iCognitive Logistics 2050


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iCognitive Logistics 2050

  1. 1. PLAN SOURCE MAKE DELIVER RETURN©2013CopyrightiCognitivePte.Ltd.AllrightsreservedDelivering TomorrowInception • Imagination • Issue • Implication • IntelligenceA summary from original publication by Deutsche Post AG, GermanyLogistics 2050: A Scenario StudyFive far-ranging, at times even radical visions of life in the year 2050 and theirimplications for the logistics industryEdition February 2012
  2. 2. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedInception• Before strategic plans are formulated, organizations should engage inalternative futures forecasting.• Strategies and plans based on a preferred future, after havingconsidered a wide range of alternatives, are more robust.• Uncertainty is “new normal” in today fast-changing times.• Scenario planning has emerged as a proven approach to navigatingthrough uncertainty.• Scenarios allow new strategies to emerge and existing ones to betested, improving the quality of strategic thinking.2
  3. 3. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedInception• The study “Logistics 2050” developed explorative scenarios of thefuture for the logistics industry with a long-term and globalperspective. The study aims to foster dialogue about the future oflogistics by describing a number of different pictures of the world in2050.• The scenarios were derived by observing the key influencing forcesaround us, such as trade and consumption patterns, technologicaldevelopments or climate change and considering how they drivebehaviors and shape values3
  4. 4. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedImaginationScenario 1 Untamed Economy – Impending CollapseCore Idea:“A world characterized by unchecked materialism and consumption”• Quantitative growth and the rejection of sustainable development• A global transportation super grid ensures rapid exchange of goodsbetween centers of consumption• Unsustainable lifestyles and uncontrolled exploitation of naturalresources• Massive climate change inches closer, natural disasters occur moreoften and disrupt supply chains frequently4
  5. 5. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedImaginationScenario 1 Untamed Economy – Impending CollapseImplications for Logistics Industry:• Massive increase in the demand for logistics and transport services• Economic expansion will multiply the market size for logistics, especiallybenefitting freight forwarding and express• Companies outsource production processes to logistics companies• Climate change impacts value creation in logistics on all levels• An increase in extreme weather events interrupts trade routes on afrequent basis and raises capital costs for logistics companies• Profit margins come under pressure due to high energy and resourceprices – due to the fact that not all costs can be passed on to customers5
  6. 6. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedImaginationScenario 2 Mega-Efficiency in MegacitiesCore Idea:“A world in which megacities are both the main drivers and beneficiaries ofa paradigm shift towards green growth”• To overcome the challenges of expanding urban structures, such as congestion andemissions, megacities have become collaboration champions, fostering open tradeand global governance models in partnership with supranational institutions• Robotics has revolutionized the world of production and services• Consumers have switched from product ownership to rent-and-use consumption• Highly efficient traffic concepts, including underground cargo transport and newsolutions for public transport, have relieved congestion6
  7. 7. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedImaginationScenario 2 Mega-Efficiency in MegacitiesImplications for Logistics Industry:• The logistics industry is entrusted to run city logistics, utilities, as well assystem services for airports, hospitals, shopping malls and construction sites• Logistics provider also manages the complex logistics planning and operationsfor advanced manufacturing tasks• Inner-city point-to-point delivery is taken over by swarms of small players• In response to “dematerialization” of consumption, logistics companies offeran array of renting and sharing services, as well as secure data transfer• Advanced logistics services not only encompass the fast and reliable deliveryof goods, but also the safe transfer of information and knowledge• In contrast to the situation in cities, the logistics situation in rural areas faroutside the urban regions is very poor; central collection stations or shops inlarger villages are the main delivery options7
  8. 8. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedImaginationScenario 3 Customized LifestylesCore Idea:“A world where individualization and personalized consumption arepervasive”• Consumers are empowered to create, design and innovate their own products• Rise in regional trade streams, with only raw materials and data still flowingglobally• Customization and regional production are complemented by decentralizedenergy systems and infrastructure• The new production technologies like 3D printers accelerate the customizationtrend• Extensive production of personalized products has increased overall energyand raw materials consumption8
