A PUBLICATION OF CERASIS

The Current State of Manufacturing, Supply Chain, Logistics, & Transportation Management

TABLE OF CONTENTS

1

2

Introduction

The State of Manufacturing

The State of Supply Chain

Conclusion

1

The State of Manufacturing Technology

The State of Logistics

The State of Logistics Technology

3

4

5

The State of Transportation Management

Conclusion

6

INTRODUCTION

Every new year we write about the most important trends to pay attention to for the year

on our blog. In 2016 we focused on our main areas of writing: Manufacturing, Supply

Chain, Logistics, and Transportation Management. We will, again, in 2017, write about

the trends to look out for in these main categories. However, we do not want to abandon

the trends we wrote about in 2016 and instead we want to revisit those trends and write

about each of the various trends in respect to where they are now a y ear later. We call

this the “State of ” e-book because it talks about the trends and what is truly going on in

industry today.

In this ebook, you will learn about the current States of Manufacturing, Supply Chain,

Manufacturing Technology, Logistics, Logistics Technology, and Transportation

Management.

As we look back on the year, you can take these trends and what is going on now and

apply them yourselves.

We hope you enjoy this “State of ” ebook as we look back at the 2016 trends.

INTRODUCTION

Chapter One

The State of the 2016 Manufacturing Trends

Robotics, Cyber Security, and Advanced Analytics: How Did Our Predictions Turn Out?

At the onset of 2016, we identified key trends to watch for in manufacturing, and as

the year draws to a close, it’s time for an evaluation of our predictions. In a sense, we

are looking back at our previous selves to see how we can improve our future. This is

the fundamental concept behind most supply chain processes, so let’s take a closer

look at what was expected versus what happened.

E-Commerce Grew More Important in Manufacturing.

E-commerce was expected to become the dominant player for manufacturers in 2016

through the following:

• Increasing share of aftermarket parts sales.

• Custom e-commerce solutions.

• Integration of e-commerce with IoT-based technologies.

• Mandated integration of dealer-manufacturer systems.

• Greater sales of parts directly to consumers.

Since e-commerce can be best analyzed by reviewing Cyber Monday 2016, consider

the record-breaking sales achieved. Per Fortune Magazine, this was the most

successful shopping holiday in history. Major retailers, including Walmart, Target and

Kohl’s among others, dramatically improved their online shopping portals in

anticipation of the holiday. Cumulatively, shoppers spent $3.45 billion on Cyber

Monday, and total online sales in the U.S. have surpassed $40 billion, as of November

29, 2016.

In other words, e-commerce has clearly defined its path. More importantly, the named

retailers have also expanded online sales options to include products direct from

manufacturers and various dealers or vendors. Of course, none of this would be

possible without improved self-service features, as explained by “The Impact of B2B

E-Commerce on Manufacturers and Distributors,” and comprehensive, easy-to-

integrate platforms. Meanwhile, 79 percent of manufacturers and distributors,

surveyed by Handshake, reported increasing use of e-commerce to meet customer

demand, and the role of business-to-business e-commerce has become more of

concern for up to 63 percent of companies.

Advanced Analytics Became Slightly More Complicated.

Analytics were supposed to become more advanced, giving manufacturers more

power to predict and accommodate changes in production on a real-time basis.

Unfortunately, manufacturers may have grown too preoccupied with ideals to

understand how analytics played into production in 2016. While 41 percent of

manufacturers are beginning to embrace analytics, approximately 50 percent do not

understand key difference between business intelligence, big data analytics and

predictive analytics, reports Johnny Williamson of The Manufacturer.

True, all analytics do provide insight, but the different types describe different ways

data can be used.

For example, big data is all the data compiled and analyzed. Predictive analytics

provides insight-based predictions on how production and distribution may change,

and business intelligence uses this information to boil down to the fact-based,

immediate decision making.

There are a few reasons for this delay and confusion. Manufacturers have simply not

yet fully integrated systems or applied them to changing current processes. Today,

most analytics capabilities are being used to design next-generation products, not

improve current standards. Thus, analytics has grown more complicated, but it does

not yet provide the key benefits of improving productivity, reducing machine

downtime and improving quality. The argument can be made that next-generation

products improve quality, but how can a manufacturer improve the quality of today’s

products without understanding how they can manufactured faster, correctly or more

efficiently before moving on to the next product? In other words, manufacturers need

to fix today’s issues before working on the problems of tomorrow.

Meanwhile, the use of analytics is starting to become isolated. Only 40 percent of

workers are considered knowledge workers, giving them access to data insights. This

is the result of manufacturers experiencing trouble creating a “single point of access”

for data, reports Industry Week. Ultimately, most manufacturers continue to operate

on a safety-stock forecast, not a real-time planning process, giving rise to a “higher

level of product quality [reducing] costs and improving customer satisfaction,” asserts

Sam Pearson of Deloitte.

Robotics in Manufacturing.

The use of robotics in manufacturing was expected to continue growing. By 2018, 1.3

million new industrial robotics were expected to become key parts of global

manufacturing. However, there appears to be a greater acceleration than anticipated.

In a recent blog post, “Robotics in Manufacturing: Creating More Efficient

Operations & The Future of Manufacturing Jobs,” we discussed how many

Americans view foreign manufacturing as the killer of American jobs. Most jobs lost

in the U.S. this year were due to robotics. In fact, the value of robotics in the U.S. will

climb to more than $1 billion by 2020, and globally, the value is expected to reach $3.1

billion, explains Jim Lawton of Rethink Robotics. Of course, the addition of new

robotics in collaborative manufacturing means more people will be needed to repair

them and complete the tasks robots are not currently doing.

Robotics were also primarily linked to mass manufacturing in our prediction.

However, the use of robotics is becoming more acceptable in small to medium-sized

businesses. Per China Briefing, the costs associated with integrating collaborative

robotics into existing systems are much smaller now than previously seen. More

importantly, these costs are going to drop more than 20 percent over the next decade,

making them even more affordable.

Manufacturing is changing. The 2016 predictions revealed an industry in the state of

change, preparing for the next revolution. Its image is getting an uplift, cyber security

is growing more complex, and distribution is becoming more focused on third-party

services. Let’s see how closely the year kept up with our predictions.

The Manufacturing Picture Became a Reality For Students Across the

Country.

We spoke about how manufacturing is becoming more clean, complex and based on

new technologies. The old-age image of dirty floors, intense labor and sweat-laden

work is on its way out. In October, numerous educators, organizations and business

leaders took to the school system and public to raise awareness about what it means

to work in manufacturing today as part of Manufacturing Day. The teaser video to

American Ingenuity, as featured in this blog post, took the ideals of a clean, crisp and

modern environment from the drawing board into classrooms and the minds of the

next generation.

Part of the rationale behind Manufacturing Day goes back to changing how the public

perceives the industry. Many continue to have the old images of what it means to

work in manufacturing in their minds. Meanwhile, people want well-paying,

challenging, exciting and world-changing careers, explains Polymer Ohio

Manufacturing Services. Thus, more young people will be enticed to enter the field,

providing relief to the growing manufacturing skills gap.

The world of manufacturing is only getting a better, more clean and enticing image.

In fact, the following infographic sums up how advanced manufacturing has become,

and it puts the pre-modern stereotypes to rest.

Cyber Security Did Grow Stronger.

With claims of hacking the election still permeating the internet, manufacturers are

looking upon 2016’s cyber security improvements with even greater scrutiny. In our

prediction, we defined good penetration testing as an essential component for more

manufacturers to follow this year. Today, we must also face uncertainties placed by

terrorist organizations. Consequently, manufacturers are also rethinking their budgets

for cyber security.

In a 2016 manufacturing report, created by Sikich, the incidence of cyber-attacks on

manufacturers grew more than attack prevalence rates on any other sector of the

economy. In addition, automotive manufacturers were affected most, accounting for

30 percent of all cyber-attacks in 2015. Unfortunately, official statistics for 2016 are

not yet available, reports Industry Week. However, the trend appears to show an

increase in attacks on automotive and chemical companies for this year.

While we assumed more companies would work on penetration testing, only 33

percent did. Moreover, this statistic only focused on annual penetration testing. Yet a

vulnerability could crop up almost overnight, so penetration testing needs to be more

year-round, not an annual event.

There are other solutions to shoring up manufacturing cyber security. For example,

blockchain technology might help keep different consumers’ and companies’ financial

data secure. However, it is only one piece of the puzzle, and manufacturers must stop

simply identifying risks in cyber security. In other words, manufacturers cannot

mitigate risks without actually doing something, and while 90 percent of

manufacturers recognize the importance of cyber security, most are still falling behind

the curve in improving it, explains Ian Write of Engineering.com. Ultimately,

manufacturers did increase cyber-security budgets by 77.3 percent, reports Qatalyst

Global, but thorough penetration testing on a recurring, frequent basis seems to still

be out of reach.

Manufacturers Did Look Towards Logistics Efficiency to Stay Competitive.

The prediction called for increased utilization of third-party logistics (3PLs) and more

smart systems to stay competitive, and we literally hit this one on the head. Across the

internet, more companies report use of logistics service providers than ever before.

