If you just can't wait to see what the future holds, you're not alone. Scientists, business leaders and even MIT researchers are pondering how the world will change and what it means for our lives, our businesses and, yes, our supply chains.
Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
The rise of the Internet. Virtual reality. The end of the Cold War. The World Future Society's Outlook called them all. It also predicted a shortage of worms and the advent of all-day eating (a consequence of the vanishing distinctions between breakfast, lunch and dinner).
No subject is too arcane for the Outlook, a report published annually by the World Future Society since 1985. The Outlook features some of the more thought-provoking ideas that have appeared in the society's bimonthly magazine, The Futurist, during the previous 12 months. The predictions are based not on original research, but on observations by scientists, academics and business leaders on social and technological developments that may affect how we live, how we work and, yes, how we manage our supply chains.
Because the wide-ranging ideas come from all aspects of human endeavor—business, economics, demographics, education, the environment, technology and even terrorism—the Outlook tends to be an intriguing brew, not to mention a lot to absorb. But Timothy Mack, president of the World Future Society, sees that as a strength. By bringing a wide range of topics together, the Outlook spotlights how developments in one area affect others, emphasizing what he calls their "cross impact." It's important to get the big picture, he says. Failure to watch overall patterns because you're looking solely at your business "will come back and bite you."
What trends are highlighted in the 2006 edition of the Outlook? Predictably, they vary all over the map. Some will come as no surprise—like the rising demand for health care and biotech professionals, or the projected surge in wind-generated and tidal power. Others may be more startling—like the prediction that nanotechnology will be used for everything from monitoring the health of soldiers in the battlefield to transforming waste into edible material.
As for trends in business, it's all about technology—specifically, the information technology that will help to network workers, connecting both enterprises and individuals. "Connectivity will likely shift the way businesses are structured and how decisions are made," Mack observes. In that same vein, the Outlook forecasts the coming of the Digital Age—an era "characterized by inter-connectivity, complexity, acceleration of human activity, convergence of media, and rising significance of intangibles such as reputation."
Some of the trends hold out promise for solving society's ills; others are troubling. One of the more worrisome is the decline in the number of U.S. citizens enrolled in engineering programs in the United States. The World Future Society reports that by 1999, half half the engineering students in this country were foreign born, an indicator that the United States may someday face a shortfall of engineers.
The post-modern supply chain
At the same time the World Future Society is tracking big-picture trends, researchers at the Massachusetts Institute of Technology's Center for Transportation and Logistics are trying to do the same for a microcosm of the business world, supply chain management. A five-year research project known as the Supply Chain 2020 Project is currently under way, as researchers endeavor to find out how supply chains will look in the year 2020. The project's goals are to determine what makes a supply chain effective and to identify emerging trends managers should take particular note of in their supply chain planning. The year 2020 was chosen in part because of the double meeting—the year and the visual acuity needed to obtain a clear view of what lies ahead.
Those looking for predictions or advice will be disappointed. Larry Lapide, who heads the project, cautions that the research will offer no prescriptions; nor will it attempt to predict the future. The premise is that the future is unknowable but that understanding key drivers can help managers prepare for what may come.
Lapide, who was formerly a consultant at AMR Research, expects the five-year project to open a few eyes. As part of the groundwork, researchers analyzed existing studies on the future of supply chains. More often than not, they found, those studies tended to bubble over with optimism, portraying the kind of future that Mr. Rogers might have envisioned: where it's always a beautiful day, where global trade unfolds seamlessly, where highly connected companies engage in endless partnering and collaboration.
But Lapide's not buying it. "The problem with that is it's too utopian," he says. "It does not bring competitiveness into it." It also makes some assumptions that many would question. Will companies really share information? Is it realistic to expect to overcome the difficulties of crossenterprise integration when cross-functional integration within companies has proven so difficult?
Beyond best practices
In the face of all this uncertainty, how can businesses even begin to plan for the future? Lapide's advice is to select several possibilities and concentrate on their implications for supply chains. "We can't forecast the future 15 years from now," he says. "What we can do is consider three or four possibilities."
What Lapide describes, in essence, is a form of risk management based on understanding how various developments may play out, and understanding what "sensors in the ground" a business should put in place so it receives early warning of those developments. The idea is that companies have to look "beyond best practices," as the MIT researchers like to say. That is, changes in processes should be based on understanding underlying principles of supply chains, not simply on who is doing what well today.
In fact, the project's first phase concentrated on defining and understanding supply chain excellence. The researchers examined several successful supply chains, including Dell's and Wal-Mart's, to find out why they work so well. But their goal was not to use the findings to come up with a prescription for success. "What's best for each of those companies is not necessarily the best for everybody," Lapide points out. "We're trying to understand why it's the best for them."
