Tuesday 22nd Aug 2017 - Logistics & Supply Chain

Is logistics in its ‘Model T’ phase?

The Model T Ford was the most popular car of its era – but have you ever tried to drive one? It comes as a shock when you stamp on the brake and find that it is actually reverse.

The brake is where the accelerator pedal is supposed to be. And then there is a strange lever on the steering column which apparently is a “spark advance” – whatever that is.

In their early days, cars had all sorts of different arrangements of control levers and pedals – it took a surprisingly long time to come to the layout that we know today.

Why am I talking about this? Well, the way we do logistics may be going through a similar process, according to Dr Chris Caplice, executive director of MIT Centre for Transportation and Logistics.

In the latest MIT newsletter, Supply Chain Frontiers, he argues that the logistics market is following its own evolutionary path. The dominant design in the US in recent years involves ocean transport of goods from China to the US West Coast ports and then into a multi-echelon distribution network.

Caplice highlights four macro trends that could fundamentally alter product flows and unseat this broadly accepted pattern of distribution.

* Densification of product – reducing product size while maintaining or increasing its value changes the transport requirement.

* Diversification of sales channels – omni-channel retailing is gaining ground requiring a rethink in the way products are distributed.

* Decentralisation of production – new manufacturing technologies and production processes could diminish economies of scale opening the way for production closer the consumer market.

* Digitisation of products – the long-predicted shift away from physical to information-based products.

Caplice is looking particularly at the US market, but these trends are just as relevant in Europe.

Not only does it open up the possibility that the dominant logistics model will change, but that we could move to an era of multiple competing models to achieve the same goal.

 

 

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