Special Feature: Does the supply chain have a future in the Fourth Industrial Revolution?

The World Economic Forum’s Annual Meeting of the Global Future Councils in Dubai has brought together experts from around the world to discuss the future of industry, society and the environment in the context of the so-called ‘Fourth Industrial Revolution’ (4IR).

4IR is the term used to describe the transformation of economies through a combination of technological, societal and business related disruptive forces. It has led to the development of the ‘sharing economy’ (such as AirBnB and Uber) as well as a change in attitudes towards asset ownership.

Nowhere will the effects of 4IR have more impact than in the development of the transport, logistics and supply chain industry. However it is far from evident whether the outcome for the industry will be positive or negative – much will depend on choices being made in the coming years.

The impact of 4IR on employment is a case in point. A number of the most significant innovations being considered will eliminate many millions of jobs as supply chain functions become automated by driverless vehicles, robots in the warehouse or 3D Printing. Unless education and training is put in place now which will equip future employees with the skill sets enabling them to adapt to the changing economic environment, a large proportion of society could find itself excluded.

In fact the whole future of the industry has been called into doubt. 3D Printing could seriously diminish volumes of components moving through upstream supply chains (especially throughout Asia) as manufacturing becomes consolidated in local plants. This would mean that the ubiquitous sub-contractor/assembly model becomes redundant and the logistics services required to link production nodes are eliminated. Instead these will be replaced with lower cost bulk shipments of ‘printer’ materials originating in large chemical plants based close to where the raw materials are extracted (e.g. in the Middle East).

The pace of change (although not the likelihood of change itself) will be impacted by the inertia created by governments and vested interests. For example, regulation finds it difficult to keep pace with technological change and this can lead to a vacuum of governance and the lack of a legal framework. This could equally apply to the development of autonomous vehicles, employment in the ‘gig’ economy or drones.

Although there is always the risk of over-hyping the impact of new technologies, it seems inevitable that there will be significant changes in the next ten years. Supply chain and logistics companies need to prepare for this new environment by building flexible and agile structures which allow them to respond quickly to shifting dynamics – whatever they may be.

Ti offers a wealth of industry analysis and commentary around the key factors impacting the logistics industry. Often in the form of white papers and webinars, Ti analysis is shared throughout the global logistics industry. If you would like to know more about the potential for sponsoring Ti whitepapers, contact Sarah Smith.

Source: Transport Intelligence, November 14, 2016

Author: John Manners-Bell