrupting the entire Logistics Supply Chain, not just the warehousing, picking, and sorting functions.  The impact of Automation on roads, rails, and ports is immense.  Ports are increasingly embracing Automation, but they haven’t yet started getting the return on their investments.

In Logistics, ocean and air shipment has potential for Automation—which is certainly under way—but its effect on enhancing throughput is yet to be seen.  Logistics operations are being transformed at quite a pace with new models, concepts, and offerings evolving rapidly.  With the current pace of technology evolution, experts believe Logistics operations would be done autonomously in the not too-distant future.

The COVID-19 pandemic has disrupted businesses and industries alike significantly.  Businesses are trying to grapple with the ambiguities the situation has presented to them.  Automation is being viewed by many Logistics companies to be the only option to prepare for and survive in the future.

Logistics companies are exploring ways to automate their businesses mainly due to 3 trends that are shaping their industry.  These 3 trends include:

  1. Shortage of Labor
  2. Proliferation of E-commerce
  3. Advancements in Automation

Let’s talk about these trends in a bit detail.

Shortage of Labor

Labor markets are stiffening globally with lowest unemployment rates and high wages.  Online retailers everywhere have a huge demand for skilled workers.  This demand rise steeply in the holiday season.  A sizable workforce is engaged in Supply Chain related jobs—about 4 million only in the US as packers, handlers, and supervisors in warehouses.  This translates to $100 billion in payroll costs.  Automation will definitely reduce this cost head.  However, it will have implications for the workforce.

Proliferation of E-commerce

Another trend that is affecting the Logistics industry immensely is the explosive growth of E-commerce retailers.  The sales of e-tailers are growing at a consistent pace every year.  With this trend, the range of products has grown considerably, benefiting the logistics businesses.  Logistic companies are making significant profit from this large volume of online shipment orders—saving about $12 to $20 on a sale of $100.

Interested in learning more about the trends that are shaping the Logistics operations?  You can download an editable PowerPoint presentation on 3 Trends Driving Logistics Automation here on the Flevy documents marketplace.

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Want to Achieve Excellence in Supply Chain Management (SCM)?

Gain the knowledge and develop the expertise to become an expert in Supply Chain Management (SCM). Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.

Supply Chain Management (SCM) is the design, planning, execution, control, and monitoring of Supply Chain activities. It also captures the management of the flow of goods and services.

In February of 2020, COVID-19 disrupted—and in many cases halted—global Supply Chains, revealing just how fragile they have become. By April, many countries experienced declines of over 40% in domestic and international trade.

COVID-19 has likewise changed how Supply Chain Executives approach and think about SCM. In the pre-COVID-19 era of globalization, the objective was to be Lean and Cost-effective. In the post-COVID-19 world, companies must now focus on making their Supply Chains Resilient, Agile, and Smart. Additional trends include Digitization, Sustainability, and Manufacturing Reshoring.

Learn about our Supply Chain Management (SCM) Best Practice Frameworks here.

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About Mark Bridges

Mark Bridges is a Senior Director of Strategy at Flevy. Flevy is your go-to resource for best practices in business management, covering management topics from Strategic Planning to Operational Excellence to Digital Transformation (view full list here). Learn how the Fortune 100 and global consulting firms do it. Improve the growth and efficiency of your organization by leveraging Flevy's library of best practice methodologies and templates. Prior to Flevy, Mark worked as an Associate at McKinsey & Co. and holds an MBA from the Booth School of Business at the University of Chicago. You can connect with Mark on LinkedIn here.

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