The development of different kinds of data and information technologies has already brought new opportunities to businesses and will bring more in the future, but it has also placed demands on the logistical performance of supply chains, according to Max Finne, Assistant Professor of Information and Service Management at Aalto University.
“Blockchain, 3D printing and other technologies have been featured widely in the media, but their application in industrial companies is still in its infancy, albeit increasing rapidly. On the other hand, the Industrial Internet—the Internet of Things—and remote monitoring and control have changed business supply chains, for example when it comes to device maintenance,” Finne says.
He mentions solar power plants and wind turbines, which are often situated in difficult-to-reach locations.
“These technologies allow us to closely monitor their status and predict maintenance needs. In some cases, even potential fault situations can be serviced remotely, in the same way as is already done to a certain extent with mobile networks,” Finne says.
Many expectations have been placed on blockchain; it could increase transparency in various sectors in the future."
As a result of ICT development, the role of information has changed from the perspective of supply chain management. With the ease, affordability and transparency of data processing, some intermediate levels of the supply chain have disappeared.
In the future, one of the major technological breakthroughs in logistics will probably be blockchain technology, which is being talked about all the time, but which is still very limited in the number of applications.
“Many expectations have been placed on blockchain, including that it could increase transparency in various sectors in the future. For example in the housing trade, the role of banks and similar players may be reduced when buyers and sellers can rely on the transparency provided by blockchain technology,” Finne says.
“In the same way, it is hoped that through this technology, we could for example get at least some kind of hold on the ethical problems of the global clothing industry. Expectations are particularly high, because people believe blockchain could help specifically in the lack of transparency in global supply networks, which is a fundamental challenge facing supply chains."
Protectionism has a global impact on supply chains
Finne mentions changes in the political environment at the global level as another large driver in logistics change, in addition to technology and digitalization.
The growth of protectionism for example in the United States has already increased the use of domestic subcontractors, but on the other hand, companies in the UK have been preparing to relocate their operations elsewhere because of Brexit.
“With Brexit, numerous companies have announced plans to relocate their operations from the UK to other EU member states in order to avoid the anticipated logistical problems in the future EU-UK border,” Finne says.
“Large companies which will remain in the UK have made plans to deal with increasing barriers to trade. For some companies, this can mean resorting increasingly to domestic subcontractors, which we have seen taking place increasingly in the United states.”
Assistant Professor Max Finne is a program manager in Aalto EE's logistical consortium program "Future of Logistics and Supply Chain Management". Together in implementing and designing the program were VR Transpoint, Metsä Group, and SSAB. Read about their experiences.