2019 Supply Chain Predictions: More Collaboration, Innovation and Disruption

After decades of “shipping in the dark,” shippers and their ecosystems of partners and carriers are increasingly connecting via visibility platforms. That means they can now see -– literally – novel ways to improve business operations and uncover new value in their supply chains.

As I’ve said before, we’re just at the beginning of this supply chain visibility movement. In 2019, this relatively new-found ability to peer in to the supply chain will help the industry breathe new life into sustainability efforts and spur innovations in new areas (with the warehouse at the forefront). But even as shippers step up their collaboration to find greater value in the network, supply chain visibility will force others – DFMs and brokers in particular – to look inward as everyone jockeys to be a disrupter and not a “disruptee.”

Visibility Will Help Propel Sustainability

The sustainable supply chain has been a topic of conversation and a worthy aspiration for a long time, and as climate change predictions grow more extreme, it is in everyone’s best interest to step up their efforts to adopt more sustainable practices. A 2014/2015 report by Accenture for the CDP put it well: “Not only do these offer a means to reduce costs by driving efficiency in resource use, but sustainability is likely to become a key differentiator in the marketplace.”

Shippers are highly motivated, for example, to reduce “deadhead,” which is when a truck driver is on the road with an empty trailer. Recent estimates suggest upwards of 40% of trucks travelling the roadways are empty and therefore needlessly pumping more C02 into the atmosphere. Not just that, empty trailers are inherently unsafe, with a deadheading truck 2.5 times more likely to crash than a truck that's carrying freight.

Now, shippers finally have the tools to mitigate this problem, using visibility and artificial intelligence to dynamically match shipments with available capacity. Shippers and carriers can execute matches based on real-time conditions, including delays at stops, traffic congestion and disruptive weather events. It’s a huge step forward compared to traditional matching technologies and load boards that operate based on stale historical data uploaded by carriers and shippers.

Technology is the enabler, but none of this is possible without shippers connecting and collaborating to find common opportunities. We’ll see more of this in 2019.

Network Effects Will Proliferate

This ability to match shipments with capacity is a great example of a “network effect.” I’ve written about network effects previously. In short, the term refers to the impact and value a given network delivers as more users come onboard and engage more with the platform.

The idea originated with telephone networks—i.e., a single telephone is useless. Two, and you’re onto something. More is better -– more phones, more users, the more valuable the network. The same is true of visibility platforms.

2019 will see positive network effects proliferate as more shippers and carriers get connected and share data that can be leveraged for benchmarking, analysis and ultimately, insights to help drive business value.

“On-Demand Warehousing” Will Take Off

When you think of supply chain innovation, the warehouse isn’t typically the first thing to spring to mind. Relatively recent innovations such as robotics and RFID are important, but I’d argue that the warehouse management system (WMS) was the last truly big innovation, and that was decades ago. Billions of dollars in venture capital have gone to logistics in recent years while the warehouse was left fallow.

That’s about to change. Because if you think about it, it makes sense that warehousing innovation would follow logistics innovation. Logistics is an input to warehousing. Now that we have all of this innovation in logistics, we can start to ask, “How can we make warehousing better?”

2019 will be the year when we start to answer that question in a meaningful way. “On-demand warehousing” will take off (throw in “mobile warehousing,” “inventory on wheels” and related concepts). Everyone -wants to reduce inventory and the associated costs of storing product. How do you modernize warehouse activities? How can you improve how you receive an order, find it, pack it, stage it, and load it on a trailer? We’ll see a big increase in the utilization of data to improve all of this in 2019.

Disrupt or Be Disrupted

“To be a broker or a digital freight management vendor, that is the question.” Not quite Shakespeare, but a key question nonetheless for 2019.

From my perspective, if you are helping arrange freight between a shipper and carrier, you’re a broker. That’s just a literal definition. That said, the VC money is going to DFM vendors and they are perceived by many as the future. As a result, talk to any broker/3PL in the country and you’ll find most of them are offering, or planning to offer, an app. Understandably, they don’t want to be disrupted by the DFMs of the world. (Imagine being a driver in this environment. How many apps can they possibly download?)

At the end of the day, I don’t foresee any significant investments in DFMs in 2019. DFMs will have to differentiate from traditional brokers and pivot into a SaaS model to justify the valuation. Brokers will have to figure out how to incorporate DFM capabilities into their overall value proposition.

It’s only going to get more interesting! I look forward to hearing your reactions and your own predictions for 2019.