Yesterday, we reviewed the seven trends for 2012 that World Trade identified for the logistics sector in a recent article and asked if they had weight. Today, we answer that question by presenting the reality (that SI perceives) with respect to these trends.

• Buyers are expecting 3PLs to be the new Jack-of-all-Trades.
  While some of the larger organizations are adapting to their clients’ requests, this won’t hold true in all cases. Only where the requests are for services similar to what the 3PL is already offering and where the 3PL has the necessary expertise will the 3PL be able to successfully offer the service for the long term. As a result, some 3PLs will falter (and maybe even fail) and, ultimately, retrench on their strengths and smarter buyers will seek solutions from the right partners. (Going to the supplier to handle packaging, a best-of-breed software provider for a visibility solution, etc.) The 3PL as the Jack-of-all-Trades trend will be short-lived.
• Mobility is King, the Cloud is irrelevant.
  Call it ASP, SaaS, Cloud, or Web 3.0 — smart buyers don’t care. They just want a solution that works on the go. They’ll settle for what works, and won’t be satisfied with who has the most buzzwords in their product description. That being said, buyers still on the learning curve may fall for “cloud” in the short term, but if they don’t get results, the services provider will wish they were up in the clouds far from the angry buyers’ reach!
• Transportation is going back to intermodal.
  The trucking phenomenon is over. The value proposition of intermodal rail can no longer be ignored.
• Capacity is climbing up the issues list — fast!
  Regulations and lack-of-drivers are severely limiting available capacity, air capacity is also limited, and low-cost ocean routes are not going to last forever. As a result, smart buyers always have an eye on capacity.
• The rate of system/data integration is going to increase.
  As visibility is a necessity in today’s supply chain. Execution integration will also improve as lean and JIT continues to be applied to the logistics chain. But business integration will take time. Trust, and undisputable business cases, will have to lead the way.
• Near-Sourcing will happen.
  The value proposition is back, and, like the value proposition of intermodal transportation, it can’t be ignored. It will take time, as you can’t switch suppliers, or end multi-year contracts, over night, but it will happen.
• Sustainability will continue to lag.
  The reality is that at least 8, if not 9, out of 10 companies only tackle sustainability when forced to do so by regulation or pressured by customers. Very few tackle it for the long-term benefits it can provide an organization because, with the relentless Wall-Street focus on profit quarter-after-quarter, an average organization does not want to bear the up-front cost, no matter how great the potential year-over-year reward in the long-term.

And, most importantly, you’re going to see the following trend start to take shape later this year:

• A renewed investment in logistics/inventory management/optimization software
  Leading, and better-than-average, organizations are not going to be content to let their 3PLs manage logistics after the fact, when most of the cost has already been locked in, but use advanced software to make sourcing decisions that, when sensible, optimize logistics and inventory costs up-front. Like all sourcing technology trends, it may take a year to pick up steam, but it’s going to happen. Too much money is on the line.

That’s what the doctor thinks. Any divergent opinions?

Earlier this year, World Trade identified the following seven trends for 2012. The question is, how many are taking shape and, of the ones taking shape, how many are relevant for your supply chain. And are any missing? Let’s start by examining the seven trends WT identified.

• 3PLs are the new Jack-of-all-Trades
  Apparently, demand for 3PLs to play a role in capacity strategies, to provide technologies that optimize planning and enable visibility in increasingly complex global supply chains, and to increase operational agility is increasing. In addition, some shippers are seeking to consolidate their 3PL bases to relieve an administrative burden of managing multiple providers while leveraging a larger, indirect spend pool. And, some 3PLs are offering more value-added services such as contract and custom packaging, return disposal, and even individual store deliveries.
• Mobility and the Cloud
  The use of M2M technology is increasing, and more software providers are certifying the use of their solutions for off-the-shelf consumer and ruggedized devices. And some are predicting that 2012 will be a big year for “cloud supply chain”. Supply chain technology vendors will seek ways to use the cloud to facilitate application integration and data visibility, and work with material handling equipment manufacturers to bring MHE automation closer to real world application.
• Transportation Modes
  There will be more adoption of intermodal transport. This is because trucking faces predicted driver shortages, potential highway user fees, and changing governmental regulations — which is making intermodal rail an increasingly compelling proposition. As a result, new intermodal facilities are being built in several U.S. locations. This option can reduce fuel costs, increase delivery speed, and decrease reliance on OTR (Over-the-Road) trucking.
• Trucking & Capacity Issues
  New compliance mandates for trucking, including CSA (Carrier Safety Administration) and HOS (Hours of Service) legislation, will further increase capacity challenges in 2012.
• Partner Integration
  Disparate supply chain players will come together to form partnerships and work together to benefit the entire supply chain. This is because smarter commerce requires seamless integration with all partners in the end-to-end supply chain, particularly in the complex global supply chains of today. Furthermore, the expectation is that this partnership will span the business, execution, and technology layers of the supply chain.
• Near-Sourcing
  There is an expectation that near-sourcing will likely increase, helped by unstable oil prices, rising labor costs in China (and India), the cross-border trucking program with Mexico, and NAFTA. Plus, Central and South America (and Brazil in particular), which are often on similar time-zones, are also viable sourcing options in many industries, and reachable through land-based inter-modal transport.
• Sustainability
  According to the article, Sustainability will continue to be a focus for shippers and carriers alike, as long as there is a business benefit.

Not a bad list of trends, and some good arguments for. But what is the reality (that SI perceives)? Stay Tuned for Part II!