In 2012, a game-changing patent was filed. Using predictive shipping analytics, Amazon’s “anticipatory” or “speculative” shipping system plans to ship products to customers before they’ve so much as clicked “add to cart.” According to a recent trend report by DHL, the future is upon us. From automotive to consumer goods, over the next five years, this so-called psychic supply chain will have far reaching effects in nearly all industries. Here’s how to avoid being left behind:
1. Understand predictive analytics in the context of logistics and supply-chain management
Anticipatory logistics is a steroidal mashup of forecasting and risk analysis. It uses big data and advanced predictive algorithms to enhance planning and decision-making. The uses for this technology stretch into almost every facet of the supply chain, from procurement to inventory management, to outbound.
2. Embrace predictive metrics & be willing to
KPI’s answer important questions like “how much did we sell?” and “how many returns were there?”. They give an idea of what to expect around the same time next year. But soon, they won’t be enough. Enter their cooler, more forward-looking cousin: the KPP (Key Performance Predictor). KPPs answer questions like “how much will we sell?” and “when and where will there be delays?”. Imagine knowing that in three months; a KPI is going to fall bellow target. You’d have much more time to react and prepare.
There is a catch, though. It involves not only finding the right KPPs but also plugging them into the right models. For the highest accuracy, continuous and testing and analysis is required, which means investing in and committing to analytics.
3. Get used to the idea of sharing data
For optimal efficiency, If a third-party logistics provider is involved, there has to be an open exchange of data between both organizations. It reduces mismatches between logistic resources and logistic demands during peak seasons. Furthermore, a skilled logistics provider can enhance your models with valuable data on trade lanes and damage risks.
4. Never stop looking for new applications, it’s not just about shipping or the last mile
Amazon may dominate the headlines with shipping things before people order them, but the applications of predictive logistics go beyond the dystopian magic that is anticipatory shipping. They can add immense value to equipment maintenance, risk management, capacity planning and more. For example, the Internet of Things (IoT) now allows for maintenance predicting sensors inside machines and vehicles. This allows for just-in-time-spare parts delivery, lowered logistic expenses, less vehicle downtime, and real-time adjustments to forecasts and predictive models.
Ultimately, whether a company is vying for industry leadership, competitive advantage, or long-term survival, it would do best to take note and prepare for the game-changing effects of anticipatory logistics.