MHI Deloitte Industry Report 2017

The 2017 MHI Annual
Industry Report
Next-Generation Supply Chains:
Digital, On-Demand and
Always-On
Table of Contents
5 Introduction
7 Survey Highlights
10 Next-Generation Supply Chains
10 Emergence of the Digital Supply Chain
12 Escalating On-Demand Customer Requirements
13 “Always-on Supply Chains”
14 “Smart City Logistics”

15 Defining a Smart City
16 Implications for Supply Chains
17 Strategies for a Smarter Tomorrow
21 Innovation Update
21 Survey Trends of the Innovations and Technologies
24 Innovations and Technologies Driving Next-Generation Supply Chains
24 Robotics and Automation
29 Sensors, Automatic Identification and IoT
35 Wearable and Mobile Technology
40 Driverless Vehicles and Drones
44 Predictive Analytics
48 Conclusion – Actions for Supply Chain Leaders
51 References
52 Appendix
52 About the Report
54 Acknowledgements
54 MHI Officers
54 MHI Board of Governors
54 MHI Roundtable
54 Editing Team
54 Research and Interview Team
The 2017 MHI Annual Industry Report Next-Generation Supply Chains: Digital, On-Demand and Always-On 3
Next-Generation Supply Chains: Digital, On-Demand and Always-On
2017 MHI Annual Industry Report Key Survey Findings
DISRUPTIVE TECHNOLOGIES Top 6 out of 9
80%
Believe the digital Potential to disrupt or create competitive advantage.
supply chain will
be the predominate
model within 5 years. Robotics & Automation 61%
Predictive Analytics 57%
Internet of Things (IOT) 55%
16%
Driverless Vehicles & Drones 54%
Say it is today.
Sensors & Automatic Identification 53%
Inventory & Network Optimization Tools 50%
ADOPTION RATE In-use Today 5-Year Compounded Annual Growth Rate
60%
50%
40%
30%
20%
10%
Cloud Sensors & Inventory & Robotics & Wearable & Predictive 3D Printing Driverless Internet of
Computing & Automatic Network Automation Mobile Analytics Vehicles & Things*
Storage Identification Optimization Technology Drones
Tools
* First year of data
TOP CHALLENGES BARRIERS TO IOT

ADOPTION
63% 55% 53%
56% 45% 44%
Hiring and Customer Demand Customer Demand
Cyber Security Lack of talent to Lack of a clear
Retaining a Skilled for Faster for Lower
utilize technology business case to
Workforce Response Times Delivered Costs
effectively. justify investment
SPENDING 2% PREPARATION
Companies spending on emerging technologies Actions being taken to prepare for next generation supply chain.
over the next two years.
17% Training Workforce
50% to use New
Partnering with
54% Vendors to
Understand
$100 MILLION+ Technologies
Benefits
$10 MILLION+ 53% Recruiting for

$1 MILLION+ Begin Piloting New
46% Technologies 48% Different Skillsets
- $1 MILLION 47% to Align with
Future Needs
4
Introduction
"With a strategic focus and the courage to collaborate, leading firms

are utilizing Next-Generation Supply Chain technologies to create
digital capabilities that give them the competitive advantage they need
to survive and thrive in today’s on-demand economy."
George Prest, CEO of MHI
As markets demand not only efficiency but agility and chain industry leaders on this important topic. Survey
flexibility from supply chains, next-generation models are participants represented a wide range of industries, with
successfully combining automation and digital technologies the majority (50%) holding executive positions such as CEO,
to drive superior performance. While this digital ecosystem Vice President, General Manager or Department Head.
is creating cost savings, innovation and win-win Participating companies ranged in size from small to large,
opportunities along supply chains, it is also accelerating the with 47% reporting annual sales in excess of $100 million,
pace of change, creating disruption and raising competitive and 10% reporting $10 billion or more.
pressures.
This report provides updates on the eight innovative
The 2017 MHI Annual Industry Report, developed for technologies we predicted would have the most potential
the fourth year in collaboration with Deloitte Consulting, to transform supply chains three years ago when this annual
reflects the views of 1,100 manufacturing and supply report was launched.
We also share evolving trends over the years of the survey This year’s survey revealed the emergence of a ninth
and the potential of these trends to disrupt the industry, innovation, the Internet of Things (IoT), that has growing
adoption rates and barriers to adoption. The eight importance in the digital economy. We define the IoT as
technologies are: "the use of the Internet to connect computing devices
1.
1. Inventory
1. Inventory and
and network
and
Inventoryand network optimization
network optimization
optimization tools
tools
tools embedded in everyday objects, enabling them to send
Inventory network optimization tools - Models
1. Inventory and network optimization tools to produce, and receive data in real time."
and
1. tools to
Inventory help
and companies
network design networks
optimization
1. Inventory and network optimization tools tools
store and distribute efficiently and effectively to serve In addition, this year's report introduces the topic of
customers. ‘Smart City Logistics’ and examines how innovations and
2.
2. Sensors
2. Sensors and
and
Sensorsand automatic
automatic identification
automatic
andautomatic identification
identification technologies are being leveraged to help cities address
Sensors identification - Technologies
2. Sensors and automatic identification the growing challenges of congestion, noise and pollution
2.
to Sensors and
automatically automatic
identify, identification
locate and profile supply chain
2. Sensors and automatic identification associated with last mile deliveries within their increasing
objects and to capture and communicate associated data
populations.
and information across the supply chain.
3.
3. Cloud
3. Cloud computing
Cloud computing and
computing and storage
and storage
storage This report also describes what will be required to increase
Cloud computing and storage - Use of a network
3. Cloud computing and storage the adoption rates of the innovations most critical to Next-
3. Cloud
Cloud computing
computing
architecture
3. and
of remoteand storage
internet servers to host, store,
storage
Generation Supply Chains:
manage and process data and applications rather than a
local server or computer. • Robotics and automation
4.
4. Robotics
4. Robotics and
Robotics and automation
and automation
automation • Sensors and automatic identification/Internet
Robotics
4. Roboticsandand automation
automation - The design and use of
4. Robotics
Robotics and
and automation
automation of Things (IoT)
4.
computer-controlled machines to automatically perform a
• Wearable and mobile technology
series of actions or tasks traditionally performed by humans.
• Autonomous vehicles and drones
Predictive
5. Predictiveanalytics
5. Predictive
5. Predictive analytics - The practice of extracting
analytics
analytics • Predictive analytics
information
5. Predictivefrom existing data sets in order to determine
analytics
5. Predictive
5. Predictive analytics These technologies are working together to create next-
patterns and analytics
trends to predict future events or outcomes.
generation supply chains that are digital, on-demand and
Wearable and mobile technology - Technology always-on. They will soon become the new supply chain
6.
6. Wearable
6.
devices that and
Wearable
Wearable and
can
andbemobile
worntechnology
mobile
mobile technology
or carried, either as external
technology reality. A full 80% of survey respondents believe the digital
accessories or as part of clothing,
6. Wearable and mobile technology having the capability to supply chain will be the predominant model within 5 years.
6. Wearable
6. Wearable and
and mobile
mobile technology
technology
exchange data between the devices and a network. Another 16% say it already is.
Autonomous vehicles and drones - A computer-

7.
7. Autonomous
7. Autonomous
guided vehicles
device that
Autonomous vehicles and
and
can move
vehicles drones
drones
andabout
droneswithout a human being
7. control,
in Autonomous
either vehicles and drones
on the ground (a vehicle) or in the air (a
7. Autonomous
7. Autonomous vehicles
vehicles and
and drones
drones
drone).
3D printing - A group of technologies that can

8.
8. 3D
8. 3D printing
3D printing
printingproducts through construction of layers from a
manufacture
8. 3D printing
digital three-dimensional blue print.
8. 3D
8. 3D printing
printing
9.
9. The
9. The Internet
The Internet of
Internet of Things
of Things
Things
9. The Internet of Things
9. The
9. The Internet
Internet of
of Things
Things
10.
10. Smart
10. Smart City
Smart City Logistics
City Logistics
Logistics
10. Smart City Logistics
10. Smart
10. Smart City
City Logistics
Logistics
6
Survey Highlights
Disruptive Innovation Adoption Rates
Survey respondents increasingly believe the nine Cloud computing and storage along with sensors and
innovations described previously have the potential automatic identification are leading in terms of adoption
to disrupt supply chains or to create competitive rates (in-use today), with 50% and 49%, respectively. Over
advantage if harnessed correctly (see Figure 1). A full the next two years, the adoption of these technologies
92% of respondents believe at least one of the nine listed is expected to grow to 74% and 71% respectively. The
technology predicted to be most adopted within the
technologies could be a source of competitive advantage /
next two years is Inventory and Network Optimization,
disruption in their industry in the next 10 years.
forecasted at a 75% adoption rate. Over the same time
The top technologies respondents say can be a source of frame, IoT adoption is expected to reach a 55% adoption
either disruption or competitive advantage are: rate, followed by robotics and automation at 53% and
predictive analytics at 52% (see Figure 2).
• Robotics and automation (61%, up from 39% in 2015)
Barriers to IoT Adoption
• Predictive analytics (57%, up from 38% in 2015)
With the current buzz around Industry 4.0 and IoT, the
• Internet-of-Things (IoT) (55%, new category in 2017) survey uncovered some significant barriers to adoption of
these technologies. Over half of respondents (55%) cited
• Driverless vehicles & drones (54%, up from 30% in 2015)
cyber security as the greatest barrier, followed by the lack
• Sensors and automatic identification (53%, up from of talent (44%) and the lack of a clear business case to
42% in 2015 justify investment (44%) (see Figure 3).
Figure 1. 2015-2017 survey results: Trend of innovations being disruptive or a source of competitive advantage
Robotics and Automation 61% 27% 12%
Predictive Analytics 57% 32% 11%
Internet-of-Things (IoT) 55% 33% 12%
Driverless Vehicles
and Drones 54% 22% 24%
Sensors and Automatic

Identification 53% 37% 10%
Inventory and Network

Optimization Tools 50% 42% 8%
Wearable and Mobile

Technology 44% 35% 21%
3D Printing (Additive
Manufacturing) 40% 28% 32%
Cloud Computing and

Storage 37% 47% 16%
Blockchain and distributed

ledger technologies 31% 41% 28%
0% 25% 50% 75% 100%

■ Disrupt or Competitve Advantage ■ Support Ongoing Improvements ■ Little to No impact
Figure 2. 2017 survey results: Planned adoption of emerging innovations
100%
95%
92% 91%
91% 92%
88% 89%
87%
81% 89% 80%

79%
75% 74%
75%
71% 71%
71%
62%
58%
55%
52% 53%
50% 49% 49%
50%
45%
41%
39%
37%
30%
24%
25% 37%
20%
17%
15%
8%
0%
Inventory and Cloud Internet-of- Sensors and Predictive Robotics and Wearable and 3D Printing Driverless
Network Computing Things (IoT) Automatic Analytics Automation Mobile Vehicles and
Optimization and Storage Identification Technology Drones
■ In-use today ■ 1-2 years ■ 3-5 years ■ 6+ years
Supply Chain Talent Gap Investments

To implement any of these technologies, firms need access More manufacturing and supply chain companies are
to a skilled supply chain workforce. This has been a theme upping their financial commitment to innovation. New
in all four annual reports, and the talent gap is growing as technology investments totalling over $1 million have
the adoption of these technologies increases. According to increased from 49% in 2015 to 53% today. Two percent of
the survey, hiring and retaining a skilled workforce continues respondents plan to spend over $100 million.
to be the biggest obstacle facing supply chain professionals
(see Figure 4) with 63% of respondents reporting the issue
(up from 58% in 2016). Additionally, 50% say training their
workforce to use new technologies is a top priority. Other
significant challenges include customer demand for faster
response times (55%) and customer demand for lower
delivery cost (53%) (see Figure 4).
8
Figure 3. 2017 survey results: Barriers to adoption
Cyber security and privacy of corporate

information 14% 31% 33% 22%
Lack of adequate talent to effectively
implement and utilize the technology 18% 38% 33% 11%
Lack of a clear business case to justify
the investment 18% 38% 33% 11%
Lack of understanding of technology landscape
and effects on our business 17% 40% 35% 8%
Cultural aversion to risk – waiting until
technology is fully proven and established 21% 38% 31% 10%
Lack of access to capital to
make investments
30% 40% 21% 9%
Unwilling to invest due to
economic uncertainty 33% 40% 21% 6%
My company’s technology is functioning well
and does not need the innovation of IoT 43% 40% 13% 4%
Other (please explain) 85% 9% 4% 2%
0% 25% 50% 75% 100%
■ Not Significant ■ Somewhat Significant ■ Very Significant ■ Extremely Significant
Figure 4. 2017 survey results: Company challenges
Hiring qualified workers 7% 30% 38% 25%

