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U.S. Roadmap

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Vicki Phillips

on 26 June 2017

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Transcript of U.S. Roadmap

Relentless Competition
In 2012, total spending in the logistics and transportation industry was $1.33 trillion, which constitutes about 8.5% of the U.S GDP
Mass Personalization
Mass customization is giving the customer the opportunity to have a product any time they want it, anywhere they want it,, any way they want it.
Robotics and Automation
The Material Handling & Logistics industry has a direct impact on many aspects of our economy.
People! People!
The industry already faces a workforce challenge:
finding good workers
training workers
U. S. Roadmap
January 2015- The U.S. Roadmap for Material Handling & Logistics was commissioned to identify the current challenges and future capabilities of material handling and logistics.
Material Handling & Logistics
U.S. Roadmap

Summary of Findings
The road map identified 10 major trends in the economy, technology and society that will shape the future of the industry.
The Growth of E-Commerce
The retail landscape has been forever changed by the growth of e-commerce.
Advances in robitics and automation continue at breakneck speed, significant advances are being made in technologies directly related to material handling and logistics.
It projects out to 2025 how the industry will need to adapt its technology, practices and workforce to keep pace with the demands of change.
With more than $1.3 trillion in annual spending, the industry has a profound and direct impact on jobs, global competitiveness and our standard of living.
10 Major Trends
growth of e-commerce
relentless competition
mass personalization
mobile and wearable computing
robotics and automation
sensors and the internet of things
big data and predictive analytic
the changing workforce
Already trending...
e-commerce and relentless competition are already on the way to maturity
Big Data and the Internet of Things are in the early stages of development
Each trend has the potential to have a tremendous influence on the material handling and logistics future.
The industry needs:
engineers to engineer
managers to manage
workers to work
Material Handling and

...is the back bone of the U.S. economy.
Everything in our homes, businesses, malls. From raw materials to finished goods, everything got there because of material handling and logistics.
When all that movement and handling is added up, it accounts for:
8.5% of the gross domestic product
$1.33 trillion, and continues to grow 4% annually
and yet the costs that share the GDP are the lowest in the world
According to the DOT:
Freight Transportation system annually handles nearly 18 billion tons of materials and goods
Valued at $16 trillion
On average that is 48 million tons of freight, valued at more than $46 billion, being moved everyday of the year!
Critical logistics nodes include:
145 ports in the U.S., each handle at least 1 million short tons annually
160,000 miles in the national highway system
100,000 miles of freight rail
550 common freight carries in the Unite States
Logistics network
At various destinations in that logistics network, material handling equipment handles it all! From pallet loads to inter-modal containers, as well as figuring prominently within the four walls of manufacturing and distribution facilities.
In all, 7.5 million businesses are served by material handling and logistics on a daily basis
More than 300 million customers in this country benefit directly from the industry
Transportation and logistics is the second largest employment sector in the U.S., with more than 6 million people.
At the current job creation rate, that is more than 10% of all new jobs for the next few years!
The field will generate 270,000 new jobs annually through 2018
Direct Impact
Ultimately, material handling and logistics have a direct impact on the cost of goods that everyone buys.
A 10% reduction in transportation costs reduces the total operating cost for a companies by 1%
Call to Action
The material handling and logistics industry is very much a silent partner in today's economy.
The industry needs to look to the future to be able to handle what is in store and to meet the industries needs.
What will we look like in 2025?
So What Will 2025 Look Like?
Let's take a look at the top 10 trends that will shape the material handling and logistics future.
10% of all retail sales are e-commerce
$231 billion in 2012 to $370 billion in 2013
increasing use of mobile devices, leading consumers to spend more time online;
traditional retailers making greater investments in e-commerce fulfillment and omni-channel distribution systems. (Supply and demand are working together to increase the size of the market.)
Omnichannel (also spelled omni-channel) is a multichannel approach to sales that seeks to provide the customer with a seamless shopping experience whether the customer is shopping online from a desktop or mobile device, by telephone or in a bricks and mortar store.
e-commerce sales rise
87.5% of internet users ages 14 and older, or 178.5 million people will brows products online each year!
Of that group, 76.3% will make a purchase, a total of 170.3 million people
Shopping using a mobile device
16% of all online retail purchases.
Challenges for Order Fulfillment
1. Delivery-
directly to the consumer requires very fast fulfillment times
Time to pick, pack and ship is no longer measured in days or hours, but rather in minutes!
Direct-to-Consumer order fulfillment
involves handling individual items rather than cases or pallets, very labor intensive and complex
3. Sophisticated inventory policies are needed to ensure products are in stock, without creating too much safety stock.
By 2025 the challenge for material handling and logistics industry is not only supporting the demands of e-commerce, but providing true, omni-channel distribution systems to support the wide variety of means through which consumers will demand their products.
Dollars of this magnitude not only attract more competitors, but also expand the nature and scope of services provided
Example-the rise 3PL's
Companies began to outsource their logistics
Allowing companies to focus on their core strengths
Competition takes place along two dimensions,
Successful companies have a business plan that:
provides aggressive cost cutting through increasing scale
better planning
wise use of technology
Total time to deliver a package after the order is placed
Shorter lead times for inbound logistics in support of production (lean and just in time operations)
Making a competitive advantage for business-to-business (B2C) delivery (as Amazon Prime is proving)
Amazon Prime-"the most ingenious and effective customer loyalty program in all of e-commerce, if not all of retail in general."
By the year 2025, the material handling and logistics industry will have to offer a wider suite of services, work faster and offer a lower price point.
By 2025, the material handling and logistics industry must be capable of supporting a highly diverse set of order and distribution channels in keeping with mass customized products and delivery methods.
Customers will
want to order with their phones, mobile devices and computers
as well as traditional retail outlets
perhaps as-yet-unimagined channels
Delivery modes will be just as diverse from time-definite, long-lead time delivery to next day delivery, same day delivery and even same hour delivery.
The world continues to urbanize at a steady pace.
Today, more than 50% of the world's population lives in densely populated urban areas, and by 2025 the United Nations projects that 64% of the developing world and 85% of the developed world population will live in cities.
Although the rate of urbanization in the developing world is slowing, the absolute numbers of urban dwellers, espically in Asia and Africa, will grow at staggering levels.
In the United States, census data shows that rates of population growth begining in 2010 in the largest US cities now exceeds surban growth rates for the first time since the 1920's.
Urbanization creates many challenges for the supply chain systems that provide consumers with goods.
While dense land use patterns concentrate demand, high land costs create location challenges for last mile distributions facilities.
Urban retailing typically involves larger number of smaller stores, and urban consumers may purchase smaller quantities per trip due to smaller storage capacity in urban dwellings.
Vehicle ownership rates are lower in urban areas, increasing demand for home delivery of goods and e-commerce.
Urban areas are often more demographically heterogeneous, creating demand for a higher variety of products.
On the positive side, many urban areas have have established forms of public transportation (subways, rail) that might be used for logistics.
Re-purposing or better using other existing systems such as the U.S. Postal Service could address some of these challenges.
By 2025, urban freight and logistics will be espically challenging. As population density continues to increase in urban areas congestion and competition for a highly utilized urban roadways will be a major concern.
Some of the largest cities in the world already restrict truck traffic to non-peak times. New methods of distribution are needed to avoid such problems in major U.S. cities.
Mobile and Wearable Computing
Mobile computing is changing the way we live and at a pace that few could have imagined even 10 years ago. Use of mobile location-based services (GPS) is also on the rise.
The next wave in mobile computing appears to be "wearable computing" in which a computing device or collection of sensors is embedded in a small, wearable accessory such as eyeglasses, a wristwatch or even fabric in clothing.
By 2025, the material handling and logistics industry must be taking full advantage of mobile computing technologies. Constantly connected consumers will demand to know where their shipments are and how much longer they will have to wait for them. These technologies will also offer a tremendous opportunity for real-time control of logistics operations.
Several areas have been identified that will have a major impact on the industry bym 2025 including:
autonomous control
driver less vehicles
wearable computing
Broad based integration of several of these technologies will have a revolutionary change for this industry.
Sensors and The Internet of Things
Every year, sensor technology is creating smaller and better devices that can "talk" to the internet without human intervention.

