The U.S. Roadmap for Material Handling & Logistics: Why 2025 matters today
In today’s business climate, uncertainty is public enemy No. 1. In light of the rapid change in consumer demands, the exponential growth of technology and the demographic shifts in the workforce, predictions of any kind are foggy at best. Given that most wonder what the next six months will bring, what value could there be in guessing what 2025 will look like?
Yet, that was the challenge accepted by co-editors of the U.S. Roadmap for Material Handling & Logistics. Crafting the roadmap, which was released in a final version on January 15, 2014, took 18 months. The document was an attempt by “the industry”—meaning everyone from end users to suppliers to educators to NGOs and government—to look out 10 to 15 years into the future and ask, “How should we be preparing?” While individual companies are worried about quarterly results or this month’s sales figures, they often struggle to sit back and reflect on where things are going. The roadmap is an opportunity for everyone to ask the big questions.
Bill Ferrell, a professor in Clemson University’s industrial engineering department and a co-editor of the roadmap, comes from an operations background and admits he was not inclined or particularly adept at visualizing the future. But after listening to the contributions of the more than 100 industry thought leaders who were tapped for the report, Ferrell says he’s convinced it will be valuable to all stakeholders in materials handling and logistics.
“I think this is a believable document. It’s not Star Wars stuff,” Ferrell says. “If you like to save money, if you are environmentally minded, if you like doing things more efficiently and effectively, if you care about the quality of life for your employees, there’s something in there for you. I understand operations folks need to do their jobs, but don’t dismiss the roadmap out of hand. There are some dots that are reasonably easy to connect.”
Ferrell was keen to emphasize the opportunities outlined in the document, as opposed to the often overwhelming scope of the challenges. In both cases, the primarily forward-looking document often addresses very immediate concerns.
“It’s one thing to predict what the industry might look like in 2025, but the roadmap is very much a good way to improve the now,” says Gary Forger, senior vice president of professional development for MHI and a co-editor of the roadmap. “Change is upon us. The best practices we’ll need going forward are being proven and too many are woefully behind.”
Businesses are already looking for ways to tighten up the connections between the store shelf (or online shopping cart) and the production line in an effort to successfully negotiate any potholes on the road ahead. As a result, manufacturing, materials handling and transportation are becoming a single process as opposed to discrete processes, says Forger. “The end-to-end approach requires us to think differently,” he says. “In the United States, what will we need in the next decade to support this evolution?”
Kevin Gue, the roadmap editor-in-chief and the Tim Cook associate professor of industrial engineering at Auburn University, says he shares his co-editors’ (Ferrell, Forger and Alan Erera from Georgia Tech and Elif Akcali from Univerity of Florida) simple hope for the document’s impact on readers: “I hope they pick up the phone and start talking with colleagues and partners in ways they might not have before,” he says. “I hope it sparks a discussion.”
To develop the roadmap, input was first gathered from more than 100 thought leaders, including materials handling and logistics practitioners, suppliers, academia, associations and government. These participants attended four roundtable events held April through June 2013. Attendees contributed their thoughts regarding the capabilities that the industry needs to develop between now and 2025.
“This is the first time that anyone is aware of that representatives from all stakeholder groups have gotten together to talk about needs for the future,” Gue says. “Personally, I think it could be an important project if it leads to some collaborative solutions to big problems.”
In the workshops, Ferrell says the prompting question for participants was as simple as “what do you see now and in the future?” Despite the variety of perspectives and interests in each room, 10 common themes emerged.
“It might have been three themes or 30,” Ferrell says. “It was completely open-ended and, as organizers, we did not steer it toward a ‘Top 10’ format at all. I thought there would be more unique aspects between the four cities, but there were very few distinctions. You would be surprised at the number of things that were universal.”
Within the 10 mega-trends, there are more than 60 capabilities that participants feel will be necessary either to capitalize on opportunities or solve pressing problems between now and 2025. Each trend offers the potential to have a tremendous influence on the industry in the future including:
1) The changing workforce
Of all the conversation topics from all the workshops, the issue of the changing workforce sparked the most passionate response. “Coming into the roadmap project, I thought participants would be talking about future technologies and whatnot, and they only wanted to talk about people,” says Gue. “It’s a current problem that’s only going to get worse.”
Participants are well aware of the immediate challenges: a rapidly changing workforce that faces inadequately defined career paths, the industry’s lack of appeal to several potential labor pools, an undersized and poorly connected training/education network and inadequate skills in the existing and entering workforce. Going forward, the roadmap suggests industry, academia and government join in a renewed effort to increase workforce demographics including women, workers under 35, people with disabilities and veterans.
The roadmap suggests that by 2025, active, ongoing regional and national recruitment strategies for finding employees should be standard practice across the industry.
2) The growth of e-commerce
The report cites Forrester Research, which estimates online retail will post a 9% compound annual growth rate (CAGR) until 2017, from $231 billion in 2012 to $370 billion in 2013. Between the increased use of mobile devices and retailers’ investments in omni-channel capabilities, the roadmap suggests “demand and supply are working together to increase the size of the market.”
By 2025, the report suggests, all shipments should be trackable in real time from the instant an order is placed to the instant of delivery, both in transit and in facilities, at the level of individual items and independent of carrier or transportation mode. In addition, typical order-to-ship processing times in e-commerce distribution should be sufficient to support same-day delivery of in-stock items.
3) Relentless competition
According to the roadmap, competition occurs primarily along two dimensions: price and service. As is already the case, those who can offer better, faster and cheaper will lead the way in years to come.
