It’s been a good year for business. In April 2018, the unemployment rate dipped below the four percent mark for the first time in over a decade, and those employees have started to spend their wages. The supply chain has sprung to life to provide consumers with the products they demand. It’s a heartening sign of renewal after nearly a decade of low consumer confidence and unemployment levels hovering around the five percent mark.
However, a stronger economy does come with some challenges. Steady job growth has created competition in the labor market, and transportation and warehouse companies are now competing for qualified workers. One of the methods used to draw in new employees is higher wages and more benefits. This increases supply chain costs at the same time those systems are trying to meet increased demand. New regulations have also raised the standards that employees in the supply chain must meet. The outcome of all of these factors is higher costs for logistics companies. The biggest supply chain trends for 2018 are a result of companies striving to balance these challenges against the opportunities presented by increasing consumer demand.
Supply Chain Challenges in 2018
Major challenges facing supply chains for the rest of 2018 and beyond are increased labor costs, reduced transportation capacity, and increasing regulation in transportation and warehousing. A raft of new standards came into effect in 2018; the one currently being felt the most in the supply chain is police enforcement of the use of electronic logging devices (ELD) to record the hours a driver is on the road. Long haul tractor trailer trucks have long been barred from driving more than 11 hours a day, but many were in the habit of fudging the log books to gain an advantage. Police enforcement of ELDs prevents this, and many trucks are now idled for longer periods. The result has been a squeeze on the amount of space available for shipping freight by road, and this is one big reason why transportation costs are rising.
Going forward, a companion piece of regulation passed alongside the FSMA–the Drug Supply Chain Security Act–may create logistics challenges in the pharmaceutical industry as well.
Producers have been coping with these rising transportation costs in a variety of ways. Companies like Dean Foods are purchasing trucks to bring more transportation capacity in-house. Others have shifted their production schedules or their routes to make more effective use of the transportation capacity they already have. Still others have raised the prices of their products to protect their profits and pass the increase on to consumers.
Food supply chains are facing a different regulatory hurdle. The Food Safety Modernization Act (FSMA) came into effect in March, and as grocery manufacturers and suppliers implement policies to comply with FSMA regulations on sanitary practices, additional supply chain challenges may emerge. Going forward, a companion piece of regulation passed alongside the FSMA–the Drug Supply Chain Security Act–may create logistics challenges in the pharmaceutical industry as well.
Top Supply Chain Trends for 2018 and Beyond
The traditional method for dealing with rising costs like those we discussed above has been to raise prices. However, new technologies provide alternatives that can help save on other areas of the supply chain. The most important supply chain trends for 2018 involve innovative ways to use technology to increase efficiency and keep costs low. They include:
- Increased Automation: Automation technology has improved by leaps and bounds over the last decade. Automated Storage and Retrieval Systems (ASRS) and autonomous vehicles reduce labor costs and allow faster throughput. Usage of warehouse automation, from mechanized conveyors to more sophisticated automated pickers, has increased steadily and is predicted to continue to increase over the next few years. To get ahead of the competition, manufacturers like Merck pharmaceuticals are using more sophisticated automation throughout their supply chain in the form of artificial intelligence and predictive analysis.
- Reduced Material Use: Getting products to retail stores uses a lot of consumables in the form of cardboard packaging, slip sheets, plastic wrap, and single-use pallets. Finding a more efficient way to transport products by reusing or recycling packing materials–or by doing away with them altogether–is helping to bring logistics costs down, protect profits, and keep prices low. For example, reusable pallet wraps do away with the cost and waste of shrink wrap, and durable plastic pallets can make up to 100 trips through the supply chain with no need for slip sheets.
- Reduced Energy Consumption: There is a direct relationship between product weight and the fuel required to transport it. Companies are working to bring down load weight in order to save on fuel, which both contributes to a more sustainable supply chain and increases the fuel mileage of their fleet’s or carrier’s trucks. Even a small saving on each transportation leg adds up and can help keep your Total Cost of Business (TCOB) down.
Implementing these measures may seem daunting at first, but being on the leading edge of the latest supply chain trends will pay off down the road. Paying attention to the direction of the logistics industry can help you future-proof and prepare your business for whatever lies ahead.
The Right Equipment Can Get You Ahead of Supply Chain Trends
Plastic pallets are lighter than wood pallets–at under 50 pounds compared to a wood pallet’s 75 pounds–which translates to reduced fuel costs on the road, as much as $3 per pallet load.
Participating in the latest supply chain trends doesn’t have to mean overhauling every aspect of the way your supply chain works. Switching to a more modern shipping platform, for instance, can reduce your material use and lighten your load weight while laying the groundwork for the addition or expansion of automated systems. Plastic pallets are lighter than wood pallets–at under 50 pounds compared to a wood pallet’s 75 pounds–which translates to reduced fuel costs on the road, as much as $3 per pallet load. In addition, plastic pallets have an easily cleaned deck that supports the load fully across the width of the pallet, meaning they don’t require slip sheets to protect product from contamination, splintered wooden boards, protruding nails or from falling between top deck boards.
One of the most obvious advantages of plastic pallets, however, is that they’re engineered products with greater uniformity, durability, and reliability than wood pallets. This uniformity makes plastic pallets ideal for use in ASRS systems and with automated guided vehicles where attaining high throughput is the key to efficiency. Using plastic shipping platforms positions your company to take advantage of supply chain trends for 2018 and into the future.
The iGPS plastic pallet pool uses a lightweight, durable, and hygienic GMA-spec plastic pallet that works seamlessly with your existing warehouse equipment or new warehouse automation. To rise to the supply chain challenges of today and tomorrow, give our team a call at 1-800-884-0225, email a specialist at switch@igps.net, or visit our contact page.
Image 3: Unsplash User Gabriel Sanchez