Customer demands for lower delivered costs / pricing 11% 34% 38% 17%
Forecasting 10% 36% 39% 15%
Customer demands for faster response times 12% 35% 38% 15%
Increasing competitive intensity, rising customer service
expectations 9% 39% 38% 13%
Insight into customer behavior and
product usage 13% 45% 33% 9%
Insight into supply and demand 13% 46% 33% 7%
Customer demands for more customized
products and services 20% 40% 29% 11%
Synchronization of the supply chain 14% 47% 31% 8%
Customer demands for smaller, more
frequent shipments 33% 36% 22% 9%
Out-of-stock situations 26% 46% 21% 7%
Customer demands for more supply chain transparency 29% 45% 20% 6%
Implementing sustainability programs 28% 46% 20% 6%
Omni channel fulfillment 35% 40% 19% 6%
Visibility of inbound and outbound shipments 31% 47% 18% 4%
Food safety, spoilage and contamination 70% 18% 10% 3%

0% 50% 100%
■ Not Challenging ■ Somewhat Challenging ■ Very Challenging ■ Extremely Challenging
Next-Generation Supply Chains
“As digital capability fuels customer expectations to unprecedented

heights, the Next-Generation Supply Chain must be proactive and
predictive, with all of its links interconnected and synchronized to the
same drum beat of consumer demand.”
Scott Sopher, Deloitte Consulting LLP
The Next-Generation Supply Chain is evolving from the comprehensive data from every link of the supply chain.
more traditional model of a series of linear, individual, Next-Generation Supply Chains will take advantage of
dis-synchronized links into a more connected, harmonized this trend and develop new digital capabilities including
network of trading partners. This Next-Generation Supply the strategic placement and use of sensors and artificial
Chain has three distinct characteristics: Digital, On-Demand intelligence (also known as machine learning and cognitive
and Always-on. computing). This newly available data provides the
foundation for real-time visibility and sharing of information,
filtered through a layer of analytics, and communicated
Emergence of the Digital Supply Chain across the entire supply chain for proactive and full-sighted
operations.
The digital revolution is upon us, driven by exponential
advancements in computing power and memory. More Cognitive tools such as automation and wearables are
data was created in the past two years than all previous bringing this insight-rich information directly to supply
years in history combined1. It is now possible to access chain workers who use it to make necessary adjustments
10
as they perform their tasks. The physical and digital worlds The creation and collection of these digital transactions can
are converging, transforming traditional, linear supply be the key to unlocking innovative solutions to the most
chains into connected, learning, scalable and nimble supply complex challenges, creating competitive advantage. The
networks.2 same barrage of information can also cripple organizations
by the sheer volume of data generated. In the By the
The exponential rise of the technologies covered in this Numbers section on page 12, we illustrate a real-world
report creates a decision tipping point for supply chain example of the magnitude of information digital supply
leaders: disrupt or be disrupted. A significant majority, 80%, chains can create.
of survey respondents believe the digital supply chain will be
the predominant model within the next 5 years (see Figure Harnessing Big Data
5); 16% of these supply chain leaders recognize it is already Big data has been a business buzz word for the past decade
here. Disruption from this digital era is already evident in or so, but many companies are still struggling with not only
how it is transforming industries and changing consumer figuring out how to use it, but more immediately, how to
expectations. collect it without getting overwhelmed by it. A company’s
first step into this arena is establishing the IT infrastructure
At the same time, machines are augmenting human
to make sure the data is collected in an automated and
performance; traditional, linear supply chain nodes are
organized fashion, stored with proper amounts of capacity
evolving into a set of dynamic networks2; and the “Always-
and cleansed to ensure reliability.
On” and on-demand networks can now be more effectively
tied to the broader business strategy to become a source Big data by itself provides nothing other than overhead costs
of competitive advantage. With an integrated network, to the business and, unfortunately, this is what many firms
companies can compete on differentiating factors, such as are experiencing today in their experimentation with digital
speed or service, and apply this differentiator across all the information. Insights can be derived from this information,
traditional channels of the supply chain (see Figure 5). but those insights are captured only by careful thought
and planning in order to mine the critical information and
Digitizing the supply chain involves a continuous flow of discovery of useful patterns in the data. This process is being
information between the physical and digital worlds. This relegated to machines in increasing numbers because sifting
flow of information between the two worlds is made through data is where artificial intelligence and algorithmic
possible through integrated technologies or capabilities such processing add the most value, freeing up human capital to
as the ones covered in this report (see Figure 6). focus on other business-critical factors.
Figure 5. 2017 survey results: Timeframe for Next-Generation Supply Chain
4%
16% ■ Already here
■ Next 5 years
■ 6+ years
16%
80% 64% ■ Unlikely to ever evolve to this level
1
Figure 6. The Rise of the Digital Supply Network
Escalating On-Demand Customer Indeed, an astounding array of information regarding

Requirements their purchases is now at a consumer’s fingertips at
instantaneous speeds, leading them to expect more from
The digital revolution is also fundamentally changing
supply chains. Customer expectations for faster, better
the way that consumers behave. According to a report
service are rapidly escalating. Next-day is no longer
published by Deloitte University Press2, customers have an
considered a premium service for which customers are
increased comfort with technology, and more specifically
willing to pay. Same day is becoming more prevalent.
the technology used to facilitate online transactions, fuelled
by high usage of online channels. Users have shorter The next frontier of supply chain development is
attention spans, are becoming more demanding and expect on-demand, a level of service that will require next-
more from businesses in terms of short service cycles, lower generation supply chains to provide anywhere, anytime
costs, transparency and corporate responsibility. delivery to customers at the time the customer orders and
By the Numbers
Over the past 10 years, nearly every industry has been affected by the trend of digitization driven by exponential gains in
computing power. But no industry has been impacted more than Logistics. To illustrate this, one need look no further
than the number of Supply Chain transactions generated on Cyber Monday 2016 by one of the nation’s largest eTailers.
In 1 day, a reported 426 orders per second11 were generated from the website throughout the day. That equates to
over 36 million order transactions, an estimated 250 million picking lines at the distribution centers (DC), 40 million
DC package loading scans, 40 million inbound sortation hub scans, 40 million outbound sortation
hub scans, 40 million inbound regional sortation facility scans and 40 million outbound delivery truck
scans. Assuming 200 stops per parcel delivery truck and 300 packages per truck, there were about 122,000 delivery
trucks involved that made 24.5 million stops generating 24.5 million proof of delivery transactions and 24.5 million
shipment confirmation messages. Carrying this all the way back through the supply chain, one can account for over
1 billion digital transactions generated for that one day of the year, albeit the busiest day, for only one retailer.
12
specifies. We have seen this for years in retail with the that allow them to meet or exceed these expectations.
rise of omni-channel fulfilment, but it is now impacting Next-generation supply chains will likely be smarter, more
industries that are not consumer-facing. flexible and more efficient, thanks to a combination of the
innovative technologies covered in this report.
This trend will have a trickle-down effect on other industries
and the entire value chain. Leading firms are increasingly
demanding speed, visibility and transparency from their
supply chain partners to meet customer expectations, and “Always-on Supply Chains”
it is creating pressure down the supply chain. B2B vendors An astounding array of information on purchases is now at
must evolve as retailers have to provide more and more the fingertips of consumers at nearly instantaneous speeds,
flexibility and efficiency to support the on-demand model of
leading them to expect more. Digital order confirmations,
reducing costs and increased service3.
status updates, in-route shipment and delivery vehicle
This means “on-demand” is not just a challenge for retailers tracking information, on-demand order fulfilment and proof
and customer-facing industries, but it is impacting firms of delivery are a few examples. The net implication for
regardless of size, industry or position in the value chain. supply chains is a challenge to perform flawlessly, efficiently
and transparently if they are to meet these escalating service
This year’s survey confirmed this trend. Customer demands
expectations.
for faster response times (55%), and rising customer
demands for lower delivered costs (53%) are two of the top The innovations studied in this report make it possible for
5 issues supply chain leaders and professionals find the most supply chains to operate around the clock to outpace the
challenging. challenges. In essence, they must be “always-on.” In last
For supply chain professionals, these trends are pushing year’s report, we defined Always-On supply chains as:
against them from all sides as they are asked to deliver
“An integrated set of supply networks characterized by
product faster, cheaper and in a customized way.
a continuous and high-velocity flow of information and
Supply chain organizations are responding to these analytics, creating predictive actionable decisions that
market challenges by utilizing innovative technologies better serve the customer.”
Smart City Logistics
“As part of our Smart City initiative, we put a big emphasis on freight, because it moves
directly through our downtown and within the surrounding metropolitan area…It’s in the best
interests of our region and of companies—both shippers and carriers—who move freight, to
do so as efficiently and fluidly as possible.”
Chris Gutierrez, President of Kansas City SmartPort, the region’s freight-based economic development
group covering both the Kansas and Missouri sides of the city
More than half the world’s population, nearly 4 billion online shopping is driving a dramatic increase in freight
people, reside in urban areas. That number is projected to deliveries to and within urban areas. This will lead to
double to almost 8 billion within the next 35 years4. This unsustainable traffic congestion, CO2 emissions and noise
pattern of rapidly increasing urbanization is also seen in the and air pollution levels within urban areas.
U.S., causing city governments to start to tackle the myriad
Smart City Logistics is the idea that logistics providers can
of challenges presented by an increasing concentration
leverage many of the innovations and technology this
of people within a finite area of land. One of the biggest
report has been tracking over the past four years to find
challenges is how to provide for last-mile logistics to serve
solutions to this issue that work for government, businesses,
people within cities.
consumers and the environment. A collaborative effort
In the US, the transport of goods currently takes up to 25% across and between businesses and city planners will be
of urban road capacity. The trend towards urbanization required to arrive at sustainable solutions to this emerging
along with continued dramatic growth of e-commerce and problem.
14
This topic is included in this report to begin shedding City capability intersects with a city’s prioritized needs.
light on this important issue and how next-generation However, the world is already full of great examples of
supply chain technology can address this challenge. While Smart Cities that use innovative technologies to transform
50% of survey respondents are aware of the Smart City those functions which are most important to people
Logistics topic (see Figure 7), only 6% say they have begun who live there, whether that be traffic management,
to collaborate with other companies and cities to utilize government transparency or sustainability. Whether it’s
and develop supply chain innovations to create new smart transportation in Singapore or New York City, or
opportunities. environmental management in Barcelona or Paris – these
cities are already using the most advanced technology to
change the way people interact with the cities they inhabit.
Defining a Smart City
Our definition of a Smart City is an urban area that uses Continuing Pattern of Urbanization
information to design policies and procedures that benefit
its citizens. While that data can be gathered through a To understand the implications and challenges for Smart
number of different sources, it is the Internet of Things, with Cities, it is important to think of the relative density of
sensors embedded in everything from our phones and cars, urban areas rather than be guided by the classic census
to water valves and parking meters that enable analytics bureau classification of what constitutes an urban area.
capabilities to illuminate policy solutions. While a city could For purposes of this report, we will define a “city” as an
use this combination of data sensing and analytics in stand- urbanized area consisting of more than 50,000 people.
alone, one-off projects, a truly Smart City has a strategy for By this definition, approximately 65% of the current U.S.
creation, development, and deployment of smart solutions population resides in cities that account for just 3.5% of the
that can work together. total land mass5.
There will most likely never be a perfect Smart City, where As this trend of increasing concentrations of people within
every service is driven by analytics connected to an army finite areas of land continues (see Figure 8), leaders in the
of sensors because cities will only invest where Smart largest cities are beginning to realize they are ill prepared
Figure 7. 2017 survey results: Smart City Logistics awareness
6%
8%
6% ■ Aware; begun to collaborate
■ Aware; not willing to collaborate
■ Aware; begun to plan and invest