Amazon’s order fulfillment network has expanded to include grocery stores, Prime

hubs and even two-hour delivery capabilities, reports the IQMS Manufacturing Blog,

giving the e-commerce giant an unparalleled competitive advantage. Since most small

and medium-sized businesses cannot realistically expand to the scope of Amazon,

they must take advantage of 3PLs wherever possible. But the demand for outside

expertise is not limited to small retailers.

Target took the bold step of hiring previous supply chain experts from Apple and

Amazon to address problems maintaining and managing inventory, a sentiment

echoed in the needs of a digital enterprise and data-driven supply chain, as explained

by Stefan Schrauf and Phillipp Berttram of Strategy & PwC.

The need to unlock hidden potential without investing significant resources into new

warehouses and distribution networks has never been higher. Following an organized

structure, these five success factors are all essential components to creating an

effective relationship with outsourced logistics:

• Re-evaluation and establishment of new end-to-end processes to create a digital

supply chain.

• Organization and skills to ensure the new digital supply chain operates at

maximum efficiency.

• Performance management to maintain production and efficiency.

• Collaborating with other parties to integrate a vast pool of suppliers, distributors

and warehouses.

• Technology, such as machine-to-machine connectivity, including the Internet of

Things, to make more decisions available in real-time and adjust product as

needed.

Manufacturers Stayed the Course, But Jostled Along the Way.

Overall, manufacturers were aligned with many of our predictions closely, but our full

expectations were not always attainable, such as slower progress in cyber security than

anticipated. Realistically, the predictions represented an ideal year for manufacturing,

but the turmoil of the election and disarray in the stock market, thinking back to the

fluctuations in China and the U.S., fueled problems in manufacturing.

Fortunately, the election is over, and next year’s predictions are much more likely to come

to fruition. Of course, there could always be that one breakthrough that redefines

manufacturing and modernity, and if that happens, we will shall see how far the industry

will grow in 2017.

9. Multi-Order eFulfillment Grows Critical.

Chapter Two

The State of the 2016 Supply Chain Trends

Digital Supply Chains and Augmented Reality:

How Did Our Predictions Turn Out?

We are continuing what will become a tradition of re-evaluating the progress of supply

chains throughout the year in relation to our predictions, as explained by this blog post.

Let’s look at how supply chains kept up with expectations and where they fell short, if at

all.

Supply Chains Went Digital.

2016 marched onward with a drive to improve the use of digital technology throughout

the supply chain. In the first supply chain trends post, we surmised the previous year’s

trends would continue. However, this prediction proved to only touch on how important

the digital supply chain would become.

Within four months, the digital transformation had already reached most supply chain

organizations. Per GT Nexus, 75 percent of executives surveyed recognized the digital

supply chain as an important factor for the next five years. Meanwhile, 70 percent have

also started processes to implement digital supply chain technologies throughout their

companies.

Unfortunately, many supply chain entities continue to hope for a better tomorrow. In

other words, the digital supply chain transformation has only been rated as very satisfying

for 5 percent of respondents. In addition, just less than half, 48 percent, of respondents

report continued use of traditional technologies exclusively, which include the following:

• Fax machines.

• Manual order entry and review.

• Land-line phones, not voice over internet protocol (VoIP), which reduces overall

costs and downtime.

• Email, although beneficial, is susceptible to internet connectivity issues, security

breaches and other problems.

• Chaotic picking protocols.

This infographic, created by GT Nexus, also shows other ways the digital supply

chain evolved in 2016.

Essentially, the digital supply chain is essential to gaining and maintaining competitive

advantage. Digital technologies, reports Richard Howells of Forbes Magazine, including

Big Data, analytics, the Internet of Things, social media, and point-of-sale reporting,

enable business to know more about consumer needs and wants than ever before.

Consequently, they can more accurately respond to changes in product demand across

large distances and within infinitesimally small time frames.

Supply Chain Execs Retained Fundamentals Throughout Change.

Innovation is the driving force behind change and improvement in the modern world.

Supply chains must evolve to meet an increasing number of omnichannel sales, and

technologies must be integrated within existing systems to reach maximum efficiency and

productive value.

As explained by Grant Marshbank of VSC Solutions, “The rate of change is not going to

slow down. Technology will only delivery […] if it’s implemented with strategy and

operations that adhere to best practices.”

Marshbank’s words highlighted the need to focus on fundamental concepts while

responding to changes and improvements in the supply chain. For example, an optimized

supply chain is good, but it opens more opportunities for errors. Simply putting all an

organization’s proverbial eggs into one basket may be risky if appropriate auditing and

review measures are not undertaken to ensure continued compliance and accuracy in all

orders.

Change is a necessity for businesses, including the supply chain, to grow and expand. Yet

many destructive forces can severely undermine a company’s progress. Bad weather, poor

hiring practices or inefficient maintenance of consumers’ financial data can decimate a

company. However, the response to hindrances in 2016 continued to showcase the

importance of fundamental concepts, asserts Ryder, which include the following:

• Continually seeking the fastest, most cost-effective means of transporting products

to consumers, including enhanced delivery options.

• Expansion of global footprint while adhering to local, state, federal and international

requirements.

• Keeping companies accountable and focused on giving back to their domestic

partners through reshoring or nearshoring.

• Working with more outside agencies, also highlighted by Samantha Carr of Business

2 Community, including crowd-sourced logistics, warehouse optimization and

outsourcing, and greater use of cloud-computing.

Augmented Reality Found Its Place Among Consumers.

Augmented reality sounded amazing and far-fetched early in 2016, but the year has

shown it to be one of the most successful product in existence. There tends to be more

acceptance of technologies in the workplace once consumers can identify how they

work.

For example, new hires are likely to pick up tablet-based systems more easily since they

have been using them recreationally for some time. Essentially, the virtual-reality (VR),

which is the precursor to augmented reality, hype of the 2016 Christmas shopping season

is making more people excited about this new way to “see the world.”

While the VR hype may seem like it only emerged for Christmas, think about one of the

hottest games of 2016, Pokémon Go! This app was built on augmented reality,

combining the digital and physical worlds into one interactive environment. This

technology, reports JOC.com, will be a key to practically eliminated extensive training

courses and repair time requirements throughout the supply chain.

Ultimately, it translates into greater use of augmented reality in supply chains, which is

growing by 100 percent annually, reports Barcoding Incorporated.

What’s Next?

Clearly, technology dominated the conversation for 2016, but there are also changes in

how supply chains operate that require a more in-depth discussion as well. In the next

post of this series, we will discuss the impact of artificial intelligence, agile processes and

procurement expansion on the supply chain of 2016.

Artificial Intelligence, Procurement, and The

“New Lean”: How Did Our Predictions Turn

Out?

Understanding how different factors affect the supply chain remains a top priority for

research firms around the globe. This unwavering drive represents the continued interest

in advancing today’s capabilities with state-of-the-art technology and adaptability. From

artificial intelligence to refocusing on procurement, the state of the supply chain

continued to explode throughout 2016, and you need to understand why.

Artificial Intelligence

Artificial intelligence (AI) is among the most well-recognized ideas in science fiction.

However, its true applications are becoming more apparent daily. At the dawn of 2016,

Facebook CEO Mark Zuckerberg called on his team to create a personal assistance, and

he professed his belief in personally coding the assistant would be key to unlocking the

secrets of AI. While this may seem like a revelation, personal assistants are already

omnipresent, including Cortana, Siri, Google and Alexa.

As explained by Christine Douglass of Phys.org, artificial intelligence has the potential to

change health care supply chains, especially with respect to non-direct care equipment. In

other words, the use of AI may help to improve patient outcomes and reduce delays from

misdiagnoses or laboratory testing. Of course, the human-controlling capacity for actual

AI is still far from realistic, but the concept of a superior AI did make strides this year.

Additionally, the push toward creating a self-sufficient AI is growing stronger among

supply chain professionals. A 2016 Accenture survey, reports RF Gen, explained how

more companies are taking advantage of AI benefits through linked supply chains.

Essentially, a supply chain that is linked together is more responsive and intelligent than

individual workers or silos within the company. Consequently, all processes, including

inventory management, logistics, data analytics and ongoing performance management,

as reiterated by the staff of Supply Chain 24/7, improvement, can be optimized, creating

a more efficient, direct and intelligent supply chain network.

Agile = The New Lean

Another key player in the 2016 supply chain was the move away from rigid, lean

processes to agile methodologies. Ultimately, lean supply chain processes improved

efficiency, but they limited the variability and adaptability within a company. Most

importantly, agile processes allowed for faster decision making across a virtually limitless

stream of issues, and this trend held true throughout the year.

The move to agile supply chain management inherently required more data sources than

traditional supply chains, reports GT Nexus.

For example, planning, purchase order placement, manufacturing floor information

logistics operations and beyond became essential variables in the goal of creating a more

agile supply chain. Thus, more companies replaced antiquated enterprise resource

planning systems, as explained in another GT Nexus report, with an easy-to-integrate

solution, such as the Cerasis Rater. This helped to build an ideal, cohesive center for

making the best decisions possible in any circumstances. In addition, it bridged the divide

between manufacturing operations and service (logistics) operations, explains Springer

Link.

