Three forces reshaping the future of logistics

It is something of a trope to name our times “unprecedented”. And yet, here we are. Shifting demographics, advances in logistics technology, and the Covid-19 pandemic have converged to alter the way we work, arguably at a rate never before seen in the logistics industry.

Many jobs have already been changed by some combination of these three forces. And there’s more to come. Some jobs will require the use of new tools, others will no longer be needed, and many new jobs will be created. This is not an idle forecast of a distant logistics of the future. As of right now, labor shortages are so severe in some supply chains that they regularly make front-page news.

Remember a time before the internet? Well, in most offices and warehouses very soon the answer will typically be a ‘no’. Digital natives, for whom work and the internet have always gone hand-in-hand, will become the largest demographic in the workforce.

That is just one of the shifts supply chain organizations will be managing as we see a “changing of the guard” in the coming decade. As that sizable baby boomer generation slowly but surely goes into retirement, we will by vying for new talent from generations with whole new mindsets.

For our industry, that makes for dual stress points. At one end, concerns over the mass exodus and the consequent loss of institutional knowledge and experience. At the other, the pressing – and highly competitive – drive to attract new talent to fill vacant and changing positions and finding ways to retain them. And all of this while simultaneously handling the industry-wide labor shortages impacting supply chains.

This transformation of the workforce also heralds a values shift. Generational differences in attitudes around the concept and reality of work – skills, working environments, pay and rewards – must be factored into our strategies if we are serious about future-proofing the logistics industry.

Millennials and Gen Z-ers renew and challenge our workplaces in equal measure. They are amplifying pressure on society to meet new expectations around sustainability, diversity & inclusion, employee well-being, and tech-forward environments. The future of logistics and supply chain management demands that we rise to that exciting and worthwhile challenge. 

Where there is work, there is technology. And that brings us to the second transformational force reshaping the future of logistics: advances in logistics technology. Rapid improvements in digitalization, automation, and artificial intelligence (AI) are already having a significant impact on jobs, workplaces, and entire sectors around the world. Modern supply chains are unthinkable without technology. It is estimated that 29% of all current workplace tasks are performed by machines. That figure is expected to grow to 52% by 2025.

Our industry has already embraced the major breakthroughs in logistics technology of recent years involving sensors, batteries, wireless communication, data storage, computing power, and material sourcing. Augmenting and automating technologies, once infeasible or cost-prohibitive, are now unlocked and operational in today’s supply chains.

Operational and administrative workers are seeing their tasks transformed and new roles emerging. That is not to say that the logistics of the future is going to be fully automated. More realistic is a gradual change over the next 30 years seeing human roles collaborating with, and incorporating, technology and automation – embracing not competing.

Clearly, adoption of the state-of-the-art logistics technologies will be uneven around the world, with some regions and teams along supply chains experiencing slower or smaller changes than others. Essential to getting the collaborative response between humans and machines right is a real understanding of the order, magnitude, and speed of digital disruption. A head in the sand approach will help no one, but proactive surveying, learning, and appropriate adoption will help everyone.

The microscopic virus effecting such major change across every area of life and work is of course the third force defining these unprecedented times.

The global pandemic has so fundamentally changed the way we live and work that individuals and organizations have been forced to look at long-established procedures and habits with fresh eyes and consider alternatives. The change has been swift, and it is looking more and more permanent: from rethinking roles and responsibilities, the use of digital tools, right through to the very meaning and purpose of work.

Lockdown mandates around the world shifted purchasing patterns at near breakneck speed, creating both opportunities and challenges for global supply chains. With stores and restaurants closed for months, online transactions boosted e-commerce to dizzying heights forcing even the most traditional brick-and-mortar stores to join the online economy. And despite an easing of many restrictions around the world, many consumers’ pandemic shopping habits seem to have become lasting lifestyle changes. One study found that an estimated 70 million more people had shopped online in six Southeast Asian countries since the pandemic began.

Cue, of course, a massive surge in the demand for logistics workers to process, transport, and deliver those billions of new orders. A staggering example of the, dare we say, unprecedented scale of this demand for logistics workers, is in the hiring stats: Amazon reports 450,000 new hires since the beginning of the pandemic and a plan for another 125,000 across the U.S. in its fulfillment and transportation divisions.

Most of these new positions will be filled by Millennials and Generation Z. Savvy logistics providers are wasting no time aligning their incentives, values, tools, and more to attract and retain those workers.

In many ways, Covid-19 has greatly accelerated the pace of change, fast forwarding us into the future of logistics. The digital transformation was well underway, but pandemic restrictions shifted deployment of new tools, skills, and technologies into high gear. Occupancy limits, remote work, contactless operations: all these demands pushed innovation, that might otherwise have lingered in the wings, straight onto the world’s stage. Now we can capitalize on this momentum to further future-proof supply chains.

Unprecedented times have brought unprecedented changes, the effects of which will be felt for generations to come. The unique pressures of this time – the shifting demographics, technological advances, and the Covid-19-specific impacts – are transforming supply chains on a global scale. If we are to successfully adapt and rise to the occasion, we must deep dive into the driving forces and act on what we learn. For the good of our current workforce and for the generations to come.