  9. 9. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedImaginationScenario 3 Customized LifestylesImplications for Logistics Industry:• Reduced need for long-distance transportation of final and semi-final goods due tothe localization of value chains• Transportation of raw materials and recycled goods instead of final products• Logistics providers organize the entire physical value chains, handle the encrypteddata streams required for the transmission of construction and design blueprintsfor 3D printers, and have expanded into the online fabbing market• Growth market in information logistics and data retail• The decentralized organization of production turns strong regional logisticscapabilities and a high quality last-mile network into important success factors9
  10. 10. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedImaginationScenario 4 Paralyzing ProtectionismCore Idea:“A world when globalization is reversed and protectionist barriers areraised as triggered by economic hardship, excessive nationalism”• Resources are scarce, technological development is lagging and economies are indecline• The world economy consists of regional trading blocs separated by walls ofprotective measures; strict security regulations concerning the flow of goods andindividuals• National egoism and populist policy decisions start vicious circle of protectionism• High energy prices and dramatic scarcities lead to international conflicts overresource deposits• This direction shall be faced by balancing the environment through sharing andcollaboration among the countries, involving the exchange of raw material, endproduct, and technology10
  11. 11. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedImaginationScenario 4 Paralyzing ProtectionismImplications for Logistics Industry:• Decline in world trade and the resulting regionalization of supply chains• Governments view logistics as a strategic industry• Strong consolidation process for global players• As relations between some blocs and countries are extremely strained, logisticsproviders in bloc-free countries act as intermediaries in international tradebrokerage• The growing complexity and length of the customs clearing process increasesdemand for specialized customs brokerage and consulting services• “Devaluation of the logistics industry” results in fewer customized solutions and inservices that become increasingly commoditized11
  12. 12. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedImaginationScenario 5 Global Resilience – Local AdaptationCore Idea:“ When frequent catastrophes lead to a paradigm shift away fromefficiency maximization to vulnerability mitigation and resilience”• High level of consumption thanks to cheap, automated production• Due to accelerated climate change, frequent catastrophes disrupt supplychains and lean production structures, resulting in repeated supply failures forall kinds of goods• The new economic paradigm is distinguished by a shift away from efficiencymaximization to vulnerability mitigation and resilience• The radical move towards redundant systems of production and a change fromglobal to regionalized supply chains allows the global economy to betterweather troubling times12
  13. 13. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedImaginationScenario 5 Global Resilience – Local AdaptationImplications for Logistics Industry:• World relies on a logistics sector that ensures supply security as a top priority• Global hubs are replaced by a number of regional hubs located in safe regions• Logistics firms maintain largely dormant or redundant capacities with backupinfrastructure to guarantee reliable transport in unstable and hazardous times• Extensive backup systems are asset-heavy and conflict with the aim of carbonreduction; Sophisticated logistics planning is used to achieve high capacityutilization to counter this effect and balance energy efficiency and supply chainresilience• Owing to risk reduction efforts, instead of JIT processes, huge warehousestructures located close to the manufacturer are seen as indispensable buffers13
  14. 14. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedThe Effect of ScenariosThe implication of each of scenario in 7 key areas is shown as following14
  15. 15. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedMethodology• First, through an environmental analysis, all relevant influencing factors werecompiled.• The next step was to estimate – with the help of internal and external experts– the key factors, or main drivers, and their further development (futureprojections).• This formed the basis for the construction of the raw scenarios using software-based consistency analysis. The purpose of this was to check which projectionsof a key factor “match” which projections of the other key factors.• This resulted in five internally consistent future scenarios that are substantiallydifferent from each other.• A final impact analysis then helped to determine the strategic implications ofthe various scenarios for logistics.15
  16. 16. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedMethodology16Influencing factors Key factors Projection Raw ScenarioFinal scenarioImplicationStrategiesConclusion& PublicationDistill 14key factorsAssess futuredevelopments for eachkey factorConsistency analysis toconstruct 5 rawscenarios FinalizefivescenariosDerive strategicimplications of eachscenario for the logisticsindustryFinalize impactanalysisIntegrate thescenarios andimplications