Gathering this information via new systems also enables quality benchmarking across the

supply chain. Per River Logic, the first step toward the creation of any agile supply chain

is the ability to detect and project disruptions before the occur, allowing for better

mitigation of issues.

For example, the Internet of Things (IoT) may rely on temperature sensors in trucks to

identify food spoilages, which can catalyze a diversion of an existing shipment to meet

the immediate needs of the consumer affected by spoilage. In other words, these

hypothetical scenarios give companies a means of seeing problems before they occur and

devising solutions needed to overcome them.

Procurement’s Role Did Become More Important.

While much of the conversation on supply chains in 2016 focuses on after

manufacturing, it always helps to go back to the beginning. The beginning of any

product or service is procurement, explains Jonathan Webb of Forbes Magazine, which

refers to the obtaining of raw materials needed to create a product.

The 2016 prediction called for enhanced procurement capabilities, focusing on

establishing additional supplier-vendor relationships. This would help manufacturers

adjust to changes in the availability of raw materials, and according to the Wall Street

Journal, manufacturers are on track to spend more than $1.5 billion by 2018 to grow

these relationships. Unfortunately, there continue to be major costs associated with

procurement. In fact, as much as 70 percent of costs associated with the supply chain

derive from procurement and logistics operations. Clearly, additional resources are

needed to help drive costs down.

The solution to rising procurement and logistics costs is collaboration. Collaboration,

explains Datex, can overcome the challenges unique to procurement and logistics by

creating a common-ground for procurement and logistics operations. When a company’s

whole logistics operation, including procurement, is considered cohesively, different

means of reducing costs may become evident.

For example, raw materials for product A may be sourced more effectively from supplier

B. However, if the materials are much cheaper from supplier A, which is closer to

consumers, the ideal solution would be to move manufacturing centers closer. Essentially,

the interchanging of information and working together helps to build a circular supply

chain, but that will be discussed in greater detail in the next blog post.

Supply Chain Methodologies and Intellectual Capacity Grew.

Supply chains are growing smarter and more efficient. With the increasing capabilities of

artificial intelligence, agile processes and collaboration between procurement and

logistics, the next wave of supply chain management is around the corner. In fact, the

recent shopping holiday saw the highest consumer spending rates in existence, and future

demand on the supply chain will only grow. Thus, our next post will continue the

collaboration discussion and touch on the importance of a circular supply chain and

resiliency.

Collaboration, Process Management, and

Risk Management: How Did Our Predictions

Turn Out?

Supply chains have traditionally followed a linear path, manufacturing products and

sending them through warehouses and distribution centers to consumers. However, the

age of the internet and omnichannel sales has created vast opportunities to change how

the supply chain functions, creating a more cohesive, collaborative network. The

predictions for 2016 hinted at these trends, but recent reports suggest the need to alter

the common perception of a functioning supply chain is growing stronger. In fact, the

final two posts in this series will focus on how the supply chain is adapting to work in a

more unified manner from collaboration to visibility.

Collaboration Continues to Grow More Important.

More companies were taking steps before 2016 to improve collaboration across entire

supply chains. This was an effort to lower overall costs, increase share of wallet, improve

word-of-mouth advertising via business-to-business channels and develop long-term

relationships, and these benefits continued to be a hallmark of this year’s collaborative

relationships. More importantly, the steps for creating a collaborative relationship were

further defined, reports PLS Logistics, to include the following:

• Work together to create common-ground.

• Create more win-win opportunities.

• Select partners based on abilities and value.

• Establish joint-performance management systems.

• Collaborate over large time scales.

• Invest in the people and infrastructure of both companies.

Unfortunately, problems with collaboration continue to exist. Per Bill DuBois of Kinaxis,

data extraction and access continues to be kept in silos, process and function goals

conflict, and teams continue to be isolated. However, the solution to these problems lies

in distributing the workload evenly, including access to data sources and sharing of

information. While reassignment of workers to global locations is necessary, creating a

single source of data storage and access may be key to increasing collaboration in the

future.

Risk Management Evolved in 2016.

2016 opened with fears of a complete shutdown of the beloved Mexican restaurant,

Chipotle. The company had seen dozens of people sickened from food-borne illnesses,

and even locations that had reopened were struggling. However, Chipotle rose above the

ashes and continues to be a major company today. Essentially, the importance of

resiliency has shown that companies can overcome problems and risks, but they do often

cause widespread losses in the short-term.

This is a prime example of business continuity risk, but risk can take many forms,

reports Wayne Caccamo of Supply & Demand Chain Executive. With relation to

inventory management and product complexity, new technologies, such as 3D printing,

are enabling more efficient inventory management and control. While printing foods

does not seem to make sense, printing of parts on demand can help reduce storage costs,

eliminate concerns about overproduction or understocking and enable continued

complexity of products. This goes back to using technology to mitigate risk, as explained

by Patrick Burnson of Logisitcs Management.

For example, the need to respond to labor shortages during times of disaster can send a

company into chaos. However, knowing more about available labor workers and where

they come from can give a company the resources needed to overcome the immediate

challenges, securing the future of the company and promoting resiliency.

The Supply Chain Leaves Linear Processes Behind.

The world is changing, and more people are considering what happens to products at the

end of their lifecycles. Rather than simply tossing malfunctioning products into the trash,

the push to recycle, reclaim and reuse products and their raw materials is becoming a

core function of the supply chain. In a sense, the ideas behind reverse logistics are

becoming essential to all supply chain networks, creating a circular supply chain.

The idea of reusing products as part of reverse logistics in the supply chain is not new,

explains Edge Environment. However, the process of implementing sustainable business

solutions includes figuring out how to handle, value, store, collaborate with others and

still maintain standard operating efficiency. Consequently, the Ellen Macarthur

Foundation is working with more than 100 companies to evoke the transition to a

circular supply chain. In other words, global supply chain leaders are helping to shape the

future of circular supply chains. However, other third-party organizations, including the

U.S. Chamber of Commerce Foundation, are also pushing this ideal.

Sustainable business practices are a core value of 90 percent of supply chain executives,

reports UPS, and as many as 50 percent of executives are already working on creating

circular, sustainable solutions in their companies. Moreover, the cost savings from

creating nationwide circular supply chains in the U.S. could surpass $1 billion by 2025,

reports Kevin Brow of CIO Review.

What’s Next?

Today’s supply chains function in tandem with one another, and more emphasis is being

placed on long-term outlook than ever before. Concerning the importance of circular

supply chains and resiliency, cross-functional supply risk councils are taking advantage of

technologies, cloud-computing and collaboration to create multiple solutions that can be

implemented at a moment’s notice. Ultimately, these three factors are giving supply

chains the opportunity to survive times of despair and problems and ensure their futures.

Cloud-Computing, Wearables, and Data

Analysis: How Did Our Predictions Turn Out?

Modern supply chains are evolving beyond anyone’s expectations due to increased use of

cloud-computing technologies, wearables and advanced data analytics. In addition, the

role of these technologies is becoming more than a means of guaranteeing profits; they

are enabling more small businesses to compete with larger, big box retailers, which drives

prices down for end users. A common theme of the 2016 predictions was growth and

scalability, so let’s look at how companies are using these technologies as we prepare for

the innovations of 2017.

Cloud-Computing Use Continues to Increase.

Cloud-computing technologies are primarily designed to enable rapid dissemination of

information and access to software suites at a fraction of the costs of tradition systems,

such as Oracle or SAP. Powered by an increasing number of connected devices via the

Internet of Things, automated data entry is empowering usable data and allowing more

companies to replace legacy systems or integrate new technologies with existing systems.

Meanwhile, cloud technology enables companies to expand infrastructure without

significant investment or use of resources, reports AXIT of Supply Chain 24/7. In fact,

up to 70 percent of companies surveyed in Europe have already implemented cloud-

based solutions to enable rapid scalability and flexibility. Furthermore, larger companies

are also realizing the cost savings possible through cloud technologies.

Another driving force behind the increased use of cloud technology in 2016 was budgets.

More IT departments are being forced to work within smaller annual budgets, and most

IT departments only account for 11 percent expenditures on new applications.

Consequently, the need for a low-cost, high-return system is becoming more prevalent,

and cloud technology can answer this call. Moreover, cloud technology enables global

access to information, explains Ship Rocket, so companies can ensure continued uptime

regardless of local events or issues.

Essentially, the cloud is working to reduce overall risk and reduce costs along the way, but

it is also becoming key to increasing accountability and visibility throughout an

organization. In other words, greater access to identical systems prevents organizational

silos from inhibiting visibility, asserts Alex Whiteman of Eye For Transport.

Wearables Became More Cost-Effective and Available.

The Apple Watch, Fitbit and Google Glass have been major catalysts of efficiency and

improving productivity, and other wearable technologies are continuing to drive the

supply chain forward. While most of the conversation focuses on their applicability to

picking processes or repairs, they can also have significant safety benefits, such as alerting

managerial staff when employees are overexerting themselves, which can reduce costs

associated with health care and benefits to employees.

