Are we really entering a new era in 2021?
One of the very best things about being a consultant is the rolling opportunity to talk with companies about what they are experiencing and where they see opportunities.
So, based upon what we have heard and experienced, are 3 predictions on what we think might happen and 3 thoughts about what should happen.
THINGS THAT MIGHT HAPPEN
- Warehouse automation will definitely gain ground
From a very low base, we have seen ASEAN awareness of warehousing grow substantially over the past 5 years. While every industry sector and country has differing characteristics, the biggest change in the past couple of years is how easily warehouse automation can now be justified and even externally funded – so that, with minimal cash input, you can migrate to a lower operating cost environment.
Financially, warehouse automation is becoming an absolute ‘no brainer’ delivering huge savings while ticking service assurance and environmental boxes. However, you have to get it right! Businesses are rightly alert to the risks of getting design, selection and commissioning wrong.
- Transport automation might also be arriving
The obvious question is, ‘Why isn’t transport automation already embedded?’ Automated routing & scheduling has been around for decades and the quality of electronic maps and telematics have increased exponentially over the past decade. Ride hailing (along with all its extensions) is now part of our everyday lives, but these technologies are still not applied to the majority of goods vehicles delivering product from manufacturing into the retail or the food service sectors.
Why is this? In many businesses there is a real ‘chasm’ between management experience and logistics shop floor operations. While management may want the benefits of automation, they don’t have the capabilities to effectively overcome the natural resistance to change that exists amongst their planners, supervisors and transporters.
- Cost will still be King!
Despite many learned ‘New Normal’ articles stating that future supply chains will have to sacrifice efficiency for robustness, we have seen little evidence of this in the field . (We acknowledge that we primarily specialize in Asian in-country logistics. The same may not be the case in international logistics.)
The primary demand from our clients over the past 5 years has been that projects must deliver cost savings PLUS other tangible benefits. We’ve seen zero indication that this has changed. If anything, feedback is that uncertainty is leading businesses to push for more of the same.
THINGS THAT REALLY SHOULD START HAPPENING
- FMCG manufacturers should urgently be working to reinvent the General Trade (GT) sector
Manufacturers have allowed their GT distribution networks to grow progressively less efficient – with very limited capacity to harvest and use quality data. It is little wonder that the new digital players are actively searching for opportunities in this sector.
The GT’s inertia appears to be rooted in manufacturers’ reluctance to tinker with a revenue stream dependent upon the collaboration of independent distributors. As a result, penetration is spotty, service quality is inconsistent and costs are higher than they should be. The manufacturers’ risk, which now appears imminent, is that digital players will progressively fill the leadership gap and develop better ways to reach the consumer and to harvest the information that will deliver a competitive edge.
While manufacturers can still leverage their economies-of-scale advantage, they should be reinvesting in the cohesion, effectiveness and competitiveness of their distributor networks through rationalizing network structures and streamlining processes form end-to-end. (Technology will be an enabler of this exercise, but not its core.)
Failure to do something will see the continued decline of the GT and of manufacturers’ influence over the marketplace.
- Women on the warehouse floor
Aligned with our belief that warehouse automation is about to explode, we see that the modern warehousing operative will need less brute strength, but greater reliability, discipline and attention to detail.
With businesses in certain markets (Malaysia being a great example) struggling to establish stable (currently predominantly male) warehousing teams, an obvious solution is to tap into a new resource pool by creating warehouse environments that work for both genders. (This aligns with the continuing trend of increasing numbers of women taking up careers within the supply chain sector.)
- The motorcycle ‘truck’
Our ASEAN cities are congested, and deliveries are getting smaller – well suited to the motorcycles that can move through traffic many times faster than delivery vans. The market for a motorcycle width vehicle (ideally electric) with a much higher payload than the standard ‘bike & box’ format must be immense.
Why hasn’t anyone come up with a motorcycle designed from the bottom up as a freight carrying machine? Smaller wheels? A much longer chassis? An ‘articulated trailer’ configuration? We’re not automotive engineers, but if feels like, with a little imagination, a breakthrough might be possible if we moved away from the notion that the solution must be built ‘on top of’ a standard motorcycle.
While each of the ‘might happens’ and ‘should happens’ discussed above are independent observations, we note that all 6 will create economic benefit…enhancing the likelihood of them happening.
We also note that most of them will bring societal and environmental benefits:
- The 3 ‘might happens’ all deliver efficiencies that can place a product within reach of the consumer at a lower purchase price
- The 3 ‘should happens’ respectively preserve truly local businesses across the GT sector, create sustainable jobs for women and reduce congestion and pollution in our streets
The front runner is warehouse automation. Our recent projects have demonstrated that well designed, well commissioned automation creates serious financial savings. However, these are achieved by eradicating half the warehousing jobs that exist today. We’re hoping that our region’s ongoing economic expansion will continue to create more and better roles for those released.
Anyway, that’s it! We hope you found our thoughts to be of interest. We’d love to hear any feedback that you may have.
Here’s to 2021 being a better year for everyone!