  17. 17. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedIssue• Secure Communications– Ensuring customers’ trust, including through secure communications– Guaranteeing the identity of the sender and recipient and the inviolability ofthe contents of the message– This and other efforts the company is making to help safeguard the Internetwill likely transform the company by 2050• Sustained Prosperity in Asia– Future of the world lies in Asia– The growing depth and sophistication of Asia’s economies, coupled with therapidly increasing number of consumers in the region– The real growth opportunity is with small and medium enterprises– Local touch and serving its customers in accordance with local customs andbusiness practices is paramount to future success17
  18. 18. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedIssue• Bright Future for Africa– Now that independence is a reality, Africa’s nations are moving to the nextlevel and coming together around their common linguistic, social andeconomic bonds– Formidable challenges confront this vast continent and the tremendousopportunities are awaiting it• A Security in the 21st Century– As the forces of social and technological evolution weaken the conventionalsecurity regime, new forms of security will be called for, including privatizationof security in certain areas– New gray areas will emerge and the new providers of security as a privatizedgood will inevitably feel the need to expand their business models and findways to spark unrest and foster instability18
  19. 19. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedIssue• Renewable Energies– Both market-based instruments and regulation will be required to achieveemissions reductions– Energy markets will be increasingly influenced by renewable energies andenergy efficiency in the future– The transition to renewable energies is already taking place and technology inthese fields will continue to improve drastically19
  20. 20. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedImplications• Decarbonizing Logistics– Emissions of greenhouse gases (GHG) worldwide will have to be cut by 50% by2050, as to achieve the global temperature increase to within 2o C by 2100• Tighter regulations and stronger price mechanisms in carbon emissions– Achieving reduction in total GHG emissions will be huge challenge for thelogistics industry because demand for logistics services is expected to risesteeply over the next 40 years• EU Commission proposes a modal shift from road to rail or water for freighttraveling more than 300 kms• A move away from just-in-time manufacturing, a reversal of globalization back tolocalized sourcing, or clustering of manufacturing capacity in low carbon locationsare other prescriptive remedies under debate20
  21. 21. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedImplications• Unlocking Global Trade– Action must be taken to keep global trade on the growth path in comingdecades– To move towards a more robust global trade environment, infrastructurebottlenecks must be removed; carbon efficiency of transport improved; levelsof supply chain visibility and security raised; customs regulations simplified;and barriers to trade eliminated– Only if governments, businesses and society work together can global tradeovercome its current obstacles to growth and accelerate again, unlocking itshuge economic benefits• Customers’ Future Needs– Company should listen to customers’ needs to understand the major trendsthat play a role for customers and find solutions for their strategies goingforward21
  22. 22. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedImplications• Logistics of the Future– It is vital for logistics service providers to test alternative transport solutionsand work continuously to improve supply chain efficiency– To create an environment ripe for ideas and innovation, works closely withmany world-class companies and research institutes to develop andimplement game changing innovations.22
  23. 23. ©2013CopyrightiCognitivePte.Ltd.AllrightsreservedIntelligence• Achieving Robust Long-Term Decisions– “How to make decisions today about the freight transport sector that are robustenough over a wide range of alternative futures?”• Scenarios are considered as succinct summaries of the vulnerabilities of proposedpolicies or plans• Such scenarios could help decision makers more confidently craft policies and plans thatcan take advantage of future opportunities, avoid potential risks, and engage diversestakeholders in the planning process• Scenario planning can help leaders envision the future of logistics and connect thesevisions to the near-term choices they face today• Corporate Strategy in the Face of Volatility– In this increasingly volatile and complex business climate, the shelf life of corporatestrategies and competitive advantage is ever-diminishing– Companies must respond with added strategic agility by simplification, flexibilityand innovation– Only those companies that systematically prepare for change can ensure that thefuture not only holds challenges and risks, but also opportunities23
  24. 24. www.icognitive.com©2013CopyrightiCognitivePte.Ltd.AllrightsreservedContact:Prof. John PAUL, BEng, MSc, MBA, PhDBEM-KEDGE Business SchooliCognitive Pte Ltd13 Ann Siang Road #02-01Singapore 069693www.icognitive.com