For example, wearables measuring the number of steps, heart rate and calorie

consumption can virtually eliminate on-the-job cardiac events, reports the Inventory &

Supply Chain Optimization Blog. Furthermore, the vastness of warehouses also means

wearables may be used to identify medical emergencies and call for help if an incident

occurs. In fact, wearables were recently highlighted for their benefits to employee health

and safety by Boss Magazine. Unfortunately, full implementation of wearables in

warehouses may mean greater Wi-Fi costs or connectivity access for devices that do not

function on carrier radio waves. The use of wearables will continue to be one of the top

trends throughout the remainder of 2016 and upcoming years as well.

Simultaneously, wearables could help reduce trucking accidents by reducing fatigue,

maintaining vehicle safety and security and improving driver performance, reports

Christy Pettey of Gartner. Since the driver shortage only appears to be growing worse,

keeping today’s drivers driving is essential to the success of the supply chain.

Data Analysis Grew Exponentially, Providing More End-to-End Visibility and

Continuous Improvement.

Data analysis is the companion of cloud-computing technologies. The use of the cloud

almost inherently implies co-occurring use of data analytics for integrated systems.

Consequently, the focus on data analysis also grew significantly in 2016, and the use of

beacons and connected devices, including POS systems, on-truck sensors and inventory

management applications, will continue to shape how consumers obtain products from

manufacturers and vendors. Think about the grocery stores that have implemented self-

check-out registers.

While this idea seemed ground-breaking in 2006, it has become a commonplace aspect

of nearly all Walmart locations. Unfortunately, these same POS systems are also enabling

theft, reports ABC 10 News. Consequently, the retail giant is having to rethink how it

reduces theft by making systems more accountable, which results in direct data analysis

of consumer shopping patterns. This needed degree of visibility is also present in the

supply chain. Per Steve Hitchings of Talking Logistics, supply chain visibility and

business intelligence go hand in hand, and these technologies can practically stop a

hemorrhaging cash flow. However, they also can stop problems with inventory

management.

Retail sales are only showing increased ability to break previous records. Back-to-school

sales were expected to be slightly more than in 2015, and the 2016 holiday shopping

season broke all-time records. The ability of machines to learn more about today’s supply

chain is essential to achieving greater visibility as the number of transactions and their

values climb, reports Scott Dulman of Supply & Demand Chain Executive. More

importantly, the concept of machine learning is empowering a new wave of analytics

capabilities, allowing more retailers to respond to real-time data on what consumers need

and want, reducing headaches and bottlenecks throughout the entire supply chain.

2016 Was a Year of Innovation and Determination.

Across global supply chains, the focus of 2016 was clear; make the supply chain more

responsive, accountable, adaptable, accessible, flexible and based on technologies and

innovation. Most of the trends or predictions listed earlier this year came true, and many

were key in helping more companies survive the growing power of Amazon and big-box

retailers. If you can use the technologies and trends identified in this series fully, or even

begin the process of implementing them, in your organization, you will be able to stay

competitive and keep your company afloat in the coming years.

9. Multi-Order eFulfillment Grows Critical.

Chapter Three

The State of the 2016 Manufacturing Technology

Trends

Analytics, Virtual Reality, and 3D Printing: How

Did Our Predictions Turn Out?

Technology advancements were among the most exciting topics to watch through 2016.

Newer technologies have created entirely new methodologies for improving

manufacturing, and the outlook is brighter than ever. Like any modern business, you can

learn great things by looking back at what did and did not come to fruition. So, let’s take a

look at how our predictions for the first four manufacturing technology trends to watch

for in 2016 stacked up.

Analytics Became Commonplace to Manufacturing.

The use of predictive analytics has the potential to dramatically reduce expenses in the

manufacturing sector, particularly with respect to proactive machine maintenance.

According to Sundeep Sunghavi, the use of predictive analytics will save approximately

$630 billion in the manufacturing industry over the next 15 years. Meanwhile, analytics

also have extraordinary potential to increase profit and determine exactly what customers

want.

In other words, analytics allows companies to focus more on what customers actually

purchase, using information obtained from point-of-sale (POS) systems, internet traffic

and real-time feedback via social media. Ultimately, manufacturers no longer have to

concern themselves with what might sell well in the coming months. Instead, they can use

today’s information to create near real-time demand forecasts, allowing for immediate

adjustment of production and distribution to meet changing demands. Of course, reports

Predictive Analytics Times, analytics also possess potential to change how companies

obtain the raw materials for their products.

For example, the analysis of procurement processes and expense trends might help

companies select alternative or new suppliers, change the flow of supplies to optimize

delivery time tables and enhance payment processes, such as double billing complaints.

This reduces overhead while reducing costs and issues experienced by the consumers.

Virtual Reality Has Taken Over Consumer-Facing and Business-Facing

Operations.

Virtual reality (VR) and augmented reality (AR) are changing how everyone views the

world. VR headsets have become among the most popular gifts for consumers during the

holiday season, and the technology is gaining notoriety among manufacturers as well.

Augmented reality is essentially identical to virtual reality. However, augmented reality

typically involves a computer overlay on a person’s existing view. VR tends to replace the

entire image. In manufacturing, this means engineers, repair workers and factory

employees will be able to use augmented reality to complete tasks faster than ever before.

For example, the aeronautics’ giant, Lockheed Martin, has embraced augmented reality

during the manufacturing and repair processes, explains Industry Week. While this might

seem minimal, it actually implies accuracy and training will be much more efficient.

Essentially, workers will not have to figure out what is wrong, and they can be directed

on how to complete their duties without extensive classes or degrees.

Connected Products Are Increasing in Number.

Remember when the Internet of Things (IoT) first burst onto the scene through the

General Electric commercials? Well, that image of talking trains and cars is growing

larger. Uber, Google and other auto giants are starting look at self-driving cars as a reality

within the next few years. According to Business Insider, major companies from all

industries are starting to look at the IoT as a source of inexhaustible revenue and

productivity, including Lockheed Martin, Microsoft, Cisco, Epson and more.

Initially, experts predicted investments into the IoT through 2020 might top $5.649

billion, but even the smaller side of the spectrum of actual investments today seem much

higher. Manufacturers are expected to spend more than $70 billion by 2020 in IoT

technologies, enhancing machine-to-machine connectivity, reducing downtime,

integrating analytics capabilities and revolutionizing the manufacturing supply chain. In

fact, 97 percent of manufacturers cite the IoT as the most important technology to

impact the industry, explains a survey by Zebra Technologies, reports Macrofab. Clearly,

the IoT has caught on much faster than experts could have hypothesized.

Use of 3D Printing Advanced and Became More Affordable.

Additive manufacturing, which describes the ability to manufacturing parts in addition to

traditional factories, is making amazing strides with 3D printing technologies. Additive

manufacturing is expected to climb more than $20 billion by 2019. However, the savings

for the auto industry alone might amount to more than this figure.

For example, only 15 to 20 percent of the auto industry has tapped the potential of

additive manufacturing for boosting output and repair timeline. However, this minimal

fraction of automakers has already set the path to create more than $2.3 billion by 2021.

Now, imagine how that statistic could change if all automakers were to embrace the

technology. Yet, 3D printing is not simply for repairs. Molten metal is being used in 3D

printers to build complete cars, reports Machine Design, and this possibility alone has

eliminated the entire labor cost associated with vehicle manufacturing. When deployed

on large-scale production, the potential savings could easily supersede the $20 billion

prediction.

Ultimately, more businesses are starting to see the value in investing with high-quality 3D

printers, not run-of-the-mill systems, enabling better quality end products and superior

productivity.

The Big Picture.

The secrets to advancement often lie in the undiscovered and novice technologies.

However, technologies impacting manufacturing throughout this year have been around

for years. Ironically, manufacturers appear to be on the cusp of the next breakthrough,

destroying barriers to increased responsiveness, real-time customer service repairs and

replacements and beyond. The limitations of manufacturing are quickly vanishing, but

more evidence of this technology revolution in manufacturing can be found by looking

at the final five trends identified earlier this year.

Robotics, Industry 4.0, and Cybersecurity:

How Did Our Predictions Turn Out?

What makes or breaks a new technology in manufacturing? The answer lies in how

employees respond to the technology, how it benefits overall production value and if it

can be leveraged simply to protect the business and consumers simultaneously.

Essentially, manufacturers demand technologies that can boost their output without

causing an additional strain on resources, and the final five technologies changing

manufacturing in 2016 did just that. Let’s take another look at how advanced robotics,

procurement, computing power, industry 4.0 and cybersecurity became top priorities for

research, development and implementation throughout the past year’s operations in the

manufacturing industry.

Advanced Robotics Have Boosted Production and Distribution.

The annual growth rate for machine learning and artificial intelligence grew in excess of

500 percent from 2013 through 2016. This would have meant that companies could have

dramatically expanded their production value, but advanced robotics capabilities are also

having an impact. Machine learning is inextricably linked to the use of robotics and

automated systems, and according to the National Institute of Standards and Technology,

the use of automation and robotics in 2016 saved $57.4 billion and $40.1 billion

respectively in 2016. In fact, the value of robotics’ investments could exceed $40 billion

by 2020, making way for even greater savings as new systems come online and enhance

supply chains, reports Supply Chain 24/7.

