Megatrends in the Future of Logistics

roadmap of illinois_mattblackwellEarlier this year I came across the annual Material Handling & Logistics U.S. Roadmap, which focuses on long-term predictions—out to 2025!—with a focus on the “megatrends” that will transform logistics.

The 67-page report compiles what more than 100 industry thought-leaders had to say about the future in this particular sector, and how it will need to adapt its technology, practices and workforce to succeed over the long haul.

The very first sentence sounds very much like one of my Vested mantras—business happens: “We live in a highly connected world that is complex and becoming increasingly so. In the midst of this complexity, all the pieces must fit and work together to accommodate continuous and sometimes mind-boggling change.”

The report identifies ten “major trends” in the economy, in technology and in society that are shaping the future; I’ll highlight three that struck a chord with me.

– Relentless competition: One could ask, when has competition not been relentless? But I get the point. Competition in the logistics industry is fierce, because there’s so much money at stake: “In 2012, total spending in the logistics and transportation industry was $1.33 trillion, which constitutes about 8.5% of the U.S. GDP,” the report says. “Dollars of this magnitude not only attract more competitors, but also expand the nature and scope of the services provided.” Add the rise of 3PLs to this mix.

We know that competition for the most part takes place along the transactional dimensions of pricing and service. The report says that by the year 2025, “the material handling and logistics industry will have to offer a wider suite of services, at a faster rate and at a lower price point.” That’s a megatrend?  I think a win-win, WIIFWe mindset that creates true outcome-based partnerships will lead to greater innovation, along with healthy competition, is another dimension that trumps the companies that are locked into a “relentless” competition mode.That’s a megatrend devoutly to be desired. I’m reminded of Joy’s Law of Performance: “No matter who you are most of the bright people don’t work for you!” P&G’s A.G. Lafley was also thinking of Joy’s Law and the best ways to innovate when he said, “For every P&G researcher, there were 200 scientists or engineers elsewhere that were just as good. That meant there was a total of perhaps 1.5 million people whose talents they could potentially use.” Therefore do what you and your chosen partners do best and competition will take of itself.

Sustainability: “By 2025, the material handling and logistics industry should have developed standard methods of incorporating sustainable development into business plans and operating strategies.” In my view sustainability is an ongoing and necessary part of the landscape that has become more than a burgeoning trend. This is happening now. Again I point to P&G, which this year received IAOP’s 2014 Global Excellence in Outsourcing Award for Innovation—known as the GEO Award—in recognition for how it is driving supplier innovation with Jones Lang LaSalle (JLL), P&G’s global real estate and facilities management partner. The IAOP case study is highly instructive in how P&G has established a highly sustainable culture of innovation, both internally and with its suppliers. In addition, the IAOP case study shows the power of innovation and sustainability in action: P&G and JLL are collaborating on solving environmental sustainability challenges with their approach to “Smart Building.”

Big Data and Predictive Analytics: Like it or not Big Data is here to stay and it certainly qualifies as a continuing, long-term megatrend. The MHL report has a good summary of what Big Data is all about: “The term “Big Data” refers to extraordinarily large data sets that companies and other organizations now collect and store about their operations, sales, customers and nearly any other transaction of interest. How is our business affected by hurricane activity in the Atlantic? Do sales increase on Mondays because of Monday Night Football? Do customers really tend to order orange sleeveless shirts with purple socks? Big Data is supposed to tell us.”  In short Big Data predicts the future, if it is used correctly. And that, it seems to me, is a question of having a proper governance framework in place that tracks and measures performance and outcomes with insight, and not a blur of needless metrics.

Rather than think too deeply about how the logistics industry will adapt by 2025, I prefer to think that the future is now for these adaptations!

Image: Roadmap by matthewblackwell via Flickr cc

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