Identifying the Transformational Trends of Tomorrow
As the corporate world heads toward a digital future fueled by e-commerce and globalization, logistics has for the most part been silently reinventing itself in the wake of rising customer expectations on speed, reliability, flexibility and cost. From leveraging the latest technologies to increase operational efficiency to carefully orchestrating networks to ensure delivery within hours, logistics truly has become a fountain of innovation in recent years.
As a result, companies are discovering new ways to use logistics as a differentiator and ultimately as a source of strategic advantage in increasingly complex and competitive business environments. All industries need to identify early on which trends will have a significant impact on future operations and which trends could pave the way for new business models. This is no easy feat, as it is often difficult to predict which trends will have a successful foothold in logistics and which will fall flat in a few years. Hence, another important dimension to this exercise is not only to understand which trends will take off but also when to invest into leveraging a promising trend. Timing is key.
In the logistics industry, DHL has developed its own trend radar to tackle the challenge of identifying them together with customers.
Thinking beyond the current reality
The Logistics Trend Radar captures and monitors social, business and technology trends that could have an impact on logistics over the next five to 10 years. The tool is publicly available, is refreshed biannually and is currently in its third edition. Since its release almost four years ago, it has become a recognized source for strategic planning, as well as a basis for further research and innovation activities in logistics.
To come to a consensus on which trends enter, remain or leave the radar, researchers analyze data from various sources. First, key megatrends are monitored in order to understand global, long-term changes such as urbanization and key economic frameworks and their subsequent impact on logistics. Second, microtrends and startups are reviewed in partnership with seed investors and trend scouters to monitor new solutions in the market. This is followed by many engagements with leading industry experts, futurists and DHL customers across various industries.
The inputs from these sources are then aggregated to derive the Logistics Trend Radar. Naturally, given the complexities of each individual industry, the radar takes a holistic view on trends. This can then be tailored to create customized industry-specific radars.
Putting innovation into practice
The Logistics Trend Radar also is used for customer-centric innovation activities at DHL. Together with customers, DHL takes systematic deep dives in the format of short, agile pilot projects on specific trends, such as big data, self-driving vehicles and robotics and automation.
Following the release of the first Logistics Trend Radar in 2013, DHL and its partners conducted a deep dive on big data to improve air network and parcel volume prediction by correlating internal and external data sources. The first proof of concepts demonstrated business value through a significant increase in forecasting accuracy. Since the proof of concepts, the topic of data analytics was identified as a key technology that is now embedded in the Deutsche Post DHL Group’s Strategy 2020.
Changing societies and doing business
When it comes to redefining logistics, social and business trends are just as important as technology trends. One new trend on the radar is “batch size one”. It is predicted that within a timeframe of five to 10 years, manufacturers are likely to mass produce customized goods in small, possibly individual, quantities.
This will be in response to increasing consumer demand for personalization. Companies such as Adidas already are testing “speed factories” that are geared at customizing and automating the production of shoes through small production facilities located close to demand to shorten lead-times. The impact for logistics will be more highly automated production sites that are located closer to demand rather than traditional manufacturing bases and complex new requirements for the supply chain.
Another key trend is omnichannel logistics, which already is shaking up retailing and e-commerce but has relevance for all industries. The modern customer now cuts across different channels, browsing seamlessly between offline and online options. Omnichannel is about creating one orchestrated customer experience and managing the interactions and product flows between all the different channels to meet the preference of the customer.
Logistics will be at the backbone of any omnichannel strategy as it is a key enabler for companies to deliver personalized service and flexible fulfillment consistently and cost-effectively.
In a DHL-IDC market survey of retail, consumer and technology companies in Asia, it was revealed that four out of their top five customer expectations were in some way logistics related. These four expectations were speed of delivery, product availability and variety (e.g., ensuring zero stock-outs through an integrated and dynamic inventory and fulfillment approach), flexible delivery options and easy return and exchange. New downstream and fulfillment innovations will support companies in meeting these customer expectations. For example, DHL is testing various last-mile innovations to enable 24/7 delivery.
Be constantly curious or risk being left behind
It would be naïve to assume that all trends on the radar will impact logistics exactly as predicted.Some may develop more quickly or slowly; others may never bring any significant impact at all. However, the tool serves as a basis not only for discussion but also for further exploration. By taking active part in developing trends, companies can shape the future of their industry. The Logistics Trend Radar serves as a tool to advise as well as to encourage logistics practitioners to drive innovation on emerging trends in collaboration with supply chain stakeholders and partners.