That said, many of the opportunities in the roadmap call for a level of collaboration among competitive businesses that seems to fly in the face of convention. “Historically, I’d be willing to collaborate in a way that benefits a competitor as long as it benefits me more,” says Gue. “If I’m going to let you use the back half of my truck so we can reduce trucks, miles traveled and costs, that’s going to take a lot of trust. I was surprised to find that participants in the workshops were very willing to assume those barriers could be overcome and that that sort of collaboration was possible.
And, the roadmap offers that by 2025, a significant portion of shippers should be sharing transportation assets as a standard business practice.
4) Mass personalization
As opposed to supplying standard products cheaply and customized products at a premium, the roadmap says the Holy Grail of retailing is the ability to deliver custom products at mass-production prices. What’s more, customers will increasingly expect those products to reach them when and where they want.
And by 2025, to keep up, the materials handling and logistics industry must be capable of supporting a highly diverse set of order and distribution channels and delivery methods.
Already, more than 50% of the world’s population lives in densely populated urban areas. To serve a concentrated demand, companies are challenged to provide a wider array of products in smaller quantities and with a higher percentage of home delivery—all amid high landed costs for last-mile distribution.
To tackle that challenge by 2025, the 15 largest U.S. cities should have at least one open shared self-service parcel delivery kiosk network available for use by multiple retailers, according to the roadmap. And, most U.S. consumers should have the capability to specify personalized delivery point information to multiple retailers, including deliveries to their real-time current location.
6) Mobile and wearable computing
Smart phones enable a consumer to engage in commerce any time, anywhere. They also serve as a positioning system for tracking a user’s location, enabling dynamic delivery of physical products. And just as consumers take advantage of wearable technology like Google Glass, warehousing and logistics operations will capitalize on the same ability to share data in real time.
The roadmap suggests that by 2025, control and execution systems featuring wearable computing devices should be developed and widely adopted in transportation, warehousing and manufacturing.
7) Robotics and automation
Robots are continuing their migration from manufacturing to materials handling and logistics applications, just as automatic guided vehicles bring enhanced mobility to automation. “Autonomous control and distributed intelligence,” as the roadmap says, could one day extend to driverless equipment in the warehouse and over the road.
“Between the first draft of the roadmap and the final document, Amazon, just one company, announced drones. Now they’ve announced anticipatory logistics,” says Gue. “It’s possible some of the things we thought about for 2025 could become real in 2015. I’ve gained a whole new appreciation for the rate of change right now.”
By 2025, the roadmap points to affordable robotic order picking systems being available that support high-throughput, single-piece picking in both part-to-picker and picker-to-part configurations. And, economical, high-speed automation to load and unload trucks should be available, both at the carton and pallet level.
8) Sensors and the Internet of Things
With technologies like radio frequency identification (RFID), physical objects can be made to communicate with digital systems. This capability could provide detailed tracking or maintenance information, while enabling automation to make decisions about the movement of physical goods without human intervention. As sensor technology grows more affordable and capable, the lines between the physical and digital world will blur, optimizing efficiency and speed for a variety of processes.
Taking it one step further, the physical movement of goods could one day more closely resemble the transmission of data on the Internet. Dimensionally and functionally standardized, uniquely tagged handling units could be managed by seamless digital interfaces across all systems, the roadmap suggests. “The intent is for load breaking, transhipment, pooling and modal transfer to become negligible aspects of time and costs,” the text says.
The roadmap offers that by 2025, major intermodal hubs throughout the United States should have the ability to handle standardized containers at the unit-load and carton level, plus load/unload integration with freight containers. And, it further suggests that universally accepted data formats for all types of sensors should be established.
9) Big Data and predictive analytics
The availability of data and the computing power to make sense of it has changed the way companies make decisions in logistics and other operations. Companies now prize the ability to predict and prepare for everything from the holiday season to the lunch rush. But this is not about simply projecting a 10% increase over the same period last year. A trending topic on social media, for instance, could impact and inform the demand for fashion items.
To handle this information, the roadmap offers that by 2025, most applications accessed by logistics and supply chain professionals should be cloud based and that vehicle routing and scheduling should use real-time traffic feeds as well as support dynamic rerouting.
Sustainability is about more than just recycling programs and solar panels. The concept aims to help businesses become “lean and agile enough to prosper in turbulent times,” the roadmap offers. Businesses are encouraged to leave the world a better place than they found it, both for wildlife and shareholders.
The roadmap offers many capabilities with regard to sustainability. By 2025, the industry should have developed standard, accepted metrics for assessing environmental impact; consumers should have a better understanding of the environmental consequences of their choices; energy usage by transportation and material handling technologies should continue to require less energy, or be powered by alternative forms of energy; and LEED-certifiable manufacturing and distribution facilities should include scoring for materials handling equipment.
The origin and intent of the roadmap
The U.S. Roadmap for Material Handling & Logistics was commissioned to identify the current challenges and necessary future capabilities of the industry. It projects out to 2025 how the industry will need to adapt its technology, practices and workforce to keep pace with the demands of change.
The report compiles what more than 100 industry thought leaders had to say about the future of materials handling and logistics at four public workshops conducted in the summer of 2013 in Atlanta, Washington, D.C., Los Angeles and Chicago. Participants at the workshops included end-users, suppliers of equipment and software, and members of academia, government, associations and media.
Participants spent approximately eight hours over two days in facilitated discussions with groups of six to eight people. Each workshop resulted in a compiled summary, which a team of writers used to create the basic structure of the roadmap. Two successive drafts were presented to the public for input, and the final report was released on January 15.
The report, while supported by administrative and financial contributions from MHI, is a collaborative industry effort.
Roadmap association partners
Center for Excellence in Logistics and Distribution (CELDi)
College Industry Council on Material Handling Education (CICMHE)
Material Handling Equipment Distributors Association (MHEDA)
Warehousing Education and Research Council (WERC)