Thursday 19th Oct 2017 - Logistics & Supply Chain

Are you ready for the challenge of the New Year?

Just before Christmas the news emerged that Amazon has applied for a patent on an airborne fulfilment system that uses an airship floating at 45,000 feet to hold stock and a fleet of drones to handle the actual deliveries.

Malory Davies FCILT, Editor.

Malory Davies FCILT, Editor.

It would be a brave person that bet on that happening in 2017, but it highlights the pressure for innovation in the way that logistics is done.

The days are long gone when goods could sit in a warehouse for weeks, or months, waiting to be called off and then delivered on a three to five day schedule. The increase in supply chain velocity is hardly news.

But the pressure for more speed is not going to go away – and greater flexibility – and, critically, lower cost.

Not surprising then that companies are looking to technology to help achieve this and there is no doubt that 2017 will see increased use of automation, with robot technology coming to the fore.

But, there are other factors that supply chain professionals will have to deal with in 2017.

The UK’s decision to leave the European Union is already having an impact. James Stamp, UK head of transport at KPMG, argues that companies will need to start to adapt their business models (or at least their contingency planning) to preserve their existing business goals. “We expect companies to undertake detailed reviews of their business critical operations, and to develop back up plans, whether in recruitment policy or operating licence.”

The fall in the exchange rate since the Brexit vote should make UK exports more competitive. The flip side of that is that goods imported in the UK are more expensive – nullifying some of the benefits for UK exporters.

Within the UK, imported goods are becoming more expensive. Mondelez caused a furore in November when it reduced the weight of its Toblerone bars in the UK in an effort to avoid increasing the price. Retail analysts Kantar Worldpanel suggest that this will become a common response to rising prices in 2017 – a move that will have implications all the way along the supply chain.

But if the world is a less certain place than it was a year ago, there will be pressure to ensure supply chains have the resilience to cope with potential vicissitudes. Consolidation has been a feature of the logistics market in recent years and that is only likely to increase. We could see even more acquisitions in 2017.

There is no doubt that 2017 will be challenging: Happy New Year.

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