50%
■ Aware; willing to collaborate
■ Not aware
30%
for the profound impacts on city operations and services, While 50% of survey respondents are aware of the Smart
from infrastructure all the way to the logistics of how their City Logistics topic, only 6% say they have begun to
populace will be served. collaborate with other companies and cities to utilize supply
chain innovations to develop solutions to address the
At the same time, smaller, second-tier cities are also looking
challenges. We see this as a major opportunity that could
at Smart City solutions to brand themselves as attractive
impact supply chains over the next ten years.
to young workers and the companies who seek to hire
them. Salient examples include investments in autonomous
transportation in Pittsburg, PA and smart transportation
An Evolution in Last Mile Delivery
infrastructure in Kansas City, MO.
This densification of demand will create new models for
last-mile distribution, because cities simply cannot tolerate
Implications for Supply Chains
the congestion, noise or pollution a major increase in tractor
The evolving challenge to supply chains is to understand trailers or package delivery trucks will bring. To avoid these
how innovative technologies can be deployed or problems, deliveries will have to be smaller and much more
implemented in response to an increasingly urban consumer frequent, to accommodate accelerating expectations and
with always-on expectations. increased volume. Fortunately, necessity is giving birth to a
Figure 8. Expanding US urbanization: Percent of U.S. populations residing in urban areas

Source: US Census Bureau; Urban area defined as +300,000
100.00%
90.00%
80.00%
70.00%
60.00%
Title
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
United States Northeast Midwest South West
16
"Augmented reality number of new applications for supply chain innovation in Innovative Technologies
and wearables the urban context, both in delivery channel and distribution
Innovative technologies will be required to address logistics
have a strong role networks.
challenges of Smart Cities. The technologies enabling
in delivering that Some delivery channel innovation is as simple as negotiating Smart City Logistics innovation are those same solutions
next generation of permission for off-peak (or dead-of-night) deliveries and we already are seeing in Next-Generation Supply Chains.
human interface to temporal shifting of some supply chain activities; more Both are driven by a combination of automation, sensors,
keep the Smart City disruptive changes revolve around novel modes of delivery. analytics and the IoT, though they encompass many
infrastructure up Much has been written about the disruptive potential of different use cases.
and running." drones and autonomous delivery; the vision of drones While every Smart City must have IT architecture, how
whisking parcels through the city scape is both the stuff of that technology is seen and felt varies depending on what
Jay Kim, Chief
science fiction and shockingly plausible. Until governmental kind of smart solution is in play. For example, whether
Strategy Officer,
Upskill regulation can find a way to address concerns over safety technology is deployed to dynamically light the path of a
and security, however, the airways will remain unclaimed. pedestrian at night using street lights, count open parking
That being said, the technology is evolving, in both fixed spaces, or listen for gunfire, each situation requires a very
wing drones which drop their payloads via parachute specific kind of sensor-array integration technology with
onto rooftop receiving areas, or in suitcase-sized land- associated interfaces. On the other hand, if a city wants
based delivery drones utilizing city sidewalks currently in to collect information on maintenance needs such as
development. As regulatory and technological barriers fall potholes or graffiti, the technology to do that is already in
over time, we expect to see more innovation in this space. the pockets of its citizens, and the only thing missing is the
smartphone app to gather and process the data submitted
directly from users.
Smaller, Urban Distribution Centers
According to our survey, a variety of Smart City logistics
As orders become more frequent and smaller in size, programs (see Figure 9) are currently in the research and
distribution must move closer to customers to cap planning phases.
transportation costs and reduce delivery times. Migrating
inward from the large suburban regional distribution Strategies for a Smarter Tomorrow
centers, supply chain firms are experimenting with smaller
distribution center formats within city limits. In many The life-blood of supply chains and Smart Cities is the
cities, real estate sufficient for distribution activities is collection and distribution of digital information. The
being repurposed close to city centers to create smaller, information loop from physical to digital and back to
distribution hubs. The traditional spatial constraints of physical is paramount to the innovations front and center
in the Smart City landscape and the supply chains that will
distribution centers is being mitigated with innovations in
serve them. Sensors, robotics, automation, IoT, drones and
robotics and automation in pick, pack and sort that make
wearables will be the primary innovations leading the efforts
small distribution spaces work. Warehouse execution
towards the supply chains and cities of tomorrow.
systems that combine the hardware and software to
maximize warehouse efficiency are developing rapidly to The U.S. Department of Transportation’s recently conducted
meet the needs of urban distribution. Smart City Challenge fielded applications from 78 cities
across America all vying for a $40 million grant to help • Truck platooning, where two or more trucks driving
bring their visions to life. A variety of freight movement and in a row are connected by onboard communications
management approaches were proposed to mitigate the technology that enables them to minimize the distance
anticipated growth of 40 percent in freight volume by 2050. between each for improved aerodynamics, more efficient
The ideas included: fuel usage and a reduction in carbon emissions and
pollution
• Improved urban freight loading and unloading via dynamic
curb space reservations—enabled through sensors and An understanding of today’s disruptive technologies is
other connected technologies—to better time traffic and absolutely necessary to develop strategies to thrive in
parking availability tomorrow’s urban environment. As cities develop smart
solutions and policies to incorporate new technologies,
• Implementation of short-range communication devices that
logistics providers must keep pace to understand what
connect vehicles to infrastructure, such as road-embedded
opportunities these new policies represent. The best supply
sensors that detect traffic congestion for dynamic
chain leaders, however, will realize the best thinking and
rerouting, and traffic signals that prioritize truck movement
solutions will come from collaboration with cities, not just in
along specific freight corridors
reaction to their actions.
• Mobile apps that give truckers real-time information about
traffic, routes and parking so they can better determine
their route
Figure 9. 2017 survey results: Ongoing planning and research for Smart Cities
Logistics decoupling points 22%
Urban distribution centers 22%
Other (please explain) 16%
City logistics hubs 16%
Urban consolidation centers 12%
Off-hour autonomous vehicle deliveries 10%
Shopping mall logistics hubs 2%
18
Case Study – UPS Cargo Cruiser

Situation: UPS utilizes trucks and airplanes powered by Result: During the testing phase, UPS evaluated the
petroleum-based fuels, but also has a significant global reliability, design, integration to the city’s infrastructure and
fleet of alternative fuel and advanced technology vehicles, acceptance of the vehicle. That test was successful, so UPS
ranging from electric hybrid to natural gas. While reducing is now deploying additional eTrikes in other cities in 2017.
carbon emissions is becoming increasingly important, the
eTrikes are helping UPS to achieve its goal to reduce its
recent growth in e-commerce is also rapidly changing the
carbon intensity 20 percent by the end of 2020, while also
profile of the package delivery business, especially in cities,
creating viable options to help facilitate urban last-mile
where the trend of urbanization is concentrating more
delivery while reducing urban emissions and congestion.
people within smaller areas.
As a result, urban congestion is becoming a serious issue

for many of the world’s mega-cities. Aligning with its long
standing commitment to environmental sustainability, and
combined with a growing demand for congestion-limiting
operations, UPS is experimenting with a host of innovative
technologies and new ways of operating within urban
areas.
Case Study: One of the innovations UPS is currently

trialing is the eTrike12. UPS has successfully tested an
electrically-assisted tricycle, called the Cargo Cruiser in the
company’s Hamburg, Germany fleet to address both air
quality and congestion concerns. The eTrike is designed
to travel in and around pedestrian areas of the city by
operating from a container that is brought into the city UPS Chairman and CEO David Abney on the
center once daily. This is perfectly aligned with Hamburg Portland-based Cargo Cruiser.
City’s 20-year plan to transform into a greener, healthier, Source: UPS
vehicle-free metropolis.
Environmentally friendly with 77 cubic feet of cargo space “At some point, the delivery model of big
(more than most mid-sized sedans) and a range of 21 miles trucks driving through increasingly congested
with a top speed of 15 miles per hour, UPS’ Cargo Cruisers urban areas to make single, individual
is an economical and efficient way to deliver parcels in deliveries will become unsustainable.
an urban environment. And they’re not just for narrow Currently we are experimenting with a
European streets. UPS customers in Portland, OR, are now variety of technologies, operational changes
getting used to drivers pedaling around their neighborhoods and even new urban distribution centers.
in a similar model.
Experimentation is key because we know we
The Cargo Cruiser is equipped with a battery-powered need multiple solutions to solve for a variety
electric motor that makes it possible to cover distances, of challenges – from emissions to congestion-
carry substantial loads, and navigate hills and other terrain. related issues.”
The rider still pedals, just like on a conventional tricycle. But
in this case the pedaling motion is sensed and then assisted Alan Amling, VP, Corporate Strategy, UPS Supply
by the electric motor, so that the rider does not feel the load Chain Solutions
that he or she is pulling.
What leaders
10. Smart City Logistics should be doing today
• Get involved and stay informed by staying close to industry and supply chain groups that cover
Smart City trends. Leaders should identify champions within their companies to be liaisons with
city governments to build relationships and take a proactive stance in the formation of new
logistics policies powered by Smart Cities.
• Support technology literacy on the front-line by investing in the development of training materials
and competency frameworks to ensure every employee has a base level of technological literacy
in supply chain innovations. The creation of such a training framework can also be leveraged to
disseminate training in the future as the technological landscape of supply chains continues to
evolve.
• Understand that the essence of Smart Cities is not formalized sets of technologies or ways of doing
business. It is an emerging capability to invent new and local solutions based on the needs of the
cities themselves. Supply chains will have to leverage their local knowledge to stay competitive
and expand into new markets with eyes wide open to understand the local implications of the
Smart City, wherever they may be.
• Collaborate with urban planners, city leaders, educational institutions and leaders from other,
potentially competing companies to develop solutions to Smart City logistics challenges.
• Make investments in local educational institutions like vocational schools, high schools, junior
colleges and universities. Assist these institutions to design and deliver supply chain and
technology-focused curriculum. These institutions and your investment will play a critical role in
educating and training the work force that will be required to effectively and efficiently operate the
sophisticated supply chains of Smart Cities. In the future, people with the right skills will continue
to be the most critical resource in the operation of an enterprise’s supply chain.
20
Innovation Update
“Add the rising cost of labor and a labor shortage as the current workforce
ages, and supply chain leaders are turning to robots as a solution.”
Tom Galluzzo, Ph.D., chief executive officer of IAM Robotics
Survey Trends of the Innovations Disruptive Innovation

and Technologies Over the last three years, survey respondents increasingly
Four years of conducting the survey gave us an opportunity believe the eight innovations previously survey respondents
to compare past and present results to identify and increasingly believe the eight innovations covered have the
evaluate significant trends of how responses have changed potential to disrupt supply chains or to create competitive
over time. The questions over the past three years have advantage if harnessed correctly (see Figure 10). A full
been consistent in probing for perspectives on the eight 92% of respondents believe at least one of the nine listed
technologies and innovations identified after the first year’s technologies could be a source of competitive advantage /
survey. Key insights are emerging from comparisons of disruption in their industry in the next 10 years.
results from the past three years.
“Historically, robots Actions to Prepare for the Next 10 years which brings industry, professors and students together
and humans might to shape in four-year and post graduate university-level
The survey asked what leaders are doing to prepare for
have shared the programs to meet current business needs. Also, MHI and
market conditions over the next ten years. While workforce
same building, but the Material Handling Education Foundation, Inc. (MHEFI)
training remains important, many are exploring other
jointly developed MHI’s Career & Technical Education
they were separated avenues to improve their supply chains. Showing the largest
Program, which is helping to build the workforce of
by cages because increases in priority since 2015 are: “Recruiting for different
tomorrow by developing curriculum and textbook materials
of safety concerns. skillsets to align with needs of the future” at 48% in 2017,
for training programs at the high school, vocational-
Today’s robots are up from 38% in 2015; “Partnering with vendors to better
technical school and community college levels.
now safe enough understand applications and business benefits” at 54%, up
to work alongside from 45%; and “Begin piloting new technologies” at 46%, Barriers to IoT Adoption
humans, so it’s no up from 41% (see Figure 11).
Cyber security was identified as a top barrier to IoT
longer a question of MHI supports collaboration between industry and academic adoption, with 55% of respondents in the 2017 (see Figure
humans or robots, institutions to improve education and training for the skill 12). The ‘lack of adequate talent to effectively implement
but one of humans sets needed to keep up with supply chain innovation and and utilize the technology’ was also a top barrier according
and robots.” to increase awareness of the importance of manufacturing to 44% of respondents in 2017 compared to 31% in 2015.
and supply chain careers. One key resource is MHI’s College The ‘lack of an understanding of technology landscape and
Melonee Wise, Chief Industry Council on Material Handling Education (CICMHE), effects on our business’ shows the largest percent increase
Executive Officer of
Fetch Robotics
Figure 10. 2015-2017 survey results: Trend of innovations being disruptive or a source
of competitive advantage
Trend
2017 61%
Robotics and Automation +56%
2016 39%
2015
57%
Predictive Analytics +50%
38%
54%
Driverless Vehicles and Drones +80%
30%
53%
Sensors and Automatic Identification +26%
42%
50%
Inventory and Network Optimization Tools +11%
45%
44%
Wearable and Mobile Technology +47%
30%
40%
3D Printing +122%
18%
37%
Cloud Computing and Storage +54%
24%
22
since the 2015 survey (+59%), with 43% in 2017 compared to the C-suite not just the ROI of digital supply chain
to 27% in 2015. technologies, but the risks of not adopting.
In order to survive and compete in this new business The next portion of the report will provide more detail
environment, supply chain leaders will need to put a keen and perspective on the art of the possible for the leading
focus on digital security and the development of a skilled innovations driving next-generation supply chains.
workforce. Also, leaders will need to be able to articulate
Figure 11. 2015-2017 survey results: Trend of actions taken to prepare for supply
chain in the next 10 years
Trend
2017 54%
Partnering with vendors to better understand
2016 19%
applications and business benefits
2015 45%
50%
Training workforce to take advantage
- 3%
of new technologies 52%
48%
Recruiting for different skillsets to align 26%
with needs of the future 38%
46%
Began piloting new technologies 11%
41%
Increased investment / budget 43%