Yet, the implementation of robotics and automation was not universal in manufacturing.

In other words, some manufacturers continue to resist the trend. However, saving $100

billion over one year means the use of robotics and automation have the potential to

impact the industry in the most profound ways possible. Of course, a throughout

examination of the savings found in the industry must also consider other technologies

that are required for wide-scale deployment of robotics to be operational. For example,

replacement parts and machine-to-machine connectivity must be easily accessible.

Procurement Operations Became Decentralized and Adaptable.

Procurement is also becoming more interesting and involved. In 2016, the use of X-ray

fluorescence was deployed to help automakers identify abnormalities or verify correct

composition of source materials, explains ThermoFisher Scientific. Meanwhile, additive

manufacturing, or the use of 3D printing, has grown to encompass the use of metals as

“3D ink.” This allows manufacturers to create their own source materials, and when a

certain product or material is unavailable, an alternate supplier may be found more easily.

In other words, procurement is starting to encompass a wide range of possibilities and

adapt to the real-time demands of manufacturers.

High-Performance Computing Grew as Expected.

Less than 10 percent of IT executives in manufacturing believe their companies are truly

taking advantage of their available computing power, asserts by Govindaraj Rangan of

MBH Mag. Throughout the generations of computer development, the issue of wide-

scale implementation and enhancement of processes has always been at the forefront of

manufacturing ideals. However, the next wave of high-performance computing is

growing much more than anyone could have predicted.

Today’s computer systems can handle extensive security software, practically serve as a

virtual assistant through increasing capacity of artificial intelligence and continue to

analyze millions of individual processes faster than any human. As a result, more

companies have invested in high-performance computing capabilities, generating a

possible market size of $31 billion by 2019, reports New Electronics. Surprisingly, much

of this investment is being generated from small to mid-sized businesses. In other

words, the push toward high-performance computing is becoming more evident as

companies look toward the other trends identified earlier in 2016 for cost savings and

more realization of productive potential.

Industry 4.0 Is Bracing For the Next Wave of Advancement and Deployment.

The Industrial Internet of Things (IIoT), otherwise known as Industry 4.0, reflects the

ongoing investment of connected devices into modern manufacturing. Unlike the

traditional ideas of the Internet of Things (IoT), Industry 4.0 provides automation,

connectivity, and the analytics’ capabilities within the IoT, explains Industry Week. This is

allowing companies to hire entirely new teams of engineers and software experts, which

has changed the standard scope of a factory worker’s duties. Essentially, the use of

Industry 4.0 extended machine life expectancy in 2016, and due to its relatively new

analytics’ capabilities, the true cost savings cannot yet be determined. However, initial

estimates place the savings in the neighborhood of $70 billion, explains MBH Mag.

Stronger Cybersecurity and Privacy Measures Became Essential, Tantamount to

Overall Productive Value.

The security of health information became front and center in recent years as the

information of patients’ personal health records were subject to hacking and involuntary

sharing. However, hacking of personal information in politics dominated much of 2016,

and while the election may be over, the paranoia is not. According to Tim Bandos, the

manufacturing industry is the biggest target for cybersecurity breaches and attacks after

health care.

This means the information of companies’ assets, proprietary formulas or processes and

financial data of consumers could be at risk. As a result, consumers are spending more

time than ever considering the security of companies they buy from, which could cause

profits to plummet if manufacturers fail to upgrade security standards. These upgrades

were consistent with expectations in 2016, and they will likely continue to be a focus

throughout the coming years as well.

The Big Picture.

The manufacturing image of an age-old man breaking his back to scrape together two

items daily is practically gone. Today’s manufacturers have more technology and

resources than ever before, and the improvements will not stop there. From reducing risk

of injury to workers to protecting the private information of consumers and business-to-

business partners, these technologies have become essential components in modern

manufacturing, and businesses that do not consider their impact will face an uphill

struggle in the quest for maximizing production value and reducing overhead. It is the

best interest of supply chain entities and executives to look at how these technologies

grew this year and what it could mean for future developments. In other words, 2016’s

technologies will be a starting point for innovation in 2017 and beyond.

9. Multi-Order eFulfillment Grows Critical.

Chapter Four

The State of the 2016 Logistics Trends

Augmented Reality and IoT: How Did Our

Predictions Turn Out?

Supply chain logistics providers made significant changes in standard operations in 2016.

From ditching age-old tactics of shipping products now, even if the truck was barely

loaded, to advancing augmented realities capabilities, our logistics trends highlighted

expected improvements in the supply chain, many of which came true. While our initial

predictions were somewhat concise, this update shows how incredibly far these entities

have come.

Sustainability Measures Swept Through Logistics Providers to Reduce Transport

Needs.

2016 was a year of major improvements in sustainability measures for logistics providers.

The Center for Retail Compliance reports more companies are turning to enhanced

operations to reduce transport costs and inefficiencies wherever possible, which include

following:

• Better management systems to reduce overhead, collecting data and identifying

unsustainable operations.

• Load planning reduced redundancies.

• Load utilization eliminated wasted, “empty” space in freight.

• Route planning reduced demand on fleet vehicles and fuel.

• Lane sharing and pooling defined freight consolidation, giving rise to the power of

collaboration within the supply chain.

• Grants enabled major logistics providers to upgrade fleets, explains Shelia Shayon of

Brand Channel.

Research indicates implementation of sustainable practices results in 5- to 20-percent

revenue increase, reports Supply Chain Digital. Meanwhile, a lack of sustainable

solutions and practices leads to social, business or legal backlash as more people are

willing to pay more for companies’ services when they align with sustainability goals.

Overall, companies took advantage of the sustainability movement to push revenue

profits higher, improve current technologies with dramatic initial investments and gain a

competitive advantage.

The Internet of Things

The world’s biggest container ships are about to come online, explains Finbarr

Bermingham of Global Trade Review, and more than 1 million free container slots are

readily available. This may seem like an opportune time for logistics providers, but it

hints at the successes of another trend seen in 2016, greater use of the Internet of

Things (IoT). In fact, estimated spending on IoT-based technologies will exceed $20

billion by 2020, up from approximately $7 billion in 2016, asserts Andrew Meola of

Business Insider. So, you must think about the reasons IoT spending increased in 2016.

IoT-based logistics operations had two primary goals, including improving visibility and

eliminating actions that could be automated. In the supply chain, IoT-enabled devices

have managed to open a door to profound possibilities for a strong start to 2017,

including addressing driver shortages, meeting increasing government regulations and

delivering products within Amazonesque time frames. However, supply chain executives

must understand what’s driving this surge in IoT investing.

• Cost of sensors has dropped to less than $10 per unit.

• Cellular ubiquity has led to greater opportunities for IoT-based operations.

• Standard beliefs, such as GPS-exclusive location technologies, have been replaced

with multi-dimensional location sharing through cellular location and WiFi

availability, explains Link Labs.

• Recent research suggests Big Data analytics, better delivery performance, shipment

visibility and real-time response to supply chain demands became top priorities for

logistics in 2016.

Essentially, the usefulness of the IoT grew even more important and necessary to meet

these demands, asserts Scott Dulman of Supply and Demand Chain Executive. But, up

to 24 percent of companies remain in the dark about how IoT works in the supply chain,

reports Supply Chain 24/7. So, 76 percent of companies made progress in 2016, but

chances are good that a company you know of is still struggling to understand how the

IoT works on a fundamental level.

Augmented Reality Found Fame Among Consumers, Driving Its Costs Down.

Augmented reality gave consumers the chance to see other settings without ever leaving

their homes, and it is already being used to review products prior to purchase in greater

detail than before. However, the application of augmented reality in business did not get

as much attention in 2016 as expected. Instead, the technology grew more advanced and

better able to manage multiple processes. Much like other electronics, it was left waiting

until consumer demand helped to drive its costs down, and that finally happened with

the 2016 holiday shopping season.

Virtual reality, another name for augmented reality, became a normal part of the

discussion for holiday shopping, and since warehousing picking operations account for

more than 11 percent of total logistics costs, implementing augmented reality-based

picking systems could easily exceed any person’s dreams, reports Appcessories.

For companies that did implement augmented reality solutions, including using the

technology to assemble products, the benefits were striking. Workers using headsets

could complete tasks 30-percent faster and up to 300-percent more accurately than a

comparable worker with traditional training.

Essentially, 2016 was a year for testing, and the results were positive. Thus, more

companies are devoting time and resources to creating applications to manage and

implement augmented reality in the coming year, explains Jules Besnainou of Clean Tech.

Meanwhile, the cost savings possible in transport through augmented reality are

becoming more clear. Companies will soon be able to tag, code and manage the freight

handling process more efficiently and with fewer touch points, but that notion, as

explained by David Kiger, is still a way from being implemented on large-scale

operations.

What’s Next?

