The supply chain of the future
By Craig Simon, President and CEO Supply Chain, FedEx
For most of history, the supply chain that links the world together today would have been unimaginable. The road to market is now a superhighway. It is a 24/7 operation. Global trade does not sleep. In fact, it never even pauses for a nap. Wheels on the ground, wings in the sky, keels in the water connect a largely borderless world economy.
At the same time, supercharged as the global superhighway may already be, no one in the shipping industry doubts that faster, cheaper, safer, simpler remain the fundamental currency of success for anyone in the shipping business. The world’s insomniac global companies demand, and deserve, nothing less.
That might suggest that the supply chain of the future will need to look quite different. There are even sci-fi visions of a Star Trek-style teleport option, 3-D printing, a super-premium service able to move goods through cyberspace, like auto parts for example, from a plant in China to a factory floor in the United States. It’s an intriguing possibility.
What’s considerably more likely is that 20 years from now, the moving pieces necessary to move goods will still primarily be planes, ships, trains and trucks. Not as exotic, perhaps. But it will be with a new level of near-molecular precision. The supply chain of the future won’t look all that different, but in 2033 its visibility will be extraordinary. It will radiate data.
We are already approaching that level of transparency, but in the future ever more pervasive tagging of every item in a shipment will take advantage of tiny embedded sensors to enable an unprecedented degree of real-time tracking and tracing.
Today, FedEx already offers a larger, multi-sensor device for high-value shipments, called SenseAware for use on all transport modes, including airplanes, intra-US and to over a dozen international locations as well. The sensors of 2033 will be ubiquitous.
It will be an optimised supply chain overall, and it will be personalised on an individual level. Each one of us will have access to a personalised control tower, a command center for a shipment in the palm of one’s hand, whether in a smartphone, or tablet, or another device.
Today, many larger companies already have teams charged with managing ‘control towers’ to monitor disruptions in the supply chain, whether from a weather event, a mechanical breakdown or, for that matter, civil unrest. 20 years from now ever more advanced algorithms will constantly compute speed versus cost ratios for each one of us, generating global options to re-route a shipment, or speed it up, or to slow it down.
This level of data will also mean greater security throughout the supply chain. The ability to know the status of a shipment – the location of a consignment of dish washers or the temperature of a delivery of human tissue – with ever-greater certainty.
This in turn simplifies the supply chain. Having a 360 degree view of a journey in a sense flattens it out, makes even complex routings easier to see, creating efficiencies, cost savings and, simply, confidence that goods will arrive safely and on time.
This flexibility will extend to a venerable fundamental of the supply chain – consolidation. In 2013, most shipments are consolidated, packed in containers in the belly of an aircraft or hull of a ship or back of a truck.
By 2033, the array of possibilities built into the supply chain will include de-consolidation, removing a portion or even a single item from a consolidated shipment. It will mean the ability – for a price, of course - to speed the customisation and delivery of a personal dialysis machine that arrives from Vietnam to the port of Los Angeles for an urgent patient need in Kansas City.
Rather than send it with dozens of other devices on a truck when it reaches the US, there will be more options to extract it from the bulk shipment and send it alone, by express air for example, overnight.
Eventually, another kind of consolidation may also increasingly be built into the supply chain. The manufacturing process of, say, that personalised dialysis machine, will be merged with its shipment and end-of-life disposition.
When a product is made, the process for determining its final resting place will be coded into the product itself. An order for a device placed in Kansas City could instantly connect into a matrix of interconnected manufacturers, shippers and, eventually, to complete the virtuous circle, even a final destination for the device – a qualified reclamation center to recycle the components.
Imagine using your phone to scan a 2D barcode on the product which will automatically dispatch a courier to your door to pick it up with precise instructions for its final shipment.
Sustainability will be fundamental. One of the world’s foremost experts on the supply chain, Dr. Edgar Blanco of MIT has said: “We’ve been great at getting something to you. What we haven’t been so great at is getting that thing that we gave you back. Trying to extract more value either as materials that you can recover, recycle, or maybe even to give that same product to other people after you’re done with it.”
It’s an expansive vision. The shipping industry has long been at the forefront of sustainability, with constant and ongoing efforts to reduce its carbon footprint and create an ever greener supply chain. This commitment will continue and could even one day, indeed, encompass the entire life cycle of a product.
The modern supply chain has come a long way from a cart pulled by a horse to market, and it is still a long way from shipments in cyber space.
But even in just 20 years the supply chain of the future will be more finely tuned, accessible, reliable, sustainable – and profitable – than ever. That’s great news for the entire global economy that we are all so dependent on.
Right now, the superhighway of the world economy has never been better. The even better news is that it’s still under construction.