for emerging technologies 5%
41%
Changing organizational structure and incentives to 40%

create culture of innovation 5%
38%
0% 20% 40% 60%
Innovations and Technologies
2. Sensors and automatic identification
Driving Next-Generation
Supply Chains
3. Cloud computing and storage
Robotics and Automation the new digital, on-demand, always-on supply chain.
4. Roboticssupply
andchains
automation Additionally, as automation has become smarter, safer,
Next-generation will utilize robots and
faster and more accurate, it has also become less expensive
automation to perform traditionally manual tasks such as
and more flexible to implement - leading to higher rates of
picking, sorting, inspecting, storing, handling and classifying
adoption.
products to improve overall efficiency. Implementation of
robotics and automation continues to grow as companies Survey respondents also reported that automation is a
look for ways to remain competitive. According to the growing disruptor for their firms, with 61% of respondents
5. Predictive
survey, analytics
adoption of these technologies is currently at 37%. (see Figure 13) saying that it is disrupting the industry or
However, the real story is that adoption is predicted to grow providing competitive advantage compared to just 39% in
to 53% over the next two years and rise to 71% over the 2015.
next five years.
Robots are increasingly able to perform “human” traits
The spike in this adoption rate is proof that firms recognize such as sensing, dexterity, memory and trainability, making
6.robotics
that Wearable and mobile
and automation technology
is becoming an important automation a good fit for simple and repetitive material
lever to maintain and grow competitive advantage in handling tasks such as moving products from one area
7. Autonomous vehicles and drones
8. 3D printing
24
Figure 12. 2015-2017 survey results: Trend of barriers to IoT adoption
2017 Trend
2016
2015
Cyber security and privacy of
55%
corporate information
Lack of adequate talent to effectively 44%

+42%
implement and utilize the technology 31%
Lack of a clear business case to 44%

+19%
justify the investment 37%
Lack of understanding of technology landscape 43%

+59%
and effects on our business 27%
Cultural aversion to risk – waiting until technology 41%

+41%
is fully proven and established 29%
Lack of access to capital to 30%

+20%
make investments 25%
Unwilling to invest due to 27%

+4%
economic uncertainty 26%
My company’s technology is functioning well and 17%

-37%
does not need the innovation 27%
0% 20% 40% 60%
of a facility to another, picking and packaging, testing or Investing in Robotics Offers a

inspecting products and assembling electronics. Automation Competitive Edge
also brings a level of consistency and repeatability. If an
While current adoption of robotics and automation is
objective of a task is to place a product at a set height
at 37%, it is predicted to skyrocket to a 71% adoption
parameter of 30 feet, the system will never stock at 31 feet.
rate over the next five years. Why? Because supply chain
Automation is also safer than in the past, with robotic professionals can see that intelligent robots offer a
machines now working side-by-side with human workers. competitive edge.
This frees up those workers to switch to more advanced
roles in programming, maintenance and analytics—roles As customer demand for quicker delivery and multi-channel
that require complex thinking, are more rewarding and order fulfillment continues to increase, labor within supply
require greater skill. chains will need to become exponentially quicker to keep
up, and human labor simply doesn’t scale like that.
When using robotics and automation, 41% of respondents
say they are using them in repetitive processes like As automation continues to develop and become more
assembly operations or processing, such as welding or intelligent, it also is becoming more affordable, mitigating
painting (see Figure 14). The percentage is even greater in the previous cost-of-entry barrier for companies. On top of
warehouse and distribution center operations, with 66% of that, companies can save on labor and increase production,
implementers using it for tasks such as loading, picking or offering an attractive ROI that explains the predicted 71%
receiving. adoption rate.
Figure 13. 2017 Survey Results: Potential impact of Robotics and Automation
12%
39%
■ Potential to create competitive advantage
■ Potential to disrupt the industry

27%
■ Support ongoing improvements
■ Little to no impact
22%
Additionally, the face of robotics and automation is As robots begin to handle more and more of the repetitive,
changing. Where traditional automation systems were monotonous tasks, employees can focus on making
typically permanently installed and bolted to the warehouse operational improvements, making jobs in the industry
floor, the rise of mobile robots is building greater flexibility more interesting and more appealing. The growing need for
into supply chains, matching the Next-Generation Supply people with technical skills within supply chain and material
Chain model of omni-channel distribution. handling can attract people who may not previously
considered jobs in this industry.
Last year’s report pointed out that the rise of collaborative
robotics was creating visible increases in productivity as the Mobile robots also allow companies to invest and convert
safety barriers and sensors that separated man and machine on a timeline that makes sense for their company and
started to disappear6. Robots are continually being customer base. “An owner can deploy a small number
developed that are more and more intelligent, allowing of robots, and then scale up the number of robots as the
them to work alongside humans safely and create a division business grows versus purchasing all at once,” says Joe
of labor with humans and robots, each doing what they do Zoghzoghy, Ph.D., mobile robotics manager for Bastian
best simultaneously to increase productivity. Solutions7.
Figure 14. 2017 survey results: How companies are using Robotics and Automation today
Receiving and Put-away 18%
Picking / Packing / Sorting Orders 25%
Loading / Unloading / Stacking 23%
Processing – Welding, painting, cutting, etc. 21%
Assembly operations (multiple products on an assembly line) 20%
26
4. Robotics and automation
Case Study – One Touch Order

Fulfillment at REI
5. Predictive analytics
Situation: Outdoor sporting goods retailer, Recreational Result: The implemented operation enables up to 4,000
Equipment, Inc. (REI), responded to customer requests to unit picks per hour, as compared with 500 units per hour in
increase service levels in the Southwest regions to match the a manual environment. Inaccurate shipments are virtually
same-day and two-day service levels they had established non-existent due to the automation employed.
in other parts of the country. They conducted a network
Overall, 97 percent of all materials used in the facility are
optimization initiative,6.considering
Wearable environmental
and mobile impacts
technology
recycled, meaning that less than 3 percent of materials and
as well as cost as key factors and decided to build a new
waste is sent to landfills. By producing renewable energy,
distribution center in Goodyear, AZ with sustainable
the system will pay itself off in five years and provide REI
operations.
with 20 years of free energy.
The typical REI distribution center had different processes
for retail replenishment orders and direct to customer
7. chose
orders. In this case, REI Autonomous vehicles
to build an operation thatand drones
would be capable of omni-channel order fulfillment with
minimal manual intervention.
Case Study: REI partnered with their material handling

systems integrators and equipment suppliers to develop a
fully automated, omni-channel, LEED (Leadership in Energy
8. 3D printing
and Environmental Design) Platinum certified distribution
center that delivered a large ROI.
The facility also included efficient "pocket sorter" and an

OSR Shuttle system. The pocket sorter moves products in
bags that are sorted and delivered to workstations for final
order processing. 9. The Internet of Things
This system provided the facility with the ability to enable
picking and order assembly in one-touch - requiring as little
interaction with the product as possible.
Pocket sorters deliver products in bags. Since the sorters are

automated, they don't 10. Smart
need lightingCity
to doLogistics
their work and
motion sensors turn on lighting only when needed, saving
on electricity. In addition, LED lights with motion sensors
illuminate other parts of the building, so they shut off when
human workers are not present.
"There are often people that believe that this
To achieve net zero energy, REI installed a 2.2-megawatt
level of technology doesn't have a positive
solar array that produces enough energy to power the
ROI. It does. We've done the math. It is a
entire facility (equivalent to powering 390 homes for one
year). The size of the solar array was determined through
function of the productivity and the smaller
early energy modeling, ensuring the system would support
building that you can build."
high automation and a cooling system throughout the
building. Rick Bingle, VP of Supply Chain at REI
What leaders should be doing today

5. Predictive
• When thinking about analytics
implementing robotics and automation, consider starting with a semi-
automated design to learn and understand how far to take robotics. Each company will have
different needs and different combinations of robotics, automation, and human capitol should be
evaluated to be most effective.
• Be measured when considering robotics and automation. Challenge engineers to be clear in their
6. Wearable and mobile technology
vision for deploying robotics within an operation. Determine ROI and make sure you develop a
clear understanding of where and when automation investments make sense for your business.
• Be informed. Talk to companies using the technology. When working with vendors, ask to
speak with their existing customers and tour facilities where the technology has already been
7. Autonomous
implemented. Many companies are vehicles
very open and
aboutdrones
sharing their experiences and lessons learned.
• Develop your talent strategy. Begin thinking about which roles may be automated in the next five
to 10 years and develop a transition strategy. Think about how roles will evolve and what skill sets
will be needed.
• Work with a reputable partner and talk with those in leading associations to help you match
8. 3D printing
supplier capabilities to your specific needs. Working with these partners can even allow you to
develop equipment and systems in combinations not seen previously that are specifically beneficial
to your operations.
• Model the robotics or automation using simulation technology to “test drive” the solution before
implementing it.9.Simulation
The Internet of Things
modelling software has been available for many years that allows
adopters to accurately study, test and visualize the new automation operating in a simulated
environment before implementing it. This service is frequently available from the automation
vendor or can be contracted from multiple providers.
28
Supply Chains
1. Inventory and network optimization tools
Sensors, Automatic Identification and IoT they will adopt the technology within the next five years —
taking the adoption rate to 87%.
Sensors Expand Possibilities and Manage The data these sensors provide, combined with cloud-
Information based applications connected to the same networks, can
be applied to analytic models that uncover supply chain
Visibility and control are high priorities for those responsible
patterns that reveal actionable intelligence.
for managing supply chains. Smart sensors provide data on
the condition and location of a firm’s supplies and products The potential benefits for supply chains include end-to-end
as they are transported across a facility or around the globe. visibility and predictive modeling capabilities that result in
This capability provides the end-to-end visibility and the optimized agility and performance, reduced risk, improved
operational intelligence that Next-Generation Supply Chains operational processes, faster delivery times and reduced
demand. costs.
This year’s survey respondents reported that 49% of them Survey respondents are experiencing these benefits, with
4. Robotics
have sensors andand automation
automatic identification in-use today, 53%, up from 42% in 2015, saying that these technologies
which is up from 43% in 2015. Another 38% predict that have potential to create competitive advantage or to
disrupting supply chains (see Figure 15). Another 37% say
sensors and automatic identification support ongoing supply
chain improvements.
Sensors often are implemented as part of or alongside

other supply chain technologies such as robots and drones,
making them not only versatile, but also supplementing
other supply chain technologies covered in this report. Early
adoption is becoming an advantage as it makes adjusting
to other technologies easier because workers are already
familiar with sensing functions.
According to the survey (see Figure 16), firms are using
sensors and automatic identification technology for lot
tracking and tracing (55%), supply chain monitoring (37%),
security (24%), event management (23%). Companies are
also using these technologies in point of sale operations,
7. Autonomous vehicles and drones reported at 20%, such as automatic check-out, inventory
consolidation, and replenishment, showing a growing
8. 3D printing

Figure 15. 2017 survey results: Potential impact of Sensors and automatic identification
9%
11%