Logistics industry trends in 2016 reflected global drives to improve efficiency and meet

increasing consumer and business-to-business demands. However, there is still much to

be unveiled about how the supply chain logistics entities evolved this past year, and the

next post will look how collaborations and partnerships grew, why reshoring is becoming

more important, especially following the election and how expanded services among

third-party logistics providers (3PLs) changed what it meant to outsource operations.

Reshoring and 3PLs: How Did Our Predictions

Turn Out?

Third-party logistics providers (3PLs) saw additional gains and enhancements throughout

2016, as predicted earlier in the year. The level of visibility across entire supply chains

grew as collaboration became the new normal. Reshoring was set to become a major

trend as well, but at the close of the year, actual reshoring and nearshoring efforts did not

surpass most logistics trends. Meanwhile, expanding the level of services offered by 3PLs

stood out as the leading logistics trend throughout the year. But, taking on the challenges

of 2017 will require executives in supply chain operations, specifically logistics operations,

to consider what happened in each of these areas.

Partnerships and Collaboration Became King, Enhancing Utilization of U.S.

Logistics Operations.

There was a time when working with competitors was tantamount to industrial espionage.

However, that age has been replaced as analytics capabilities and Big Data sharing

enabled cross-company optimization and refinement of processes. According to Jeff

Berman of Logistics Management magazine, 91 percent of shippers saw positive results,

ranging from increased revenue to lower overhead, following the implementation of

business partnerships and collaborative efforts. Additionally, 93 percent of 3PLs

identified collaboration as reducing overall logistics costs, reflecting a positive, 5-percent

shift in opinion since 2012.

By September, shipping giant, Penske, partnering with Capegimini Consulting, forecasted

a return to higher growth among logistics providers due to increased collaboration. But, a

larger number of intermodal shipments were also key in the push toward more

collaboration and sharing of data among logistics providers in 2016. Amazon also played

a role in this trend throughout the year. Since Amazon brought more small to mid-sized

businesses together in one arena, reports Patrick Burnson of Supply Chain 24/7, prices

were driven below expectations, increasing the demand for better logistics operations.

This need was only achievable through collaboration.

Reshoring Gained Political Attention, Increasing Demand on Domestic Logistics

Entities.

Bringing more jobs back to America was spotlighted in the 2016 presidential election. As

explained by Apple Rubber, more than 2.4 million manufacturing jobs traveled overseas

to China between 2001 and 2013, not counting millions of other jobs outsourced

overseas through the close of the 20th century and spurring the demand for change in

the political conversation. While U.S. domestic output reached nearly $6 trillion,

Americans still felt the stings left from the Great Recession, catalyzing a reshoring

movement that only grew stronger. Although the trend was most noted during the

campaigns, manufacturers were already looking at how its benefits could outweigh its

investment costs.

Essentially, reshoring simplified logistics operations by reducing communication

problems, consolidating laws governing shipments, storage and manufacturing and

eliminating unnecessary costs involved in remote management. As 80 percent of

Americans grew to demand American-made products, the push has only grown stronger.

Manufacturers are also changing their target markets. In 2013, 30 percent manufacturers

were focused on serving the needs of China, but that was replaced by 20 percent in 2016,

reports Barry Matherly of Inbound Logistics. In other words, the need to move

production and shipping costs back to America was strong, and it will save companies

money too. There remain challenges to large-scale reshoring, such as higher material

costs in domestic production and transport, explains Reginald Tucker of FC News.

However, manufacturers’ resolve appears unwavering as more companies face social and

potential legal backlash for continuing offshoring of jobs.

3PLs Grew Service Offerings, Going Beyond Transportation-Only Services.

One of the most interesting things to watch in 2016 was the number of 3PLs expanding

traditional services to create more well-rounded service levels. Cerasis took on the

challenges expressed in our predictions directly. The Cerasis Envoy, our newest API,

which replaced traditional electronic data interchange (EDI), within the Cerasis Rater,

connected carriers’ APIs in a cohesive dashboarding tool. In addition, Cerasis broke free

from less-than-truckload constraints to open the door to a host of small parcel

operations, including packaging, auditing and better customer service levels.

The changes in service levels were also seen across the industry. Per Penske Logistics, 19

percent of shippers explored consultancy opportunities, and 17 percent started paying

greater attention to expanding their IT service capabilities. Consumers and business-to-

business partners also powered this trend as up to 62 percent of 3PL customers favored

intermodal shipments or changing typical modes used. In fact, look at a few of the other

results from the Annual Study on the State of Logistics Outsourcing, which highlights

the changing degrees of service levels.

What Does It Mean For 2017?

Shippers and logistics providers stand on the cusp of breakthroughs in how products

move around the globe and the U.S. Rather than relying on traditional practices, more

companies are turning to 3PLs to embrace the next wave of omnichannel sales, and

demand on U.S. shippers will only climb from here. In 2017, we will see some true

innovations and setbacks as companies prepare to answer to the Trump Administration,

but the overwhelming view of the state of logistics is coming into alignment with

American ideals and demands for a better tomorrow. Ultimately, our predictions were

closer than ever, and we look forward to what 2017 might bring the industry.

9. Multi-Order eFulfillment Grows Critical.

Chapter Five

The State of the 2016 Logistics Technology Trends

TMS, Automonous Vehicles, and Robotics:

How Did Our Predictions Turn Out?

Last year, the technology trends in logistics seemed straightforward, and many of our

technology predictions came true. The use of the new technologies, ranging from

robotics to value-added services within transportation management systems (TMSs) saw

greater implementation across supply chains, and widely-held beliefs about the supply

chain’s limitations were tested. Technology in logistics grew beyond imagination in 2016,

and you need to understand how and why.

The TMS Became More Than What It Was.

Companies using outdated enterprise resource planning (ERP) systems are obsolescent.

According to Vijay Ramachandran of Logistics Viewpoints, the Electronic Logging

Devices (ELD) mandate, reduced fleet sizes, growing problems within the driver shortage

and merging of business and logistics strategies are responsible for this new view on the

TMS.

Supply chain partners have grown used to the idea of a TMS that gives them options and

supports the next generation of computers, explains Talking Points With Adrian

Gonzalez. However, predictive analytics and value-added services are being poured into

TMS models, and supply chain executives have taken notice. Unfortunately, industry-

standard TMS systems are simply not cutting it as more companies look for better ways

to improve operations and reduce costs.

It is true; the return on investment for implementing a TMS remained stronger than other

systems, but there are some companies that are not seeing returns as high as they would

prefer. Consequently, a new breed of TMS systems are emerging, TMS-as-a-Service

(TMSaaS). These new systems offer the benefits and returns of TMS systems without the

complexities of integration and abandonment of existing systems.

In addition, the term, TMS, doesn’t quite describe the capacities of today’s systems, so

while companies bought into them, explains Chris Jones of Logistics Viewpoints, they

still wanted something more fulfilling, including value-added services like auditing.

Ultimately, replacing electronic data exchanges (EDIs) with application program

interfaces (APIs) has created the possibilities found in TMSaaS.

The goal remains the same. Save more customers and business-to-business partners

money while providing better services than before, monitoring and improving customer

service along the way. Meanwhile, the cost of TMSaaS could be cheaper than purchasing

a TMS, so more companies are looking at short-term versus long-term returns.

Essentially, TMSaaS is poised to sweep the market and steal the proverbial thunder from

EDI-exclusive systems.

Autonomous Vehicles and Drone Delivery Became a Reality.

We expected Amazon to make progress with drone delivery, and the ideas of

autonomous vehicles (AVs) were promising, but guess what happened in 2016? The ideas

took off faster than anyone could have expected.

Google, Uber, Lyft, Tesla and Facebook started testing self-driving cars, and the push

was not limited to the these companies. Practically every tech giant is headed in the

driverless car and truck direction. In fact, Uber recently acquired Otto’s self-driving truck

startup, explains José Miguel Fernández Gómez of Advanced Fleet Management

Consulting.

With more than 75 percent of consumers accepting delivers from third-parties, including

third-party logistics providers (3PLs), the demand on the logistics industry for better self-

driving technology has been great. In the prediction, we imagined road-bound trains of

trucks carrying more products, reducing environmental pollution and optimizing fuel

efficiency, but in 2016, this concept got a name in Australia, “platooning.” According to

Charles Edwards, large-scale acceptance of driverless trucks is a ways off, but with more

companies applying for testing permits, time frames might be accelerating faster than

experts predict.

Another side of the coin is drones. In 2015, drones were new and exciting, but still out

of reach. But, the FAA lifted its restrictions on drones for commercial use in late August,

explains Supply Chain Digest. On December 7, 2016, Amazon officially launched Prime

Air, delivering products within 30 minutes of placing an order. These drones are

autonomous, meaning they do require a controller at the helm. This is the first private

trial of drone delivery by a major logistics operator, so clearly, predictions for use of AVs

and drones are coming true faster than expected.

Multiple Companies Sought to Replace the Deficit Left by Amazon Robotics.