Using data gathered, without help from us, we would be able to:
track and count everything
greatly reduce waste
loss and cost
know when things need replacing, repairing, or recalling
GPS tracking
Imbedded RFID chips
Sensors on Unit loads
Optimized routing
How does this all effect the Material Handling and Logistics field?
Big Data and Predictive Alyticsk
Big data refers to extraordinarily large data sets that companies and other organizations now collect and store about their operations, sales, customers and nearly any other transaction of interest.
Data mining is the science of finding patterns and correlations among sets of data the presence of such patterns can lead to better decisions in logistics and other operations.
Predicted analytic is related concepts that uses data mining and other techniques to predict the future. It differs from forecasting which relies more on mathematics rather than accounting for trends and seasonality.

By 2025, these techniques we much more mature but likely that they will not have been fully deployed, The material handling and logistics industry must find ways to make appropriate data available to all who need it, while protecting the interest of owners of that data.
The changing workforce
Of all the topics discussed in the roadmap workshops, one generated more passion and concern then the other – challenges in attracting, training and keeping an adequate workforce for the future.
Changing demographics in the United States suggest that
the challenge will be even greater by the year 2025. So cold baby bloomers will be retiring in droves and will be replaced by if you were workers in the next generation.

Another significant workforce challenge or skills. As many as 270,000 new jobs are expected to be created annually in this field by 2018. That is more than 10% of all new jobs in this country at current workforce expansion rates.

There is considerable concern for the existing and future workforce with respect to skills. On one hand, there is a high rate of change in the technology is used in skills required to operate low-cost supply chains every day.
On the other hand, skill sets of new employees at all levels are lacking. Beyond technology skills other gaps include problem-solving abilities, situational response skills, abstract reasoning and even basic work ethic.
By 2025, the industry must have in place new initiatives to find, attract and retain the workers that are necessary for success – and do so in the presence of many other industries competing for the same talent.
The widely excepted definition for sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
The commonly excepted framework that applies this definition to business strategies for private and public organizations identifies three main considerations economic development, environmental preservation and social development.
Environmental preservation address is the environmental impact of supply chain operations such as effects on local wildlife, solid waste generation and omissions of pollutants.
Social development accounts for the effects of supply chain activities on human populations and societies, including positive effects such as education and negative effects such as pollution and public health.
In the context of supply chain systems economic development means the creation of economic value for employees, customers and stakeholders.
By 2025, the material handling and logistics industry should have developed standard methods of incorporating sustainable development into business plans and operating strategies. Such method should adhere to the goals of sustainability, well maintaining an even advancing the commercial interests of the industry.
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