43%
■ Little to No impact
37%
dependence on technology to manage sales and reduce Manufacturers can move from simply providing products to
inventory error. providing services associated with managing the life cycle of
those products. Sensors also allow for extended networks
Smart sensors are changing supply chains in some very basic of equipment that all share an information pool.
ways. One way the use of sensors is being expanded is by
Sensors and automatic identification (auto ID) allow
companies who monitor their equipment after it has been
information to be collected in ways and at rates that
sold to customers. Manufacturers can check on equipment
were previously unavailable to supply chain professionals.
remotely and ensure proper working order, leading to fewer Visibility and control are high priorities for those responsible
maintenance calls and fewer customer complaints7. Using for managing supply chains. Timely information about
sensors can also allow companies to aggregate data to build materials movement and status from one link of the chain
better products in the future. to the next and on to customers is critical. Technologies
Figure 16. 2017 survey results: How companies are using sensors and automatic identification
today (or planning in the next 1-2 years)
Lot Tracking and Traceability (e.g., in-plant tracking, shipping) 55%
Supply Chain Monitoring 37%
Security 24%
Supply Chain Event Management (e.g., Re-Routing) 23%
Point of Sale – automatic check-out, inventory consolidation and replenishment, etc. 20%
30
"If you could such as barcode readers, radio frequency identification to the application of business process improvement through
monitor customers’ (RFID) tags and readers, point-of-sales systems, imagers collaboration with many of the other featured innovations
usage rates so and beacons are being used to capture, verify, store and within this report. By definition, it is the interconnectivity of
communicate supply chain data, replacing the cumbersome, physical devices (smart devices) through a network that ties
you know where
costly and error-prone manual processes of yesterday. them all together for transfer of information.
their stock levels
were, you could Auto ID applications give companies information about Although the concept for IoT has been around since the
optimize your the precise identity and location of each physical item in 1980s and started to become reality in the 1990s with the
delivery schedule. the supply chain in an automated and timely manner. This commercial emergence of the Internet era, the IoT is just
Knowing that there real-time information enables companies to gather other starting to take-off as the number and variety of connected
is enough capacity related information about the product in order to assess devices has been growing exponentially over the past few
on site, you can both its current state and future required actions. years. The IoT is enabled by the combination of the other
leave a customer’s Adopting such technologies provides a major opportunity innovative technologies working together to provide the
delivery for for a supply chain operation to quickly enhance its tracking digital information driving the Next-Generation Supply
another couple of and tracing systems, process control and inventory Chain.
days and schedule management. The use of sensors expands the reach of Survey respondents are recognizing the growing importance
it for when you these automatic identification applications and has potential of IoT, with 55% saying that it has potential to create
can get it there to give a company complete visibility to its supply chain by
competitive advantage or to disrupt the industry (Figure 17).
more efficiently. removing a number of traditional supply chain limitations
Another 33% say that IoT can support ongoing supply chain
associated with latency and distance.
Having some improvements.
insight into what’s
Connected devices are being introduced into all areas of
happening with the Internet of Things (IoT) is Foundational
the supply chain from cellular and GPS-based sensors on
end customer has The Internet of Things (IoT) has been added to the list of cargo containers to robotics in warehouse operations. The
just given you the innovative technologies this year because it is foundational interconnectivity of these devices is unlocking the potential
ability to improve
your logistics
and logistics Figure 17. 2017 survey results: Potential impact from the Internet of Things (IoT)
efficiency.”7
12%
Steve Baker,
Business
Development
Manager at 13% 42%
The Technology ■ Potential to create competitive advantage
Partnership ■ Support ongoing improvements
33%
Figure 18. 2017 survey results: How are companies using the Internet of Things today (or
planning to use it over the next 1 - 2 years)
Real-time analytics 31%
Customer and/or Supplier Collaboration 28%
Customer / market insight 26%
Quality control 25%
Streamlined production 17%
Artificial intelligence (AI) and machine learning 9%
Cold chain temperature and humidity integrity 9%
to collect real-time digital information about areas of the The Internet of Things is the underlying platform in
supply chain like never before. Sensors for example, are which the next-generation supply chain will breathe and
becoming smaller, more sophisticated and less expensive to operate. Through the interconnectivity of the smart
implement into areas of the supply chain that have typically devices embedded throughout the supply chain, all of
been manual in nature. Smart devices have been utilized the digital, on-demand and always-on communications
in transportation vehicles for some time now to monitor are possible. This will also be the case for the future of
the equipment conditions for maintenance, but that same Smart City Logistics. The smart city urban cores will be
technology is now being implemented on railcars to track completely immersed in the transfer of digital information
the bearing conditions and monitor impact reports for the between devices throughout. Smart sensors placed on
cargo. As the catalog of smart devices continues to grow final mile, ground drones will be able to communicate with
and infiltrate into all areas of business, the potential benefits sophisticated software to follow a pre-determined route
produced from the interconnected workings between them for delivery, navigate the crowded streets and sidewalks,
will produce great opportunities. and adjust based on blockages and detours to reach the
ultimate destinations all while providing real-time tracking
According to the survey (see Figure 18), the top 4 ways
capabilities for the end consumer. The future for the
that firms are using IoT for are for real-time analytics (31%),
Next-Generation Supply Chain and Smart Cities is endless
customer and/or supplier collaboration (28%), customer/
in the potential for efficiency and effectiveness through the
market insight (26%) and quality control (25%). Companies
interconnectivity of smart devices through the IoT.
are also using these technologies to streamline production,
enable artificial intelligence and machine learning and to
support cold chain temperature and humidity integrity.
32
Case Study – Driverless Vehicles

with IoT
3. Cloud Technology
computing and storage
Situation: A major US retailer with a product portfolio

ranging from jewelry to apparel to tires, struggled to
manage operational costs and cycle time increases due to
a rapidly increasing4.mix of non-conveyable
Robotics items since the
and automation
introduction of their ecommerce channel. The 1+ million
square foot distribution center, once touted as industry
leading for its level of automation and conveyors, suddenly
faced bottlenecks associated with manual carts used to
transport tires, carpet rolls and mattresses
5. Predictive analyticsthrough
the building. The bottlenecks increased costs and
reduced throughput.
Historically, the non-conveyable items represented

given human attributes of
such an immaterial amount of the business that it
6. Wearable localized intelligence and
was perfectly acceptable to haveand mobile
a person technology
hand-
cognizance allowing it to
deliver the items from the non-conveyable area
make intelligent decisions
to put-away and shipping zones. However, the
about what it sees in real-
emergence of the online sales orders not only increased
time, which gives it the benefits of flexibility, adaptability
the number of the bulky product picks, but also created
and modularity.
demand for more 7. Autonomous
variety vehicles
of these items. and drones
Approximately
30% of the items could not flow through the efficient The ultimate solution consisted of a series of OTTO SDVs
conveyor system. A study performed by the engineering with cages bolted to the tops of the vehicles’ platforms to
teams determined that these non-conveyable items were contain the large, bulky items. The items are transported
taking 4 to 5 times longer than the standard conveyable from their stocking locations to the dock doors for loading
items to pick, pack8.and
3Dload
printing
onto outbound trucks. onto outbound trailers. Workers are now able to pick an
order from “non-con” zones, load it onto an SDV, send it
This retailer needed a solution that could address the
along its way and continue through to their next item to
non-conveyable issues and seamlessly work in harmony
be picked. In the meantime, the OTTO SDV is able to find
with the current infrastructure of warehouse management,
its way through the ever-changing maze of obstacles along
inventory and conveyor control systems already in place.
9. The Internet of Things the active warehouse floor and deliver the order to the
Case Study: The retailer engaged OTTOTM Motors to solve outbound dock staging area in the appropriate sequential
their problem with IoT connected autonomous, self-driving order.
vehicles (SDVs). SDVs are the evolutionary next generation
Result: With the implementation of the OTTO SDVs,
of automatic guided vehicles (AGVs) because they have the
the retailer has been able to bring their distribution
10.and
intelligence to sense Smart
adaptCity Logistics
to their surrounding and
center operations back in line with internal and external
reroute as needed to avoid obstacles in their path.
expectations with strong financial return on the investment.
The mobile robots are connected to other modules of Benefits from the revamped operations have seen an
automation within the operation and are fully traceable due increase in productivity from an increase in the overall
to the integrated navigation system powered by leading IoT throughput of the facility and a reduction in cycle times. An
technology. The first generation AGVs only knew where additional benefit beyond the typical efficiency and speed
they were within a facility in relation to fixed icons and the of throughput is the ability to have live track and trace
sequence they were on along a pre-programmed path, capability for all of these items as they travel through the
explains Bill Torres of OTTO Motors. SDVs, on the other distribution center.
hand, perform ‘Simultaneous Localization and Mapping’
(SLAM) in real-time to detect where they are in relation to all "Self-driving vehicles, with their ability to
of their surroundings, down to the millimeter. The driverless
maneuver around people or objects are really
vehicle does not follow fixed program routes.
collaborative robots, but nobody is talking
They are cognizant of all of the viable routes within the about it that way."
facility and make a route optimization plan and then
TM
re-route around obstacles. Essentially, the SDV has been Bill Torres, Director of Sales, OTTO Motors
What leaders
2. Sensors and should be doing today
automatic identification
• Integrate sensors, automatic identification and IoT within the overarching business case for the
emerging Next-Generation Supply Chain as it will be a critical enabler. This technology will provide
much of the data needed to connect supply chain partners and provide them with the visibility and
3. Cloud
insight computing
needed andnot
to manage storage
only risk, but increasingly complex customer service requirements.
• Learn how predictive analytics can provide insight and action prompts to connected supply chain
workers through sensors and IoT.
• Stay tuned. The viability of sensor technology is evolving rapidly as the cost is falling. Seek out
4. Robotics
experts and automation
and potential vendors that can share the latest and most relevant information about this
technology.
• Begin to identify and refine business processes for digital integration
• Create plan for what data to collect and how to collect it. Then determine how best to organize
and use the data.
• Begin training and hiring a workforce with the technical skills to operate in this new environment.
• Establish digitization as a critical enterprise strategy. Require that all functions of the organization
include digital initiatives in their strategies and budgets.
8. 3D printing
34

Supply Chains
Wearable and Mobile Technology appointment confirmation and checkpoint status updates
are widely accessible for consumers and reduces reliance
6. Wearable
Wearable and
and mobile mobile technology
technologies, devices that can be
on physical documents – a key step in creating the next-
worn or carried, give people convenient and immediate generation supply chains.
access to information wherever they happen to be working
and enables the free flow of information across supply Just as Uber has disrupted the taxi industry, these mobile
chains. solutions will continue to disrupt the trucking industry by
7. Autonomous vehicles and drones providing improved service at lower costs with real-time
Mobile technology, including smartphones, tablets and visibility. This year’s survey confirm this, as 44% of
other wireless devices, is now pervasive throughout the respondents reported that wearable and mobile technology
world. Wearable technology, including smart watches and has the potential to either disrupt the industry or create
glasses, give people ready access to a wide-ranging suite of competitive advantage. Another 35% say it can support
information regardless of their location and can also collect ongoing improvements in their companies (see Figure 19).
8. 3D printing
and display data about the wearer and the surrounding
The market for wearable and mobile devices is exploding.
environment. They are becoming mainstream in both commercial and
The relatively low cost of entry to mobile technology allows industrial applications. According to the survey, 22% of
companies of all sizes to drive up their capabilities. For respondents say that they are using wearables and mobile
example, independent technology in their supply chains and adoption is predicted
9. The Internet truckers
of Thingscan put an app on their
more than double to 45% within the next 1-2 years.
phone that gives them digital supply network capabilities,
allowing them to participate with and compete with larger According to the survey (see Figure 20), the top four ways
companies. Options like digital document signing, mobile that firms are using wearables and mobile technologies in
updates for proof of delivery, geo-fencing for automatic manufacturing and warehousing are in core processes such
Figure 19. 2017 survey results: Potential impact from Wearables and Mobile Devices
21%
35%

