The mega trends offering the best opportunities for supply chains

Each year, Frost & Sullivan tracks what it calls mega trends – key technologies or changes in society that will impact economies moving forward.

The firm this year tracked nine mega trends that it said were accelerated by the COVID-19 pandemic. These include trends like the “cognitive era,” which includes warehouse automation, and the future of retail, which is primarily the impact of e-commerce. It also includes the future of mobility and the drone delivery market.

In each case, Frost estimates the pandemic accelerated the compound annual growth rate (CAGR) of the trend. In the case of warehouse automation, as much as 6% to 17% CAGR by 2024, and 5.1% to 21% CAGR for drones. Other mega trends (connectivity and convergence; smart is the new green; new business models; health, wellness and well-being; and innovating to zero) are now forecast for growth rates of between 3% and 10%.

What does this mean for businesses, especially those in the supply chain? In a word: opportunity.

Frost said its mega trends are leading to a convergence of five areas of growth opportunity, and four of them relate to businesses in the supply chain.

The five growth opportunities are:

1. Digital point-of-care testing
2. Robotics-as-a-Service
3. Return Logistics-as-a-Service
4. Zero-waste manufacturing
5. Autonomous private shuttles and pods

Digital point-of-care testing will speed up clinical decision-making, the firm said, powered by artificial intelligence and machine learning that will alter the way results are gathered and analyzed through telehealth care.

The remaining growth opportunities all offer hope for supply chain businesses.

Robotics-as-a-Service (RaaS)

RaaS is offering logistics organizations and manufacturers solutions to labor market challenges as well as the ability to scale operations as demand dictates.

“As companies struggle to keep up with demand amid the pandemic, they will increasingly use RaaS to enhance productivity. Subscription services like RaaS can be implemented in a test-driven approach, reducing robot purchasing costs,” Frost wrote.

However, the firm noted that the high cost of robotics and the constant maintenance of sensors, hardware, software, networks and security/safety systems mean most organizations do not have the ability or resources to manage complex situations. RaaS, where robotic solutions are paid for on a monthly subscription basis, offers some hope, though.

Frost estimates the growth opportunity for RaaS is between $40 billion and $100 billion over the next five years.

“RaaS providers can utilize scalable, cloud-based computing platforms to provide a wide computational power range. By capturing and analyzing data gathered by robots in their environment, these platforms can give valuable real-time insights into business operations. Customers view this cloud-based approach more favorably than purchasing hardware that they would need to own and maintain,” Frost wrote.

Return Logistics-as-a-Service (RLaaS)

The rise of e-commerce has complicated supply chains. With some estimates as high as a 30% return rate, trucking capacity and warehouse operations are being flooded with merchandise that must be inspected and either returned to stock or removed from inventory. And delays in doing so, or a lack of visibility into what merchandise is in which warehouse, can lead to missed sales opportunities.

“The pandemic has amplified return logistics’ challenges within supply chains. Waste management has become a major problem as e-commerce became one of the dominant purchasing channels during COVID-19,” Frost wrote. “As more companies move to remote management, some return logistics’ chain elements—including return management, remanufacturing/refurbishment/recycling processes and logistics, and waste reduction—have become inherently more complex.”

Frost said the need to solve this problem is bringing return logistics to the fore like never before.

“Companies must enable frictionless, end-to-end return logistics experiences for retailers, suppliers, and backup suppliers through the value chain by solving crucial challenges. These include streamlining complexity, reducing associated waste and costs, increasing process transparency, and reducing associated labor needs,” it said.

The business opportunity for RLaaS is estimated at between $50 billion and $100 billion over the next five years.

Zero-waste manufacturing

With a focus on sustainability and environmental, society and governance (ESG) goals at many companies, the push to convert the manufacturing sector toward zero-waste strategies is ramping up.

Technologies such as carbon capture, machine learning for quality inspections, configurable machinery, worker-of-the-future technologies, predictive wastage, and digital twins are all areas where manufacturers might find opportunities to reduce waste.

“The manufacturing sector is striving to drive higher profit margins by enhancing existing processes to reduce the gap between planned and actual performance,” Frost said. “Achieving zero-waste manufacturing would require fully integrating and aligning essential functions such as planning and scheduling with closed-loop automation systems such as advanced process control and dynamic optimization.”

With a growth opportunity of at least $40 billion and as much as $100 billion over the next five years, Frost advised companies to incorporate AI into existing operating and information technology to help drive improved results and maximize profits.

Autonomous private shuttles and pods

The last of the five growth opportunities identified by Frost & Sullivan features the increased use of autonomous private shuttles and pods.

This area focuses on a couple of areas, including ride-sharing and last-mile connectivity. Frost said the trend to a remote workforce seen during the COVID-19 pandemic has increased demand for transportation model flexibility.

With a growth opportunity of between $100 billion and $200 billion in the next five years, Frost sees opportunity for automakers and technology providers working in this space.

“Vehicle manufacturers must consider adding new health, wellness, and well-being features that convert autonomous cars into health centers of the future,” the firm said.

Keys to success

Regardless of the growth area a business is in, Frost identified five keys to success, including dynamic and effective leadership, setting a clear digital and omnichannel strategy, strengthening internal platforms against cyberattacks, business model innovation, and building supply chain resilience.

“COVID-19 was a wake-up call for several companies that had the majority of their supply chain set up in China, leading to inventory shortages, product delays, and logistics complexities. Manufacturing automation, vendor diversification, and warehousing distribution will play a key role in building a resilient supply chain in a post-pandemic world,” Frost wrote.

SC
MR