Let’s see how far we’ve come: Logistics edition

 
As technology continues to transform the supply chain and organizations are turning to big data to improve operations and keep up with steadily increasing consumer demand, the landscape for logistics tools is also becoming critical to watch out for. Quite a few things happened in the world of logistics last year, and in the year to come, there are even more things to keep an eye on in terms of what’s going to be the best tools and technologies to adopt.

One thing’s for certain: supply chain and logistics managers have a lot on their plates waiting for them in the year ahead.

Where we’ve been

In his year-end review for 2016, Logistics Management group news editor Jeff Berman noted that the past year was certainly eventful from a logistics standpoint. New fuel efficiency standards, a long list of carrier deals and mergers, and reports of freight volumes increasing steadily all characterized the past year in logistics.

Earlier in the year, the Council of Supply Chain Management Professionals released its 27th Annual State of Logistics Report, which stated that total U.S. business logistics costs rose to $1.48 trillion in 2015, according to Logistics Management contributor John S​chulz. This represented a 2.6 percent increase from 2014, which is a considerable slowdown from previous years – meaning it was definitely a buyer’s market for business logistics. However, the industry is subject to rapidly changing conditions, so this status won’t last forever.

Cloud computing and automation were the biggest players in the logistics game in 2016. SupplyChain247’s Bridget McCrea reported earlier in the year that the cloud was making it easier than ever for mid-sized businesses to benefit from investing in a transportation management system. In fact, an ARC Advisory Group report found that companies that used a TMS saved an average of 7.5 percent on freight thanks to being able to use preferred carriers and conduct better procurement negotiations.

Logistics technologies like the cloud were important in 2016.Logistics technologies like the cloud were important in 2016.

 

Where we’re going

It’s clear that last year was eventful for logistics managers. That being said, this year and beyond are shaping up to be even busier. A recent report from Technavio found that the global rail logistics market will be worth more than a staggering $210 billion by 2021, growing at a compound annual rate of 4 percent from 2017 on. According to the report, drivers for this considerable growth include increased efficiency of rail freight over truck freight, fewer traffic jams and less road congestion, and the growth of rail intermodals.

Supply & Demand Chain Executive contributor Richard Beeny noted that demand for better logistics solutions was especially prevalent in the medical device and drug industry in 2016, and that’s likely to continue into the new year. In light of recent standard changes wrought by the U.S. Food and Drug Administration, organizations have had to increase their warehouse square footage and plan for price changes in order to keep up with increased regulatory scrutiny.

“[O]n a macro level […] it is likely we’ll see continued outsourcing by manufacturers, as it offers them greater control at a lower cost,” Beeny wrote. “Given what we also believe will be continued downward pressure on drug and medical device pricing, this won’t change in the near future.”

Whatever the case, this year and will bring new – and old – challenges. By investing in logistics management tools and services like Oracle Transportation Management and Global Trade Management, organizations can take advantage of their supply chain data and use key insights to improve their operations. Get in touch with the experts at Inspirage today for more information.

Don Wu

Don Wu | Key Contributor

Don Wu is a Manager, Solution Architecture for Inspirage. At Oracle, he was a Principal Software Engineer in the development of Oracle Transportation Management. He has authored many OTM functionalities for the releases from 2.6 to 6.2. He is also an experienced Oracle certificated DBA.