9%
35%
as order picking (27%), receiving (25%), cycle counting devices that are in the hands of consumers in real time.
(21%) and high-value asset handling and monitoring (15%). Delivery drivers can give live updates on deliveries and apps
Companies are also using these technologies in field service with location services allow customers to have real-time
(14%), retail (14%) and sales (11%). updates and tracking of the delivery status. The Next-
Generation supply chain is defined by this customer driven
need of real-time updates. Always-on supply chains can
Real-time Visibility
utilize applications to connect data both within and outside
Mobile devices in the hands of supply chain workers can of the company, delivering better quality, faster service, and
transmit data, like tracking information, to the mobile more cost efficiencies.
Figure 20. 2017 survey results: How companies are using Wearables and Mobile Technologies
today (or in the next 1-2 years)
Manufacturing & warehousing: Order picking, value-added processing 27%
Manufacturing & warehousing: Receiving 25%
Manufacturing & warehousing: Routing, trucking, expediting and exception handling 22%
Manufacturing & warehousing: Cycle Counting 21%
Manufacturing & warehousing: High-value asset handling or monitoring 15%
Field services: Installation, repair, maintenance, or monitoring 14%
Sales: Data collection (e.g., orders, sales forecasts) 11%
Retail: Inventory management or replenishment 9%
Retail: Compliance 5%
Other 2%
36
Mobile devices in Smart glasses are increasingly being used to improve them to focus on what they’re doing as opposed to
the hands of supply efficiencies and effectiveness within distribution operations. scanning and holding both devices and product, workers
chain workers They allow workers to free themselves and their hands from gain valuable time and have the added benefit of real-time
stationary terminals and paper documentation. There are data to work with. This augmented reality creates multiple
can transmit
also ergonomic and safety advantages in allowing operators levels of information sharing and productivity, further
data, like tracking
to be hands free. pushing supply chains into the customer driven ‘always-on’
information, to the class of the emerging next generation of supply chain.
mobile devices that Real-time data can be transmitted and displayed for workers
are in the hands of as they are processing items to give updated instructions Business intelligence reports can be viewed on mobile
consumers in real and decrease number of touches needed on each item. devices, making real-time, business critical insights available
Step-by-step instructions for maintenance and repairs can exactly in the moment it is needed to make key decisions.
time.
be transmitted and displayed visually to guide a worker As companies move toward next-generation supply chains,
while they are mobile, rather than having to stop and refer wearable and mobile technologies are proving to be a
to an instructional document. critical factor in pushing forward or being left behind.
The benefits of wearable technologies are largely shown in

gains of efficiency. By freeing workers hands and allowing
Case Study – Order Picking
with Smart Glasses
Situation: A third party logistics (3PL) provider has been
managing the e-commerce operations for a retail client
with highly seasonal demand of sharp increases for the
winter holiday. The 3PL faces a number of issues with
the irregularity of this spike in demand which included
managing the ramp-up of inventory levels and the need
for flexible space expansion, but none more so than the
challenge of onboarding temporary labor to fulfill pick
orders during the8.final
3Dtwo months of the year to meet the
printing
holiday demand peak.
As holiday season approaches, With the wearable technology,

the 3PL will locate a pop-up warehousing staff receive the visual
warehouse space in the general information needed to complete the next
vicinity of the operations and task instead of a codified direction from
9. The Internet
begin to stage additional order of Things the screen of the radio frequency scan gun.
volume starting in September This enables a much more natural user
through concentrated efforts interface for the workers by providing them
from their standard team of with the pick item along with a birds-eye
operators and staff. A month later, the 3PL then begins to view of the facility layout and where they
hire and train transient staff to support the order picking are in relation to where the next pick is located, resulting in
10. Smart City Logistics a quicker, more efficient picking process.
process through the end of the year. This timeline allows
for the management team and supervisors to onboard the The implementation of wearable devices began with the
warehouse workers with just enough training to learn the integration of the smart glass platform with the on-premise
order fulfillment process before the tidal wave of demand warehouse management system (WMS). The IT integration
rolls through Thanksgiving weekend. The 3PL typically efforts took only a few weeks to develop and test before
finds that not only are managers are challenged to find it could be rolled out, very similar in the level of effort and
enough qualified employees for the seasonal peak, but that timeline needed to setup new radio frequency equipment
the overall site sees a significant decrease in operational for warehouse operations.
efficiency and employee productivity during this critical time
because of the short onboarding timeline amplified by the Result: The primary benefits from implementing smart
complexities associated with the high volumes. glasses for the 3PL’s order fulfillment operations was the
ability to onboard the seasonal employees at a much faster
Case Study: The 3PL sought to improve their ability rate by providing visually intuitive content that allowed
to manage its seasonal demand through empowering them to perform at a level closer to the experienced team
the operators, new and experienced, with smart glasses members. This allowed the 3PL to wrap up quicker and
powered with the Skylight software platform by Upskill. better respond to seasonal surges in customer demand.
With these smart glasses, workers are delivered visual Productivity at all levels of operations improved by 12-15%
information associated with the picking process right from over the previous holiday season and picking errors were
within their line of sight. Such information includes item drastically reduced. The smart glass order picking operation
locations, item quantity, pick list, “hot” picks, and images also benefited the experienced team of operators as they
of goods, all with intuitive graphics that reduces the human acclimated themselves to the pop-up expansion facilities
cognitive load. For example, without smart glasses seasonal each holiday season.
workers must learn and decode item information and
location, for example what “2B-34-189-2” means as seen
on handheld scanners. "The WMS offers all kinds of information that
is not effectively delivered to the warehouse
Prior to introducing the smart glasses, the 3PL considered
workers. With easy to understand visual
a couple of other options such as pick-to-voice solutions
and pick-to-light systems but found these solutions did not
information delivered on smart glasses via
work for seasonal staff who are not native English speakers. our Skylight platform, people are better
Smart glasses provide an interface that transcends language equipped with the information needed to be
barriers, delivers more system-driven interactive information effective in their job."
and visually intuitive content to the operator. In addition,
training time for new seasonal staff was greatly reduced. Jay Kim, Chief Strategy Officer, Upskill
38
What
6. Wearableleaders should be doing today
and mobile technology
• Make sure you have adequate Wi-Fi coverage on the warehouse floor. Many wearables and
mobile technology rely on Wi-Fi to deploy information, so companies should ensure their network
infrastructure is prepared to accommodate new devices and support needed bandwidth.
7.valuate
• E Autonomous vehiclesratio
cost to productivity andofdrones
devices and programs. Many mobile devices are targeted
toward consumer preferences, and developers could “de-scope” functions not needed for material
handling to reduce the price. However, with the development of the Internet of Things, many
companies will already have the systems, resources, and knowledge in place to move to mobile
and wearable technologies.
8.arefully
• C 3D printing
evaluate the risks of employee participation in wearables programs before investing.
Consider incentives and increase benefits from such programs, and plan for safety programs for
employees as they adjust to the any new mobile or wearable technology.
• Keep abreast of the latest advancement as the pace of progress is swift in this space. Continue
to test the
9. The technology.
Internet The more familiar workers are with the technology, the easier it will be to
of Things
drive adoption.
Supply Chains 6. Wearable and mobile technology
Driverless Vehicles and Drones drone depots to drones being deployed from vans, to
ground-based robots, they are seen as potential ways to
7. Autonomous
Autonomous vehicles
vehicles and drones and drones
drive themselves from
change how product is delivered to consumers. While full
a starting point to a predetermined destination using
adoption of these technologies may take decades, the value
advanced in-vehicle technologies, cameras and sensors.
to supply chains will be indispensable.
These vehicles have been used in industrial facilities for
decades, but as technology evolves, so do the vehicles and Today, these vehicles are increasingly being deployed in
“We are getting to manufacturing facilities and distribution centers. Companies
their capabilities.
the point that, in 8. 3D printing currently employing drones as inventory management tools
the not-too-distant Today's smarter driverless vehicles and unmanned drones
are reporting significant increases in accuracy and efficiency.
future, through are being used not only for movement of material and
vehicle-to-vehicle product across a facility, but for real-time inventory control, These drones are more commonly known as unmanned
order picking and last mile delivery. vehicles or aerial robots, “because they’re very similar to
and vehicle-to-
ground-based autonomous robotic vehicles, except they can
infrastructure The deployment of this technology is rapidly emerging, with
move in a third dimension: the Z-axis,” explains Eric Ringer,
technologies and 54%9.ofThe Internet
survey respondents ofsaying
Thingsthat driverless vehicles and
Strategic Projects Engineer at Skyward.
sensors and the drones have the potential to create competitive advantage
ability to detect and disrupt the industry, that is up from 30% in 2015. An Driverless vehicles and drones offer automation that is
where things are, additional 22% say that these technologies support ongoing flexible and scalable. Companies can purchase the number
every vehicle will improvements in supply chains (see Figure 21). of robots they need, or can afford, and still have it be
know where every an effective tool. Driverless vehicles and drones are also
While adoption remains low at 8%, 31% report of survey
other vehicle is, as 10. Smart
respondents City
say they willLogistics
adopt these technologies within
transportable, which means they are more flexible because
well as where they they are not a static fixed asset, unlike many other forms
the next five years with an additional 19% predicting
are in relationship of automation that have to be installed permanently. They
adoption further into the future (6+ years) (see Figure
also offer operational flexibility. For example, rather than
to the fixed 22). Given the accelerated pace of change with these
hardwiring a security camera system or RFID monitoring
environment they’re technologies, these adoption rates could rise beyond these
equipment, companies can deploy a handful of drones
moving in.” predictions.
equipped with both cameras and sensors to offer a more
Scott Corwin, flexible and adaptable security system.
Managing Director Beyond the Buzz
Driverless vehicles are also experiencing more widespread
Deloitte Consulting,
Leader of the Future Major buzz regarding these technologies is currently around applications within supply chains. One of the most
of Mobility Initiative last-mile delivery in both urban and rural areas. From flying impactful areas is their growing use in support of logistics
40
Figure 21. 2017 survey results: Potential impact from Driverless Vehicles and Drones
24% 28%
22%
26%
and distribution. For example, in conjunction with planners chain from beginning to end. By constantly communicating
of smart cities, developers of the technology are exploring the information they collect, they create an opportunity
the use of caravans of driverless trucks that move during to intercede with an alternate plan should a delivery be
low traffic hours into urban centers within dedicated lanes. delayed, for example.”8
Once there, the trucks would be unloaded and sent back
By 2018, 20% of logistics organizations will exploit
outside city limits before the next day.
drones as part of their monitoring, searching and event
“The impact of autonomous robotic vehicles and drones management activities. What's more, by 2030, vehicles
is more evolutionary than revolutionary,” says John capable of driving autonomously are expected to represent
Clark, Director of North American Marketing for MHI approximately 25% of the passenger vehicle population in
Member Egemin Automation, a global AGV manufacturer mature markets. In fact, many Autonomous Commercial
and supplier. Current drone deployment is focused on Vehicle (ACV)-related systems are already in use today
connecting product to the Internet of Things, and doing within the trucking industry. Examples include electronic
it in a way that is more efficient and more accurate. Clark stability control (ESC), collision avoidance technology, rear-
adds, “It’s the intelligence of these technologies, and their and forward-view camera systems, plus related electronic
connectivity, that makes them game changers for the sensor arrays needed for transmitting data between such
companies that are willing to invest in them. They give systems and a truck’s engine, transmission, and brakes.
users smarter views of what’s happening in their supply
Figure 22. 2017 survey results: Adoption of driverless vehicles and drones technologies over 6+ years
8%
12%
■ In-use today
42%
■ 1-2 years
■ 3-5 years
■ 6+ years
19%
■ Unlikely to adopt
19%
Case Study – Inventory Accuracy

with Drones
Situation: A large retailer faced challenges to manage the record in question can be replayed or observed from a
its more than $250 million of inventory within one of its local PC for further review and validation instead of having
distribution centers. Even with the full-time efforts of another physical review of the location.
8.they
eight cycle counters, 3Dwere
printing
unable to perform all of
The solution will not replace human workers to manage
the necessary counts to achieve more than 96% inventory
the inventory, instead it will enhance their ability to perform
accuracy within the 500,000 square foot facility.
their jobs by completing the manual tasks of visiting each
Their cycle counting process involves travelling to a and every location to free them up to perform value-
designated location, using a radio frequency (RF) scanning additive tasks such as reviewing variance reports and
device to scan the barcode of the location, counting the ensuring that the inventory is reported as accurately as
9. The
units within the location andInternet
key enteringoftheThings
quantity possible. Fewer people on the warehouse floor also means
of units into the RF device before being directed to the less congestion and fewer accidents for the employees.
location of the next item on the list. When the cycle
count quantity does not match the expected value in
the warehouse management system (WMS), an incident
is created and escalated for another cycle count to be
performed, usually 10. Smart City
by a supervisor Logistics
to ensure the accuracy of
the report.
Even though the process is connected to the WMS, it is