Amazon’s purchase of Kiva Robots seemed like a dream come true in 2012, but it proved

to only help Amazon, leaving other logistics providers in the cold. The savings were

enormous, cutting the “click to ship” cycle by 75 percent or more, asserts Tom Green of

Robotics Business Review. But, the Kiva patent meant that the same designs and

software was no longer accessible. Thus, more inventors stepped up to the plate in 2016.

By some accounts, up to 20 robotics companies have launched to fill the void left by

Amazon’s purchase of Kiva, but robotics innovations are coming from manufacturers

themselves. Per David Edwards of Robotics and Automation News, BMW has even

designed and built its own type of logistics robot. So, the trend toward robotics in

logistics is far from over.

The Big Picture.

The first three logistics technology trends shot a bit too low for the innovations that were

made possible in 2016. We expected there to be some improvement, but across the

board, our predictions did not go far enough. 2016 saw the advent and authorization of

commercial use of drones, driverless cars, wide-scale creation of robots for the logistics

space and changes to how supply chain entities viewed the benefits of TMS systems.

Obviously, technology is moving faster than anticipated and the overall returns are more

promising than ever.

Bluetooth and Omni-Channel: How Did Our

Predictions Turn Out?

How technology in logistics grew throughout 2016 is not limited to the technology that

delivers products or enables better, faster picking processes. Over the last year, huge

strides were made in machine-to-machine connectivity, as foreseen by our predictions,

ranging from greater use of automated identification and data capture (AIDC) and

stronger resolve for more omni-channel solutions.

Many of these advancements were expected to bring strong investment into supply

chains, and they did just that. But, you need to understand where the investments

focused, how they relate to improving supply chains and why they are essential to omni-

channel solutions.

How Machines “Talk” Expanded.

Machines “talking” to one another is not a new concept. But, the amount of investment

being poured into machine-to-machine connectivity is surpassing expectations. By some

accounts, overall spending on connected logistics solutions globally surpassed $7 billion,

and more than $13 billion will be pumped into this supply chain powerhouse by 2020,

explains Andrew Meola of Business Insider. The true scope of investment into

connected devices can be seen in the following graph:

This increasing level of connectivity was driven by three critical types of sensors and

data processing, which include the following:

• RFID sensors found a place among large shipments. Radio frequency identification

(RFID) tags were expected to become commonplace among individual shipments in

2016. However, their use felt some restraint, and most companies used them to track

large-scale shipments, such as cargo containers, reports Claire Swedbery of the RFID

Journal. Additionally, these sensors were used to help monitor temperature changes and

ensure the best conditions possible for shipment.

• AIDC communications reduced workload, making tracking items and using analytics

easier than ever. Part of the problem with large-scale implementation of machine-to-

machine connected devices was data capture. In other words, someone had to physically

scan and enter information. However, AIDC tools are making analytics in the supply

chain an affordable reality. More importantly, they have eliminated chance for error from

manual-entry systems, explains Nicole Pontius of Business.com, so accuracy of data is

helping to produce superior results and recommendations.

• IoT-based tech spending saw a huge boost, becoming synonymous with improvements.

IoT-enabled devices grew even more in 2016 than anyone expected. However, these

devices are not simply monitoring and reporting on events; they are responding to events

in real time. When applied to the supply chain, this is the Industrial Internet of Things

(IIoT). It is eliminating bottlenecks in the supply chain, ensuring maintenance is kept up-

to-date and verifying the operability of all equipment, reports Jenipher Wang, Ph.D. of

the WIOMAX SmartIoT Blog.

Bluetooth Technologies Got a Real Seat at the Supply Chain Dinner Table.

Bluetooth technologies offered to solve a major concern inherent in the use of connected

devices, internet bandwidth and usage. Bluetooth technologies do not require an active

internet connection to function, so their feasibility seemed ideal when shipments are

traversing seas or remote areas. Yet, there would still need to be some sort of data capture

and processing, which is why this trend fell into alignment with other major technology

trends in logistics. Essentially, information capture did not have to rely on immediate

availability of the internet, but it still benefited from it when available.

GPS is great, but Bluetooth enables users to access practically any information necessary,

provided the right sensors are in place. Per Link Labs, Bluetooth-enabled devices can take

advantage of both WiFi signals and GPS-based information to produce a more accurate

report on a shipment. However, the widespread use of Bluetooth still relies on some sort of

hub, such as central communications network.

Now, Bluetooth might seem like the distant cousin to the IIoT, but it has the potential to

change how companies operate. Bluetooth devices are inherently low-energy, meaning they

would require less charging time, which reduces overhead for supply chain operations.

Meanwhile, communication distances of more than 200 feet are ideal for increasing visibility

in warehouse operations. This has led more companies to adopt Bluetooth as they look for

cost-effective, IoT-enabled solutions. It may not be the best when away from the “hub,”

reports Go Pigeon, but Bluetooth has clearly found its spot at the supply chain dinner table.

Customers Pushed For More Omni-Channel Solutions, and They Got It.

The past few years have seen a strong push for more omni-channel solutions, such as online

or in-store returns, purchasing or shipping. Powered by cloud-based technologies and

advanced automated protocol integration (API), consumers’ demand for omni-channel

solutions was stronger in 2016 than ever before. More interestingly, companies saw this

demand and answered the call.

Walmart launched a pick-up service, allowing customers to shop online and simply drive up

to get their orders. K-Mart launched an innovative app to give customers more options, and

business-to-business service got a bigger omni-channel share with Amazon Business.

Considering Amazon’s promise of next-day delivery, the opportunities through omni-channel

solutions are growing stronger. Now, consumers can return products to Amazon stores, and

recently, Amazon launched a no-employee grocery store, Amazon Go, in Seattle.

The power of shopping anywhere, anytime and without the hassle of cashiers and registers

was proven in 2016, and 2017 will likely be a year of greater innovation. Ultimately,

eCommerce best practices, such as striving for two-day shipping, are no longer relevant. For

supply chains to stay competitive, logistics operations must be willing to shoot for nothing

less than perfection with delivery times that are only rivaled by the speed of an internet

connection. Take a look at how Business Insider reported the standard beliefs in “fast

shipping.”

What Does It Mean For 2017?

The demand on logistics for better, stronger and faster operations will continue to grow in

2017. If 2016’s advancements are any indication, this year could be a year for the record-

books. Robotics are surging, IIoT-enabled devices and machine-to-machine connectivity are

ready to take on the brunt of the work, but the next wave of innovation could come from

anywhere.

It could be a new way of looking at logistics operations entirely, placing trust in a cloud-

based system that is built on software-as-a-service (SaaS) that could replace the standard

TMS model. Alternatively, 2017 could foreshadow a transition of power between logistics

companies and the autonomous controls being developed. Only time will tell, but technology

will continue to march forward and bring society into a new realization of what it means to

get what you want, when you want it and at the right cost.

9. Multi-Order eFulfillment Grows Critical.

Chapter Six

The State of the 2016 Transportation Management

Trends

Regulations, Big Data, and the Driver

Shortage: How Did Our Predictions Turn Out?

Predictions for transportation management in 2016 highlighted growing stress and

concern. Carriers and shippers had to focus on compliance with regulations, optimizing

existing and new resources and dealing with the driver shortage. These trends held true

throughout the year and led to innovative solutions, including greater emphasis on new

technologies and software applications. As a result, you need to understand where the

industry stands now compared to this time one year ago and why today’s facts might

indicate easing tensions in the industry are around the corner.

Trucking Regulations Exploded in 2016.

There were many trucking regulations set to come up for discussion and possible passage

by Congress in 2016, but the actual number supersedes even the modest of predictions.

The electronic logging devices (ELD) mandate, which some thought might be repealed or

delayed further, was only reiterated with a set compliance date of December 18, 2017,

reports the Federal Motor Carrier Safety Administration (FMCSA). Four-hour break rules

were narrowed to only occur between 1 a.m. and 5 a.m.

A drug and alcohol testing clearinghouse, reports JOC.com, also gained attention in 2016,

further increasing the driver shortage. Obviously, supply chain entities providing less-

than-truckload and other modes of transportation do not want drivers under the

influence of drugs or alcohol. But, think about the impact that a failed alcohol

clearinghouse test could mean.

Driver A has a drink on Monday, a day he is not scheduled to drive. However, testing later

that day shows a positive result for alcohol. Although he is within his legal right to have a

drink, it should not have an impact his ability to drive while sober.

Some drivers may have problems with alcohol, but so long as they are not under the

influence, any law requiring testing for substances will reduce the number of available

drivers. Additionally, the databank in the clearinghouse might imply that drivers with a

history of positive test results could lose future driving opportunities when carriers check the

drivers’ information against records.

The outlook for 2017 with respect to this mandate is not likely to change either. The

mandate for the clearing house and other critical trucking regulations were listed in the

Moving Ahead for Progress in the 21st Century Act in 2012. So, its legislative nature is likely

to remain in effect. Moreover, testing for sleep apnea and other sleep-deprived disorders can

soon become reality for more drivers, further choking capacity in the industry. Yet, there are

other regulations that went into effect in 2016, ranging from training requirements to the

unified registration system, which reflect growing pressure on the industry as well.

Big Data Became Essential to Transportation Management.

