Last November, in the Transportation Pulse Report 2023 published by Transporeon (a Talking Logistics sponsor), I wrote about three mega trends that will transform the way companies design and manage their supply chains in the years ahead:
- A shrinking labor force
- Growing importance of sustainability in supply chain decision-making
- Supply chains becoming more customer centric
We’re now more than halfway through 2023 and it seems like these trends continue to grow in importance.
In March 2023, for example, the European Labour Authority published “The EURES Report on labour shortages and surpluses 2022.” The report “provides details on labour shortages and surpluses such as their extent and severity in the EU27 plus Norway and Switzerland.”
Not surprising, “Heavy truck and lorry drivers” is among the top occupations with widespread shortages. 18 countries reported having a shortage of truck drivers, with 73% of them characterizing it as a “severe shortage.”
The report provides more details and analysis about the European labor landscape, but here is the bottom line from the report’s conclusion:
The findings of this report confirm that there are significant labour shortages and surpluses throughout the economies of the EU27, Norway and Switzerland. This imbalance in labour demand and supply exists at both the national and the regional level, and it is due to a multiplicity of factors…Factors such as new technologies, the transition to a climate-neutral economy, the ageing of the workforce and conditions of work and employment have all made significant contributions to the evolving relationship between labour demand and supply in Europe.
However, as Transporeon CEO Stephan Sieber highlights in a recent article, “European driver shortage is not just a personnel problem. Dwindling driver numbers would not present such a challenge if transport operations were smarter and more efficient. According to scientists at the MIT Center for Transportation and Logistics, increasing the efficiency of US drivers by just 18 more minutes of active driving time per day could solve the country’s driver shortage. This claim was based on research in the US but pointed out that the same principle is likely to apply in Europe.”
Meanwhile, on the sustainability front, “The European Union’s parliament approved legislation to tax imports based on the greenhouse gasses emitted to make them, clearing the final hurdle before the plan becomes law and enshrines climate regulation in the rules of global trade for the first time,” reported Matthew Dalton and Amrith Ramkumar in the Wall Street Journal on April 18, 2023. Here are some excerpts from the article:
The tax gives credit to countries that put a price on carbon, allowing importers of goods from those countries to deduct payments made for overseas emissions from the amount owed at the EU’s borders.
The EU’s legislation will at first cover imports of iron, steel, aluminum, cement, fertilizer, electricity and hydrogen. Companies will have to begin reporting the emissions of their imported goods starting in October, including the indirect emissions released by the electricity generation that powers overseas factories.
This is why, as I wrote last November, companies need to expand their definition of end-to-end supply chain visibility beyond tracking shipments, orders, inventory, and assets in motion. Moving forward, the definition must also include having visibility to the greenhouse gas emissions across your supply chain, including Scope 3 emissions.
In terms of supply chains becoming more customer centric, a great example is Henkel and its customer centric Supply Chain (SC) transformation program. Craig Killingback, VP of Procurement & Supply Chain (EMEA) at BizClik Media, highlights the program in a May 2023 LinkedIn article. The article includes the following comment by Bjoern Neal Kirchner, the global head of supply chain for adhesive technologies at Henkel:
“While most supply chains focus on improving cost positions, inventory and working capital — in other words, KPIs established on traditionally internal data — Henkel believes that supply chains can also improve how customers engage with the company itself. By optimising the many touchpoints that customers have with Henkel throughout the entire supply chain interaction, such as ordering, logistics and planning, Henkel aims to provide a unique customer experience that can set it apart from its competitors.”
In light of these ongoing transformation trends, companies need to ask themselves, “Do we have what we need — in terms of people, processes, and technologies — to respond quickly, intelligently, and effectively to whatever happens down the road?”
When it comes to technology, the good news is that innovation continues at a relatively rapid pace.
Take Generative AI, for example. While it’s not necessarily a new technology, the public introduction of ChatGPT at the end of November 2022 (shortly after the Transportation Pulse Report 2023 was completed) sparked tremendous interest in it. Just two months after its release, ChatGPT had an estimated 100 million monthly users, making it the fastest-growing consumer application in history, according to a UBS study published in early February 2023.
The introduction of ChatGPT has also sparked a lot of activity among enterprise software companies, large and small, on how to leverage Generative AI in business applications.
We’re still in the very early stages, but what if you embed Generative AI capabilities within a business network platform? That is, if you fed a Generative AI engine with data from purchase orders, advance ship notices, invoices, bills of lading, status updates, proof of deliveries, and other transactions flowing between trading partners on the platform? What new capabilities and benefits would it enable?
One possibility is the ability to quickly and efficiently map your supply chain — that is, represent graphically where the manufacturing/production facilities of your suppliers (and their suppliers) are physically located, and which parts or materials are manufactured/produced at each location. And since supply chain networks are continuously changing, the Generative AI engine would continuously update the map, so the benefits would be ongoing.
Are we there yet? No, but the value and capabilities of network-based platforms continue to expand in other ways. Take Autonomous Procurement, as an example. I discussed this topic last August with Vincent Versee, Supply Chain Consultant at Nestle, and Jonah Mcintire, Director of Procurement Products at Transporeon. I encourage you to read the post and watch the video for all the details, but here is an excerpt:
Among other things, autonomous procurement uses AI and machine learning, coupled with applied behavioral science, to develop carrier profiles and price predictions. This opens the door to a variety of smart tendering strategies. For example, instead of asking carriers to bid on a load tender, the platform can present the tender to a select number of carriers (based on their profiles) along with an offered (predicted) price — with each carrier potentially receiving a different price based on their profile. If none of the initial carriers accept the tendered load at the offered prices within a defined timeframe, then the platform can initiate additional tendering rounds as needed, determining which carriers to invite next, what prices to offer them, and the duration of each round.
In short, we’ve seen a lot of new developments and innovation in the first half of 2023. As we head into the second half of the year, there is another question all supply chain teams need to ask themselves: What is the biggest adjustment we need to make in our supply chain and logistics operations to finish the year strong and position ourselves for success in 2024 and beyond?
I look forward to exploring that question with the 500+ attendees at the Transporeon Summit 2023 conference in Santa Susanna, Spain on September 19-20. It is by engaging in conversation together — to share ideas, to listen to each other, to find common ground on desired outcomes, and to work together as a true team, especially when the unexpected happens — that we will uncover the greatest opportunities as an industry to improve operational and financial performance, eliminate waste, reduce risk and uncertainty, and make the world a better place.