still highly manual and allows for inherent errors associated
with the manual completion of tasks. In addition, all cycle
counts performed above the second shelf have to involve The primary limitation with this application will be to
the use of man-lifts to reach the upper pick locations in recognize the abilities of what a drone can and cannot
order to perform the required tasks. This process not only do. For example, the retailer will have to ensure that all
ties up expensive equipment to perform the cycle counting locations are organized and able to be counted through
activities, but also introduces risk of accidents to the imagery, because the drone is only able to see what a
operators that are on the lift or nearby. cycle counter would see from the front of the location and
cannot pick up the items or shuffle the items around to
This retailer was seeking to find a better solution for
complete the count.
their cycle counting operations that could improve the
accuracy of their inventory and reporting, reduce costs Result: The retailer is piloting the drone solution with
from shrinkage, improve the productivity of their staff and expectations to enhance their operations through a number
increase the safety for their warehouse employees. of key performance metrics. They expect to realize an
increase in inventory accuracy to over 99.5% and as a
Case Study: The retailer is working with PINC Solutions to
result, will have an improvement in their order fill rates and
deploy a cycle counting drone to automate the process for
customer satisfaction levels. In addition, overall picking
cycle counting the inventory in their warehouse. The drone
times will decrease without the time consuming variance
is an aerial robot that works autonomously to perform the
process when order pickers discover inaccurate item
manual and repetitive tasks that are traditionally carried out
quantities.
by cycle counters on the warehouse floor. But it does more.
Overall cost will also be reduced as a result of more
The aerial drone can provide video, pictures and historical
accurate inventory information and reduced variability,
data for checking each item and how it would have
which reduces safety stock levels. Finally, shrinkage will be
changed over time in order to eliminate the revisiting of the
better monitored and controlled and costs associated with
location to verify the count. It will identify the inventory by
incomplete orders will be dramatically reduced.
capturing video and focusing in on an area of interest (i.e.,
it will extract the image of the label from the video feed
and determine how to read it, whether as a barcode or text "The enhanced tools and capabilities
characters to identify the product). allow activities to be done faster, better,
The video will then be analyzed to perform the cycle count
cheaper."
and stored to provide video documentation of the point of Matt Yearling, President and CEO PINC
interest for records. In the event of a cycle count variance, Solutions
42
What leaders
7. Autonomous should
vehicles and drones be doing today
• Explore the possibilities. Self-driving vehicles and drones for supply chains are closer to reality
than many people think, and as the technology develops, the variety will only increase. The
potential impacts of drone and driverless vehicle use aren't limited to convenience as they can
increase efficiency, safety and visibility. These technologies may soon have a major impact on your
8. 3D printing
organization, employees, supply chain and internal operations, so it's important to start preparing
now.
• Assess company needs. While drones certainly have disruptive potential, for many firms, proven
ground-based robots may be a better solution.
• L9.
ookThe
for Internet of Things
new cross-industry opportunities that combine transportation-related benefits with other
activities. Explore innovations that use drones and other automated vehicles to supplement or
improve activities that currently require human interface.
• Stay informed. As technology evolves leaders should remain educated on their use across supply
chains and the regulatory restrictions that will be in place to govern their usage.
Supply Chains 4. Robotics and automation
Predictive Analytics Today, predictive analytics is increasingly used to synthesize

insights from the data that digital supply chains provide.
5. Predictive
Predictive analytics
analytics applies statistical modeling and data
Predictive analytics can forecast consumer behaviors and
mining to historical data in order to generate accurate
risk, but it is also becoming a way to improve efficiencies in
forward projecting views, rather than measure what
supply chain operations. According to the survey, over 57%
has already happened. For example, predictive analytics
of respondents believe predictive analytics will either be a
can provide companies with a look into the future and
source of competitive advantage or will disrupt the industry
give them opportunities to identify emerging patterns
(see Figure 23). This is up from just 38% in 2015.
in the marketplace that can lead to highly effective and
personalized customer engagement strategies. Yet, only 17% of surveyed companies (see Figure 24) report
that they are using predictive analytics today. Adoption
For decades, companies have employed a basic form of
of predictive analytics, however, is expected to jump to
predictive analytics through forecasting techniques that
79% over the next three to five years, and to 89% over the
use sales history as the primary indicator of future market
next six plus years. Given this significant expected growth
demand. However, with the proliferation of supply chain
early adopters who compete on analytics will gain a major
data, the sources and volume of both leading and lagging
7. Autonomous vehicles and drones advantage over the competition.
indicators allow for much richer analysis and broader
applications.
“Prescriptive
analytics provides us
with what’s the best
8. 3D printing
possible action I can
take today in light
of what I anticipate
happening
tomorrow. But
what good is it to 9. The Internet of Things
predict what you
cannot act upon?”
Randy V. Bradley,
PhD, The University
of Tennessee
44
According to Randy Bradley, PhD, The University of While predictive analytics provide much-needed perspective
Tennessee, high-performing organizations are five times on supply chain operations and organizational performance,
more likely to be more analytics-driven than intuition- the idea of getting started analyzing the huge amount of
based with respect to decision-making as compared to data generated by digital supply chains can be daunting to
low-performing organizations. Further, according to the point of paralyzing.
an article in the MIT Sloan Management Review, high-
The good news is that as predictive and advanced analytics
performing organizations are twice as likely to use analytics
continue to grow in prevalence, so, too, do the numbers of
for developing future strategies than are low-performing
consultants and solution providers willing and able to help
organizations9.
firms develop predictive analytics into a core competency.
Figure 23. 2017 survey results: Potential Impact of Predictive Analytics
11%
12%
■ Potential to create competive advantage
45% ■ Support ongoing improvements
32%
Figure 24. 2017 survey results: Adoption of Predictive Analytics over 6+ years
11% 17%
10%
■ In-use today
■ 1-2 years
■ 3-5 years
■ 6+ years
■ Unlikely to adopt
27% 35%
Case Study – Predictive Analytics at The

University of Tennessee Medical Center
Situation: The Advanced Orthopedic Center at the
University of Tennessee, Medical Center (UTMC), had less
than adequate visibility into the appropriate types and level
of supplies needed for surgical procedures. Their goal was
to move from “hunch-driven” to historical “data-driven”
inventory and forecasting7. decisions.
Autonomous Using theirvehicles
hunch- and drones
driven approach, the operating room (OR) doors were open
an average of 10.75 minutes per case, and 30% of those
door openings were related to supplies that were not readily
available in the OR. Such repeated door openings could
have potentially increased the risk of surgical site infection A key challenge faced post implementation was related to
and contributed to surgical distractions. Additionally,
8. 3D printing information governance - Key processes for data owners
approximately 70% of the supplies brought into the OR and data sharing were developed to mitigate issues.
were not needed and had to be returned to inventory.
Results: The medical center developed the ability to
Leadership saw an opportunity to leverage innovation to ‘create the perfect physician preference card’ through
minimize the number and potential distraction of multiple predicting the supplies for a particular patient procedure,
door openings into and out of the OR toward their ultimate which allowed for a more focused experience to the patient
9. The
mission to maximize overall Internet
patient of objective
safety. Their Things with less risk of exposure to airborne contaminants. Such
was to develop an ability to track material flow and better a physician preference card contains a list of supplies that
predict what supplies the care providers needed for a surgeon uses on a procedure, guides what supplies
particular procedures. are pulled into a surgical case, is often used as the
foundation for patient charge sheet and is used for resource
Case Study: UTMC began implementing “virtual
forecasting. Forecasting and inventory knowledge became
watchers” (RFID scans) to track material flow and generate
more accurate, allowing waste and expired supply levels to
consumption data that 10. Smart
informed City
material Logistics
usage. The
decrease substantially.
application integrated with hospital information systems
and gathered information about the supply items used, Some of the other benefits of tracking the material flow
procedures being performed and the physician performing included:
the procedure in the OR. The solution used a standard
• Reduction in funds tied up in excess inventory
interface to integrate into multiple databases for inventory,
billing and surgical information systems, passing data about • Reduction of time spent on manual inventory processes
the supplies used so they could be properly tracked and
• Reduction of dollars spent on lost product and
charged to the appropriate patient.
• Fewer touches in the supply chain
The tracking solution provided accurate data for inventory
utilization and depletion, which helped the officials The pilot implementation of this initiative in less than a third
proactively determine which supplies would be needed in of their procedure rooms led to a savings of several million
a particular room, for a particular procedure performed dollars annually and, more importantly, a significant stride
by a particular physician before the patient arrived. The toward the ultimate mission of maximized patient safety.
predictive algorithm used historical consumption data and
typical procedural information to forecast the right supplies
at the right time and right place.
46
What leaders
5. Predictive analytics should be doing today
• Use a top-down approach to identify and address the biggest business challenges. Many
companies make the mistake of first identifying available data before determining how to make
it accessible to users. Instead, take a top-down approach, first looking at what drives business
performance and then aligning analytics initiatives to those business drivers.
• Become an insight-driven organization by embedding analysis, data, and reasoning into the
decision-making process. Position analytics as a core capability across the entire organization, from
strategic planners through line workers, providing insight at the point of action.
• Refine your processes as you implement predictive analytics capability. Take a fresh look at all
processes that will touch analytics and redesign them with an eye toward shortening the time
between analysis and action.
• Acknowledge security challenges and address them proactively.
• Synthesize data to determine optimal tools and techniques. Collect and analyze data for integrity
issues and gaps. Layer in external 3rd party data (if applicable). Select optimal quantitative
8. 3D printing
techniques and tools. Visualize data and begin testing hypotheses.
• Create a governance structure and change management plan for on-going analytics initiative.
Determine dependent processes and systems for developed analytic solution.
Conclusion
Actions for Supply Chain Leaders
"By taking advantage of technology and innovation, Next-Generation Supply Chains will be more
efficient, flexible and transparent. This is just what customers are demanding. However, the need for
new skill sets to run this new breed of digitized, connected supply chains will only intensify the talent
gap as these next-generation models require more technical and analytical expertise."
George W. Prest, CEO of MHI.
The findings from this year’s survey indicate that supply and supply chain operations described in this report with an
chain leaders see advancements in the innovations and eye to the challenges and opportunities provided by Smart
technologies we profiled as continued disruptors to the Cities will be critical for future success
industry. Whether it be robotics, automation, IoT or drones,
these leaders understand that the battle for the lion’s share Next-Generation Supply Chains
of the consumer’s dollar will be fought supply chain vs. Increasing digital capabilities throughout popular culture
supply chain. Those organizations that can deliver on rising and the corporate world alike, have fuelled expectations for
customer service expectations at efficient cost through faster, better service across the entire supply chain. To meet
competency and innovation in their supply chain operations these mounting challenges and provide the step-change
will be the winners. Additionally, adapting the technologies improvements to service and efficiency required, supply
48
chains must transform into next-generation models. The directly to supply chain workers who will use it to make
technologies and innovations profiled in this report are key proactive decisions and adjustments as they perform their
to this imminent transformation. tasks.
Foundational Step of the Transformation On-demand and Always-on Expectations

- Digital
Because an abundance of information is now at the
Next-Generation Supply Chains will become more digital fingertips of consumers at instantaneous speeds, they are
and take advantage of advancements in computing power expecting more and more from the supply chain in terms of
and the growing availability of data from every link. Sensors customer service: shorter delivery windows, free shipping,
will be increasingly used in strategic places to provide data full visibility of order status and more.
that is filtered through an analytics layer and communicated
Next-generation supply chains will be required to provide
across the entire supply chain.
anytime, anywhere delivery to customers and will therefore
Instead of a series of linear, individual, dis-synchronized be required to be always-on, digitally connected, with all
links, the next-generation supply chains will evolve into a of its links synchronized. Retail stores, e-commerce sites,
more connected, harmonized network of trading partners inventory control points, distribution and fulfilment centers,
able to intelligently scale operations. The physical and upstream suppliers and manufacturers – all will be aligned
digital worlds will converge. Cognitive tools including to the same drum beat of consumer demand in near real
wearables will be used to bring insight-rich information time.
Smart City Logistics Actions for Supply Chain Leaders
The trend towards urbanization along with continued We are excited to continue to profile and track the
dramatic growth of e-commerce and online shopping is innovations and technologies that are transforming the
driving a dramatic increase in freight deliveries to and within next-generation supply chains and providing breakthrough
urban areas. Current fulfilment approaches cannot scale improvements to service as well as efficiency. To maintain
to meet this challenge and would lead to untenable traffic momentum and overcome the significant challenges ahead,
congestion, CO2 emissions and unacceptable noise and air supply chain leaders can take these actions:
pollution levels within urban areas.
Look to the future
The innovations and technology profiled in this report can
• S tart with a forward looking view of what your
be leveraged to develop “Smart City Logistics” solutions
supply chain should look like at least five years from
to these issues that work for government, businesses,
now. Work with sales and marketing to understand
consumers and the environment. A collaborative effort
growth projections by product, channel and region.
across and between businesses and city planners will be
Understand how product mix change. Consider various
required to arrive at sustainable solutions to this emerging
scenarios that cover ranges of possibilities and use a
problem.
leading network modelling tool that will help to model
and evaluate your supply chain and support scenario
planning.
50
REFERENCES
[1] " IWB – Investment Watch Blog post,"
6 June 2016. [Online]. Available: http://
investmentwatchblog.com/staggering-more-data-
created-in-last-two-years-than-all-human-history-
combined/.
Begin to invest in innovation
[2] Deloitte University Press; Adam Mussomeli,
• W
hether your company is large or small, it is important Doug Gish, Stephen Laaper, "The Rise of the Digital
to begin to invest in initiatives that leverage some or all Supply Network," 1 Decemeber 2016. [Online].
of these impactful innovations and technologies. Our Available: https://dupress.deloitte.com/dup-us-en/
survey showed a consistent trend of investment across focus/industry-4-0/digital-transformation-in-supply-
chain.html.
company sizes, with most investing 1-5% of sales
revenue. Nearly half of the companies surveyed with [3] P. Pray, "Omni-Channel Analytics & the Cost-
sales greater than $10 billion are planning to invest $10 Service Conundrum," 1 September 2016. [Online].
Available: http://decisionspectrum.com/index.
million or more annually, and 30% of these companies
php/2016/09/01/omni-channel-analytics-the-cost-
are planning to invest at least $50 million annually. service-conundrum/.
[4] "United Nations publication – World