Big data analysis and the transportation management system (TMS) were set to be paragons

of improvement and perfection in 2016. However, data analytics have given carriers a chance

to look at how dimensional pricing models and route consolidation can be optimized to

improve efficiency and the flow of products. The following graphic shows the capabilities

made possible through big data:

Now, the graphic seems omnipotent, but it highlights how big data can be leveraged to

improve transportation management. According to Margaret Tedlie, big data is transforming

how carriers and shippers operate on a fundamental level. They are better able to adjust

pricing models to reflect consumers’ demands, including less packaging for smaller

shipments, a key characteristic of dimensional pricing, and it enables record-low freight

shipping.

With respect to payment auditing, shippers have realized the potential savings of simple

auditing. However, auditing is a task that few carriers or shippers really want to deal with. It

takes time, resources and may not pay off. But, third-party logistics providers (3PLs) that

offer auditing as a value-added service are reaping the rewards, up to 5-percent reductions in

overall freight shipping costs, reports John D. Schulz of Logistics Management. This is due

to having dedicated professionals and advanced computer systems double-check billing.

Essentially, this leads to profits and cost savings for both shippers and 3PLs.

The benefits of auditing also go beyond just preventing double billing, explains Inbound

Logistics. It allows shippers to have better insight into a shipment’s status before, during and

after transit. Ultimately, this translates to better visibility and customer satisfaction, which

increases the likelihood of repeat orders and business growth.

The Trucking Driver Shortage Grew Worse…Maybe.

So, the driver shortage is bad. By some accounts, the driver shortage has reached 30,000,

explains Smart Trucking. Within the next few years, that estimate could easily be more than

200,000. Meanwhile, drivers’ complaints continue. They demand higher pay. They want

respect and privacy. They want to take advantage of new technology within reason, explains

Wes Mayes of Omnitracks.

Ironically, these demands are almost overshadowed by mounting regulations and

requirements. Some of the new regulations are directly at odds with privacy and respect.

After all, who wants their personal lives, including having a drink or two on the weekends,

brought into the workplace? To keep up with demand predictions by 2027, more than 97,000

new drivers will need to enter the industry annually.

This does not even consider the new limitations being placed on drivers, including the ELD

mandate. Part of the luster in driving a truck is the ability to control one’s hours, in effect

controlling one’s schedule and sense of career. But, the new mandates are stifling that

concept, creating more stress on drivers to find better paying and more fulfilling

opportunities.

The outlook is not completely barren. Autonomous driven trucks, “self-driving trucks,” were

tested for the first time in September, reports Jeff Champa of Omnitracs, and enhanced

TMS systems will continue to reduce demand. However, the recent holiday season indicates

shopping is on the rise, and no one is forecasting recession-like attitudes in 2017. Meanwhile,

drone delivery is emerging with Prime Air, and the shortage may not be as gloom-filled as

some believe.

The Big Picture.

The pressure is on carriers and shippers to find ways to enhance capacity and address the

driver shortage, and more companies are doing just that. From implementing value-added

3PL partnerships to considering driverless alternatives, 2016 closed with a message of hope

amidst grim tales from many.

IoT and Collaboration: How Did Our

Predictions Turn Out?

Transportation management evolved throughout 2016. Our predictions focused on using

new technologies and best practices to correct inefficiencies and problems. But, the true

scope of change and focus went a bit further than expected. Let’s look at how supply

chain entities have tapped the untold resources of the Internet of Things (IoT), where

processes stand with the FAST Act and why collaboration became king.

The IoT Became a Core Concept in Transportation Management.

Companies spent more than $7 billion on IoT-based technologies. This aligns estimated

spending over the next three years, as shown in this graphic in Business Insider.

Increasing urban mobility and accessibility of shipment routes are driving forces of IoT use

in transportation management. Radio frequency identification, GPS, acoustic sensors, near-

field communications and more are combining to give transporters more information than

ever about the status of a given shipment. This translates into greater profits, more insights

into where things are going wrong and stronger visibility. In addition, customer service levels

have improved as companies have been able to boost operational times to nearly 100 percent

around the globe, reports Jenipher Wang, Ph.D. of the WIOMAX SmartIoT Blog.

Most of the IoT’s benefits derive from the analysis and use of big data. Per Cyzerg Logistics

Technology, the amount of available data doubles every two years. This graphic shows how

extensive the “mountain of information” will be in the next few years.

Clearly, the power of the IoT is only going to increase.

Implementing the FAST Act Enabled More Shipments and Fewer Delays.

Passage and implementation of the Fixing America’s Surface Transportation Act (FAST Act)

was supposed to give America’s shippers and carriers an opportunity to boost revenue and

improve capacity through federal funding. However, 2016 saw a slight diversion from this

belief. According to Representative Sam Graves, Chairman of the Subcommittee on

highways in the House, the FAST Act does not provide enough funding to properly repair

highways within the next five years. Consequently, Graves suggests creating more toll roads,

private investor-funded highways and imposing a fee for the number of miles traveled per

vehicle.

Though each of these options is possible, it would mean adding new burdens to low- and

middle-income families. Paired with the buzz over a Trump administration and his promises

to cut taxes and cost-of-living, any of these solutions will likely be met with turmoil and

hatred. So, supply chain entities may need to start thinking about the possibility of a

bottleneck in the FAST Act funding. In other words, holding fundraisers or even raising

community awareness might help to spur additional funding for improving America’s

highways.

There are other solutions too. According to Supply Chain 24/7, the U.S. Department of

Transportation (DOT) could continue providing and managing the Highway Trust Fund,

coordinate freight advisory committees with state freight planners or request extensions or

additional sources of funding under the FAST Act. Ultimately, U.S. roads make up more than

4 million miles of roadways, reports PLS Logistics, and just maintaining a project of that

scale will continue to require funding long after the FAST Act expires.

Collaboration and Inter-Management Brought Profits Across the Industry.

A disruption in one shipper’s operations can cause a domino-effect in the industry.

Transportation management can avoid these issues by focusing on collaboration, which is

why collaboration became the new normal in 2016.

Collaboration leads to optimization of resources across the industry. As explained by Artur

Zgoda of Talking Logistics, common processes, decisions and time horizons encourage

companies to work together for common goals. Although this might seem like “helping the

enemy,” the benefits help each company independently.

For example, company A outsources auditing and IoT analysis to third-party logistics

provider (3PL) A. Both companies get a profit share of something they would not have

otherwise could achieve. Essentially, companies can do more when working together. The

following graphic, created by Lanetix, further explains how collaboration plays into

procurement, integration and subsequent activities in transportation management.

Meanwhile, collaboration leads to better visibility as supply chain partners work to double-

check one another’s work. This results in better outcomes for the companies, collaborating

entities and end-users. According to Rich Katz of Talking Logistics, increasing visibility in a

company leads to more than $300 in savings per shipment. So, collaboration will continue to

dominate 2017.

The Big Picture.

Supply chain entities will be looking for new ways to cut costs and boost production in 2017.

However, the fundamentals of cost savings and transportation management identified in

2016 will continue to be driving forces this year. Instead of looking for the next big thing,

companies should double-down on their efforts to take full advantage of collaboration, new

funding sources and capabilities within the IoT. Ultimately, these few decisions could lead to

universal improvements in the industry, including fixing some of its greatest problems, such

as the growing driver shortage.

9. Multi-Order eFulfillment Grows Critical.Conclusion

Now you have seen where the trends we wrote about ended up by reading this “State of ”

ebook. Now, as you have read this e-book, ask yourself how you may go back to your

company and apply these trends in your manufacturing company or supply chain.

Make sure you tune into our blog over the coming weeks for the 2017 trends in

manufacturing, supply chain, logistics, transportation management, and freight.

About Cerasis

Cerasis, a transportation management company founded in 1997, has always believed in

the use of technology to improve process to not only reduce cost but to stay strategic,

competitive, and have the ability to use data from technology to continually improve. In

fact, one of our core values is just that: continuous improvement of our people process

and technology.

We built our Cerasis Rater TMS in 1998, launching it as web-based before Google was

even a business. Our (now Army, as our Development Manager, Jerel Byrd calls them)

development team are always continually improving the Cerasis TMS, as we know it is

vital to have a system that is not only innovative, but sound, secure, and enables those in

transportation to do their job all while doing it cost effectively.

Are you using a TMS to help manage your transportation department as a shipper? What

are you seeing in the space?

In addition to our transportation management system (TMS), the Cerasis Rater, when

you are a Cerasis shipper, you gain access to the following managed services:

• Transportation Accounting to include: Invoice auditing, one weekly invoice no

matter how many shipments, and freight payment services

• Comprehensive end to end freight claims management: if your freight is damaged or

lost, we will handle the freight claim on your behalf

• Carrier Relations: We will negotiate rates on your behalf and you get better rates

thanks to our buying power

• Inbound Freight Management

• Reverse Logistics

• Robust Analytics and Reports

• Small Package/Parcel Auditing

• Small Package/Parcel Contract Negotiation

• Warehousing

• International

• & More!

Want to learn more? Visit http://cerasis.com

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