FedEx Blog

FedEx Blog

The Future of the Supply Chain

August 26, 2013

For most of history, the supply chain that links the world together today would have been unimaginable. The road to market is now a superhighway. It is a 24/7 operation. Global trade does not sleep. In fact, it never even pauses for a nap. Wheels on the ground, wings in the sky, keels in the water connect a largely borderless world economy.

At the same time, supercharged as the global superhighway may already be, no one in the shipping industry doubts that faster, cheaper, safer, simpler remain the fundamental currency of success for anyone in the shipping business. The world’s insomniac global companies demand, and deserve, nothing less.

That might suggest that the supply chain of the future will need to look quite different. There are even sci-fi visions of a Star Trek-style teleport option, 3-D printing, a super-premium service able to move goods through cyberspace, like auto parts for example, from a plant in China to a factory floor in the United States. It’s an intriguing possibility.

What’s considerably more likely is that 20 years from now, the moving pieces necessary to move goods will still primarily be planes, ships, trains and trucks. Not as exotic, perhaps. But it will be with a new level of near-molecular precision. The supply chain of the future won’t look all that different, but in 2033 its visibility will be extraordinary. It will radiate data.

We are already approaching that level of transparency, but in the future ever more pervasive tagging of every item in a shipment will take advantage of tiny embedded sensors to enable an unprecedented degree of real-time tracking and tracing. Today, FedEx already offers a larger, multi-sensor device for high-value shipments, called SenseAware for use on all transport modes, including airplanes, intra-US and to over a dozen international locations as well. The sensors of 2033 will be ubiquitous. 

It will be an optimized supply chain overall, and it will be personalized on an individual level. Each one of us will have access to a personalized control tower, a command center for a shipment in the palm of one’s hand, whether in a smartphone, or tablet, or another device. Today, many larger companies already have teams charged with managing “control towers” to monitor disruptions in the supply chain, whether from a weather event, a mechanical breakdown or, for that matter, civil unrest. 20 years from now ever more advanced algorithms will constantly compute speed versus cost ratios for each one of us, generating global options to re-route a shipment, or speed it up, or to slow it down.

This level of data will also mean greater security throughout the supply chain. The ability to know the status of a shipment – the location of a consignment of dish washers or the temperature of a delivery of human tissue – with ever greater certainty. This in turn simplifies the supply chain. Having a 360 degree view of a journey in a sense flattens it out, makes even complex routings easier to see, creating efficiencies, cost savings and, simply, confidence that goods will arrive safely and on time.

This flexibility will extend to a venerable fundamental of the supply chain – consolidation. In 2013, most shipments are consolidated, packed in containers in the belly of an aircraft or hull of a ship or back of a truck. By 2033, the array of possibilities built into the supply chain will include de-consolidation, removing a portion or even a single item from a consolidated shipment. It will mean the ability – for a price, of course – to speed the customization and delivery of a personal dialysis machine that arrives from Vietnam to the port of Los Angeles for an urgent patient need in Kansas City. Rather than send it with dozens of other devices on a truck when it reaches the U.S., there will be more options to extract it from the bulk shipment and send it alone, by express air for example, overnight.

Eventually, another kind of consolidation may also increasingly be built into the supply chain. The manufacturing process of, say, that personalized dialysis machine, will be merged with its shipment and end-of-life disposition. When a product is made, the process for determining its final resting place will be coded into the product itself. An order for a device placed in Kansas City could instantly connect into a matrix of interconnected manufacturers, shippers and, eventually, to complete the virtuous circle, even a final destination for the device – a qualified reclamation center to recycle the components.

Imagine using your phone to scan a 2-D barcode on the product which will automatically dispatch a courier to your door to pick it up with precise instructions for its final shipment.

Sustainability will be fundamental. One of the world’s foremost experts on the supply chain, Dr. Edgar Blanco of MIT, has said, “We’ve been great at getting something to you. What we haven’t been so great at is getting that thing that we gave you back.  Trying to extract more value either as materials that you can recover, recycle, or maybe even to give that same product to other people after you’re done with it.” It’s an expansive vision. The shipping industry has long been at the forefront of sustainability, with constant and ongoing efforts to reduce its carbon footprint and create an ever greener supply chain. This commitment will continue and could even one day, indeed, encompass the entire life cycle of a product.

The modern supply chain has come a long way from a cart pulled by a horse to market, and it is still a long way from shipments in cyber space. But even in just 20 years the supply chain of the future will be more finely tuned, accessible, reliable, sustainable – and profitable – than ever. That’s great news for the entire global economy that we are all so dependent on. Right now, the superhighway of the world economy has never been better. The even better news is that it’s still under construction.


Comments

    Brad Welsh says:

    The challenge today and in 2033 will still be managing “the bullwhip effect” in the supply chain. This may be easier with the advanced technology available, and clearly FedEx is a leader here. I also think the 4PL’s will continue to be on the rise. Companies are going to want to make sure their providers are providing the most efficiency as possible. They know so much of their spend is in transportation and logistics. Sustainability will also no longer be a buzz word in many organizations. The leaders in sustainability like FedEx will reap the rewards of customer loyalty for their continued committmentt the environment. FedEx is positioned well for the future.

    Ravi Hayashida says:

    The one factor that Craig does not state, but is inherently implied, is that these developments to the supply chain network are based on the needs of our customers.

    Just as “Customers Define Quality”, “Customers Drive the Supply Chain”.

    In consideration of this, the recent developments and advancements appear to show that customers are wanting a more customizable shipping service. Home Delivery was an answer for regular Saturday deliveries, Smart Post is providing an affordable shipping alternative, Trade Networks is increasing international shipping options, and Delivery Manager is providing personalized delivery options to our customers.

    Projecting twenty years ahead, supply chain networks will not only need to be efficient and data-filled, as Craig noted above, but also improve flexibility to meet customers’ ever changing demands and expectations.

    The question is to what extent can a supply chain remain flexible enough to satisfy customer expectations while still remaining a viable and efficient network?

    Vb Joshi says:

    Very well summarized Craig. I was hooked on the ” It will radiate data” line. You are absolutely right on..The future of supply chain does in fact boil down to how effectively you can manage data, make it visible and useful for consumption. The small truth lies in the BIG Data!

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