As for what makes a supply chain excellent, Lapide points to four hallmarks: it is an integral part of a company's strategy; it makes use of a distinctive model to sustain its competitiveness; it executes well against measured objectives; and it focuses on just a few business practices that support the operating model. "You can't do everything well," he says. "Companies with excellent supply chains recognize this and concentrate on the few things they can do well."
In the project's second phase, the focus will shift to creating models for future supply chain operations. Lapide stresses that the 2020 project is not developing a quantitative model predicting how things will change; rather, it will look at the process of adapting to change. Business leaders first have to understand what factors are influencing change, says Lapide. Then they have to decide which of those factors they can exercise control over and focus their efforts there. The goal, he says, is to gain an understanding of how supply chains can react to the changes that do come.
What to watch
The 2020 project has already identified several factors that could have a major impact on business supply chains, for good or ill. Among them: a shift of economic and military strength toward China, India and Russia; technological advances that allow knowledge-based workers to be located anywhere; the imposition of tougher environmental laws around the world; and fuel price volatility.
Few would argue with that last choice, which has already forced companies to re-examine their business plans. "[O]ver the last several decades, most supply chains were predicated on cheap oil," says Lapide. But rising energy costs and the potential for supply disruptions, whether from terrorism, labor actions or something else, may require shifts in strategy. For example, just-in-time (JIT) manufacturing makes sense when energy costs are low and supply is predictable—that is, when the inventory savings offset the added transportation costs. But skyrocketing fuel prices will likely alter that equation. "JIT may not make sense in the future," he says. "The concept is still good, but we still may need just-in-case inventory."
Congestion on U.S. highways is costing the trucking industry big, according to research from the American Transportation Research Institute (ATRI), released today.
The group found that traffic congestion on U.S. highways added $108.8 billion in costs to the trucking industry in 2022, a record high. The information comes from ATRI’s Cost of Congestion study, which is part of the organization’s ongoing highway performance measurement research.
Total hours of congestion fell slightly compared to 2021 due to softening freight market conditions, but the cost of operating a truck increased at a much higher rate, according to the research. As a result, the overall cost of congestion increased by 15% year-over-year—a level equivalent to more than 430,000 commercial truck drivers sitting idle for one work year and an average cost of $7,588 for every registered combination truck.
The analysis also identified metropolitan delays and related impacts, showing that the top 10 most-congested states each experienced added costs of more than $8 billion. That list was led by Texas, at $9.17 billion in added costs; California, at $8.77 billion; and Florida, $8.44 billion. Rounding out the top 10 list were New York, Georgia, New Jersey, Illinois, Pennsylvania, Louisiana, and Tennessee. Combined, the top 10 states account for more than half of the trucking industry’s congestion costs nationwide—52%, according to the research.
The metro areas with the highest congestion costs include New York City, $6.68 billion; Miami, $3.2 billion; and Chicago, $3.14 billion.
ATRI’s analysis also found that the trucking industry wasted more than 6.4 billion gallons of diesel fuel in 2022 due to congestion, resulting in additional fuel costs of $32.1 billion.
ATRI used a combination of data sources, including its truck GPS database and Operational Costs study benchmarks, to calculate the impacts of trucking delays on major U.S. roadways.
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If the state gets federal approval for the final steps to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
A Canadian startup that provides AI-powered logistics solutions has gained $5.5 million in seed funding to support its concept of creating a digital platform for global trade, according to Toronto-based Starboard.
The round was led by Eclipse, with participation from previous backers Garuda Ventures and Everywhere Ventures. The firm says it will use its new backing to expand its engineering team in Toronto and accelerate its AI-driven product development to simplify supply chain complexities.
According to Starboard, the logistics industry is under immense pressure to adapt to the growing complexity of global trade, which has hit recent hurdles such as the strike at U.S. east and gulf coast ports. That situation calls for innovative solutions to streamline operations and reduce costs for operators.
As a potential solution, Starboard offers its flagship product, which it defines as an AI-based transportation management system (TMS) and rate management system that helps mid-sized freight forwarders operate more efficiently and win more business. More broadly, Starboard says it is building the virtual infrastructure for global trade, allowing freight companies to leverage AI and machine learning to optimize operations such as processing shipments in real time, reconciling invoices, and following up on payments.
"This investment is a pivotal step in our mission to unlock the power of AI for our customers," said Sumeet Trehan, Co-Founder and CEO of Starboard. "Global trade has long been plagued by inefficiencies that drive up costs and reduce competitiveness. Our platform is designed to empower SMB freight forwarders—the backbone of more than $20 trillion in global trade and $1 trillion in logistics spend—with the tools they need to thrive in this complex ecosystem."