CSCMP's Supply Chain Quarterly
October 16, 2018

Get ready for the next revolution

Supply chain management is on the brink of a period of upheaval driven by such technological advances as 3-D printing, ubiquitous connectivity, and driverless vehicles.

Every industry periodically goes through times of disruption, when new technologies, processes, or business models shake up the status quo. Logistics and supply chain management is no exception. Back in the 1980s, for example, when I first started writing about those subjects, the United States' freight transportation system, particularly the motor carrier industry, was undergoing such an upheaval. In 1980, Congress had eliminated most of the economic regulation that had governed trucking operations since the 1930s, and the industry was undergoing a sea change in the way it did business.

We saw a sort of business Darwinism at work. A sudden change in the regulatory environment put many of the established giants at risk as they struggled to adapt. At the time, I had a list of the 50 largest truckers in 1980 pinned above my desk. Each time one of them shut its doors I crossed it off the list. Few remained by the time I changed offices some years later and the list disappeared.

In the meantime, an aggressive group of entrepreneurs set out to take advantage of what had become true market-based competition, and they transformed the freight transportation and logistics industries. Eventually, the changes they wrought served shippers well. The innovative carriers worked hard to reduce costs, deliver top-notch service, and develop new programs. But change did not come without a cost, of course. Jobs were lost, and litigation over negotiated rates dragged on for years.

I think about this now because I am persuaded that we are on the brink of another major upheaval in the logistics and supply chain sphere. Instead of deregulation and economic policy, however, this time it will be technological developments that spur a revolution.

Three-dimensional (3-D) printing, ubiquitous connectivity, and the coming of driverless vehicles are just some of the technologies that are likely to profoundly impact logistics and supply chain practices and strategies. We can only guess at where all this will lead. As Jeremy Rifkin, a provocative economic thinker, says in an interview on the "Big Think" website, "We are just beginning to see the first glimpse of an automated transport and logistics Internet." He describes a vision of businesses large and small forming a massive, collaborative supply chain designed to eliminate many of the inefficiencies inherent in today's logistics networks.

This revolution will be different than the one we experienced in the 1980s. While deregulation in the United States eventually influenced logistics and transportation markets in other countries, the impact of the technological changes we are facing now will be felt around the world.

I don't expect to see radical change immediately. But some of the developments mentioned here—widespread use of 3-D printing and the availability of driverless vehicles, for instance—are not very far off. It's the sort of change that could be exciting and transformative. You don't want to be caught by surprise or left behind.

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