Gartner predicts logistics trends

by Array

SYDNEY, Australia: Gartner has tuned up its crystal ball and used it to to tell the future of logistics for the next four years.

According to the research firm, environmental reporting will become an increasingly important requirement for doing business. In a paper, “Predicts 2012: Global Logistics”, it predicts by 2016, half of Global 1000 logistics organizations will be required to report verified emissions and environmental data.

This mandatory reporting will be caused by a number of factors, but primarily by increasing government regulations around the world, according to Dwight Klappich, research vice-president at Gartner.

“Governments are set to continue to enact environmental legislation that has a profound impact on logistics operations. In Asia Pacific, Australia will soon introduce a carbon tax; China is moving to pilot an emissions trading scheme; and New Zealand and India have schemes in place. Over time, regulations will become increasingly tighter.”

But it won’t just be governments driving logistics companies to change. Internal pressures will be another driving force. Gartner predicts that “by 2016, 20 percent of supply chain management organizations will adopt a supply chain execution convergence application strategy.”

Through a survey, the company has found that 35 percent of businesses today say they cannot synchronize their end-to-end business processes. This inability (which is caused by an assortment of factors including stand-alone software systems, business and application silos, and corporate restructuring, among others) will become more and more limiting to businesses as a whole, forcing them to look at the idea of convergence—of bringing together processes and information under a single, cross-organizational platform, allowing the businesses to “model, orchestrate and synchronize end-to-end logistics processes”.

One aspect of business that is often overlooked is risk management and Gartner sees that trend continuing in the near future. It predicts that by “2016 less than 10 percent of logistics operations will have a chief compliance and risk management officer.”

Not having people fill those critical roles hurts supply chain management companies. The report finds that currently “only 14 percent of companies are positioned to effectively exploit risk, and few, if any, have yet seen fit to elevate compliance and risk management to an executive-level position in the supply chain management (SCM) organization. While compliance, risk management and security are all issues SCM organizations deal with today, few have formalised even one of these. While government mandates have an increasing impact on SCM organizations, responsibility for understanding and managing these is scattered across their business.”

The report also predicts that future international trade patterns will force logistics operations to change, noting “by 2016 slower global trade growth will force shippers to adjust from proliferation to optimization of international flows”. Gartner expects logistics firms to develop more global approaches to managing their businesses and as that happens there will be an increased focus on network and inventory optimization, warehouse and inventory management systems, and transportation management systems.