Urbanization Prospects; July 10, 2014;," 10 July
Invest in workforce hiring and training 2014. [Online]. Available: http://www.un.org/
en/development/desa/news/population/world-
• T he supply chain workforce crisis is real and will only
urbanization-prospects-2014.html.
accelerate as new technologies demand a labor pool
with increasingly advanced skill sets. MHI has focused [5] "US Census Bureau," 4 March 2015. [Online].
Available: https://www.census.gov/newsroom/
on the talent shortage for years and works with the
press-releases/2015/cb15-33.html.
trade to address this critical issue. MHI’s College
Industry Council on Material Handling Education [6] "The 2016 MHI Annual Industry Report,
Accelerating Change," April 2016. [Online].
(CICMHE) and Career & Technical Education Program
Available: https://www.mhi.org/publications/
are key resources. report.
Today’s supply chain leaders should embrace, not fear, [7] "MHI Solutions Magazine Q3," 2016. [Online].
the future. The supply chain function offers professionals Available: http://www.mhisolutionsmag.com/.
access to some of the most exciting and innovative [8] "MHI Solutions Magazine Q4," 2016. [Online].
technology emerging across the business landscape. Available: http://www.mhisolutionsmag.com/.
Consumers will continue to demand higher levels of
[9] LaValle, S., Lesser, E., Shockley, R., Hopkins,
service at lower costs. These demands will largely be met M. S., and Kruschwitz, N., "Big data, analytics
from efficiencies and innovation in the supply chain. Hold and the path from insights to value," MIT Sloan
on! It should be quite a ride. Management Review, 52(2), 21-31, 2011.
[10] "MHI Solutions Magazine Q2," 2016. [Online].

Available: http://www.mhisolutionsmag.com/.
[11] A. Hollyfield, "ABC News, San Francisco -

Cyber Monday," 28 November 2016. [Online].
Available: http://abc7news.com/shopping/
amazon-quickly-fulfilling-orders-on-busy-cyber-
monday/1629024/.
[12] "UPS trials delivery-by-e-bike in

US; Ben Coxworth," 8 December 2016.
[Online]. Available: http://newatlas.com/
ups-electric-trike-delivery/46854/.
Appendix
About the Report Responder's Company Type
The 2017 MHI Annual Industry Report is our 12%

fourth annual study of emerging disruptive
technologies and innovations that are
■ Manufacturer
transforming supply chains around the world.
18% 46% ■ Service Provider
The findings are primarily based on an in-depth
■ Distributor
global survey conducted in late 2016, which
involved 1,141 supply chain professionals from a ■ Other
wide range of company types and industries.
Half of participants are executives holding the

role of CEO, Vice President, or General Manager 24%
or Department Head. Participating companies
ranged in size from small to large, with 47%
reporting annual sales in excess of $100 million,
and 10% reporting $10 billion or more. Responder's Role
16%
18%
■ CEO of President
■ Vice President or Senior Vice President
14%
■ General Manager or Department Head
■ Manager or Engineer
■ Other (please specify
32%
20%
Company Size by Revenue (USD)

7%
22%
10%
■ $10 billion and more
■ $1 billion to $10 billion
10% ■ $500 million to $1 billion

■ $100 million to $500 million
13% 21%
■ Less than $10 million
17%
52
Respondent's Industry
Other 18%
Material handling and supply chain equipment 28%
Transportation and warehousing (incl. 3PL and contract) 10%
Consulting and othe rprofessional/technical services 9%
Automotive 8%
Retail 6%
Food and beverage 6%
Wholesale 4%
Technology, telecom and media 4%
Consumer packaged goods, excluding food 4%
Education 2%
Life sciences 1%
Investment In Products And Services Over Next Three Years
Fork Lift Trucks & Other Mobile & Wheeled Handling Equipment 43%
Racks, Shelving, Storage Equipment & Shop Furniture 42%
Software Systems for Warehousing, Distribution & Logistics 41%
Packaging, Labeling, Shipping, Weighing & Cubing 40%
Automatic Identification & Data Collection/Radio Frequency Identification (RFID) 36%
Information Systems & Controls 35%
Automation Equipment (AGVS, AS/RS & Robotics) 33%
Pallets & Containers 32%
Ergonomic & Safety Equipment 30%
Batteries, Chargers, Motors 29%
Conveyor & Sortation Equipment 29%
Third Party Logistics/Transportation Services 28%
Order Picking and Fulfillment (Pick-to-Light/Pick-to-Voice) 26%
Loading Dock Equipment 25%
Software Systems for Manufacturing 25%
Systems Integrators/Consulting 20%
Overhead Material Handling & Lifting Equipment (Cranes, Hoists, Monorails) 19%
Sustainable Facility Equipment and Energy (HVAC, Lighting, Solar, Wind, Natural Gas) 16%
Mezzanine 14%
Work Positioning Equipments 12%
Power Transmission Equipment 6%
Other (please specify) 4%
Acknowledgements
In memory of Willard P. Heddles, Chairman and CEO, Tiffin Metal Products, Inc.
We would like to acknowledge the hundreds of organizations that participated in our survey. We
would also like to thank the MHI Board for their contributions to the survey and conclusions.
MHI Officers Editing Team

• Chairman of MHI, John Paxton, Vice President and • Alex Batty, MHI
General Manager, Demag Cranes & Components • Carol Miller, MHI
• President of MHI, Gregg E. Goodner, President Hytrol • Thomas Boykin, Deloitte Consulting
Conveyor Company, Inc. • Brock Oswald, Deloitte Consulting
• Vice President of MHI, Brett Wood, President and CEO, • Mark Quinn, Deloitte Consulting
Toyota Material Handling, North America • Patrick Salemme, Deloitte Consulting
MHI Board of Governors Research and Interview Team

• Jay Anderson, President, Steel King Industries, Inc. • Patrick Boykin, J Sandoval & Associates
• Steve Buccella, Vice President Corporate Sales and • Bedanta Dutta, Deloitte Consulting
Business Development, Dematic Corporation • Ranga Jaganathan, Deloitte Consulting
• Bryan Carey, President, Starrco Co., Inc. • Akshay Kumar, Deloitte Consulting
• Brian Cohen, Chief Executive, Hanel Storage Systems • Jubin Varghese, Deloitte Consulting
• David Lippert, President Hamilton Caster and Mfg. Co.
• Kevin O’Neill, President Steele Solutions, Inc. For further information about the survey, contact the
• George Prest, CEO MHI following:
• E. Larry Strayhorn, President WEPCO, Inc.
• Colin Wilson, President and Chief Executive Officer, George Prest
Hyster-Yale Group CEO MHI
• Dave Young, President EGA Products, Inc. + 1 704 676 1190
[email protected]
MHI Roundtable
• Kevin Ambrose, CEO, Wynright Corporation Scott Sopher
• Ken Beckerman, President, Flexcon Container Principal and Leader of the Global Supply Chain Practice
• Steve Diebold, President, WireCrafters, LLC. Deloitte Consulting LLP
• Sal Fateen, CEO, Seizmic, Inc. +1 404 631 2600
• Rick Fox, President, Fox IV Technologies [email protected]
• Don Frazier, Emeritus, Frazier Industrial Company
• John Hill, Emeritus, St. Onge Company
• Bryan Jensen, Vice President, St. Onge Company
• Peter Kerrick, President, Bushman Equipment, Inc.
• Jeff LeClair, VP Manufacturing and Supply Chain, Basin
Holdings
• Brian McNamara, President & CEO, Southworth
International Group, Inc.
• Brad Moore, Vice President Sales, viastore Systems, Inc.
• Dan Quinn, Emeritus, HAMACO Industries Corporation
• Brian Reh, President & CEO, Gorbel Inc.
• Pat Sedlak, Principal, Sedlak Management Consultants
• Clark Skeen, Chairman, CubiScan
• Jim Vandegrift, President, R&M Materials Handling, Inc.
54
About MHI
MHI is an international trade association that has represented the material handling and logistics industry since 1945. MHI members include material
handling, logistics and supply chain equipment and systems manufacturers, integrators, consultants, publishers, and third party logistics providers.
MHI offers education, networking and solution sourcing for members, their customers and the industry as a whole through programming and events.
The association sponsors trade events, such as ProMat and MODEX to showcase the products and services of its member companies and to educate
manufacturing and supply chain professionals on the productivity solutions provided through material handling and logistics.
MHI
8720 Red Oak Blvd.
Suite 201
Charlotte, NC 28217-3992
Tel: 704-676-1190
Fax: 704-676-1199
www.mhi.org
This publication contains general information only and Deloitte and MHI are not, by means of this publication, rendering accounting, business, financial,
investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should
it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your
business, you should consult a qualified professional advisor.
Deloitte and MHI shall not be responsible for any loss sustained by any person who relies on this publication.
About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (”DTTL”), its network of member
firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred as “Deloitte
Global”) does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms.
Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not
be available to attest clients under the rules and regulations of public accounting.
Copyright © 2017 MHI. All rights reserved.

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The 2017 MHI Annual

10 Next-Generation Supply Chains

10 Emergence of the Digital Supply Chain

12 Escalating On-Demand Customer Requirements

13 “Always-on Supply Chains”

14 “Smart City Logistics”

16 Implications for Supply Chains

17 Strategies for a Smarter Tomorrow

21 Survey Trends of the Innovations and Technologies

24 Innovations and Technologies Driving Next-Generation Supply Chains

24 Robotics and Automation

29 Sensors, Automatic Identification and IoT

35 Wearable and Mobile Technology

40 Driverless Vehicles and Drones

48 Conclusion – Actions for Supply Chain Leaders

52 About the Report

54 MHI Board of Governors

54 Research and Interview Team

DISRUPTIVE TECHNOLOGIES Top 6 out of 9

ADOPTION RATE In-use Today 5-Year Compounded Annual Growth Rate

TOP CHALLENGES BARRIERS TO IOT

$10 MILLION+ 53% Recruiting for

"With a strategic focus and the courage to collaborate, leading firms

Autonomous vehicles and drones - A computer-

3D printing - A group of technologies that can

Robotics and Automation 61% 27% 12%

Predictive Analytics 57% 32% 11%

Internet-of-Things (IoT) 55% 33% 12%

Sensors and Automatic

Inventory and Network

Wearable and Mobile

Cloud Computing and

Blockchain and distributed

0% 25% 50% 75% 100%

81% 89% 80%

■ In-use today ■ 1-2 years ■ 3-5 years ■ 6+ years

Supply Chain Talent Gap Investments

Cyber security and privacy of corporate

Other (please explain) 85% 9% 4% 2%

0% 25% 50% 75% 100%

■ Not Significant ■ Somewhat Significant ■ Very Significant ■ Extremely Significant

Figure 4. 2017 survey results: Company challenges

Hiring qualified workers 7% 30% 38% 25%

Implementing sustainability programs 28% 46% 20% 6%

Omni channel fulfillment 35% 40% 19% 6%

Visibility of inbound and outbound shipments 31% 47% 18% 4%

Food safety, spoilage and contamination 70% 18% 10% 3%

“As digital capability fuels customer expectations to unprecedented

Figure 5. 2017 survey results: Timeframe for Next-Generation Supply Chain

Escalating On-Demand Customer Indeed, an astounding array of information regarding

Figure 7. 2017 survey results: Smart City Logistics awareness

6% ■ Aware; begun to collaborate

■ Aware; not willing to collaborate

■ Aware; begun to plan and invest

Figure 8. Expanding US urbanization: Percent of U.S. populations residing in urban areas

United States Northeast Midwest South West

Logistics decoupling points 22%

Urban distribution centers 22%

Other (please explain) 16%

City logistics hubs 16%

• Begin to identify and refine business processes for digital integration