Prepare now for supply chain transformation

By Diane Carroll, La Palette Rouge’s (LPR) commercial director for the UK and Ireland

Over the next decade, the supply chain is set to undergo a radical transformation, as technologies advance and pressure to reduce waste intensifies. The supply chain will become less linear and more circular, as packaging and resources are continuously reused, repaired and recycled. The supply chain relies on a series of relationships between participants; long-term, mutually beneficial partnerships in which information, technology and resources are shared for the benefit of the entire supply chain ecosystem.

It’s vital that businesses are aware of these impending changes and are ready to adapt. Collaboration with partners across the supply chain is crucial if businesses are to capitalise on the challenges and opportunities ahead.

Smart machines accelerate automation  

Technological changes are likely to exert some of the greatest pressures on the supply chain in the coming years. The arrival of 5G, combined with advances in IoT devices, will present huge opportunities to improve operational efficiency, but also pose considerable challenges for businesses throughout the supply chain. New machines with greater levels of artificial intelligence will be used to track assets, assess inventories and make more decisions without human intervention. As a result, the physical operations that support the movement of goods and assets will need to adapt to keep pace with increasing levels of automation.

The digitalisation of supply chains will require organisations upstream and downstream to develop their systems and capabilities at the same rate. A digital supply chain requires greater connectivity between its component organisations, so that orders, assets and movements can be tracked and optimised at every stage. This requires all organisations to be operating at the same level of technological sophistication. Businesses today need to anticipate these changes and start to identify gaps in their technical assets, knowledge and skill base.

Pressure to eliminate waste

Perhaps the biggest change to the supply chain will be driven by the need to minimise waste. Pressure from consumers and businesses to preserve the planet’s resources is likely to fuel increasingly stringent regulations on waste reduction.

According to a report by Gartner, by 2028 the circular economy will be the only economy – it will no longer be acceptable for supply chains to create waste. A circular economy, in which items are reused, repaired and eventually recycled, offers a solution to the global challenges of resource scarcity, excessive waste and climate change. The notion of the circular economy is nothing new to companies like LPR. Its ‘pallet pooling’ business model is based on an endless circular movement of pallets through the supply chain. It’s the antidote to traditional supply chain models of the past, with their linear approach to resource consumption: make, use, dispose.

Circular benefits boosted by new technology

If Gartner’s forecast is accurate, supply chain businesses today need to start planning for a more widespread adoption of circular asset flows. The technological advances that are likely to shape the supply chain of the future will also play a key role in facilitating this circular economy. By linking IoT devices across the digital supply chain, the condition and location of assets can be monitored continuously and automatically, enabling transport planning and asset movements to be managed in the most efficient way to optimise resources and minimise emissions and waste.

The future supply chain will combine the principles of reuse and recycling with the intelligent capabilities of smart machines – ensuring efficiency and waste reduction are fully optimised.

Prepare today for the supply chain of tomorrow

The outlook for the supply chain is ultimately an optimistic one. If the circular economy becomes the mainstream model, the prospects for waste reduction, climate change mitigation and sustainable resource use are promising. Businesses need to begin planning and adapting now, if they are to thrive in the sustainable, technologically advanced supply chain of tomorrow.