The following is an article written by Alan Amling of UPS.
As advancing technology and business-model innovations gain
momentum and threaten to disrupt logistics, some are beginning to
worry about their impact on logistics-related jobs.
Take 3D printing, also known as additive manufacturing, for
example.
The concern over jobs is based in the fact that 3D printing
eliminates the need for both high-volume production facilities and
low-level assembly workers, thereby cutting out a significant
portion of the supply chain.
And what about other disruptions, such as crowdsourcing, where
employers find answers to their needs from an undefined online
community?
Crowdsourcing potentially could be used for last-mile delivery
or as the central element in an on-demand model, where
manufacturers produce only the goods that consumers say they
want.
Another job killer, right?
Positive Jobs Impact
Based on more than two decades in the logistics industry, I
take a more optimistic view.
Rather than eliminating jobs, I believe it’s far more likely
that technologies and trends like 3D printing and crowdsourcing
will have a positive jobs impact.
Containerization, a system of intermodal freight transport using
containers with standardized dimensions, is a good example of the
job-growing potential of a disrupted industry segment.
Containerization, which has made it more economical to transport
goods between countries and ushered in a wave of international
trade, is now a cornerstone of international trade and
supports thousands of new jobs.
In addition, innovation is driving two key sources of job
creation in the logistics industry: Companies that innovate
their business models and outsource logistics to focus on their
core competencies and control costs; and innovations that increase
the value of existing logistics networks, prompting them to invest
to grow.
Growth in the services sector is largely attributed to
traditional manufacturing industries spinning-off or outsourcing
service-based functions such as logistics.
According to the 2015 Third-Party Logistics Study from Supply
Chain 24/7, shippers are increasing their use of outsourced
logistics services three times faster than those that have returned
to insourcing those activities.
As industries from healthcare to aerospace transform to compete
on a global stage, tapping into a third-party provider’s “logistic
cloud” is often a key part of their strategies.
3PLs offer existing capacity, technology and people – assets
that can be flexed up and down as needed.
They also provide operational, trade management and regulatory
expertise that can keep supply chains on the cutting edge and out
of trouble.
As shippers increasingly turn to third parties, 3PLs will need
to add jobs to meet demand.
Threat or Opportunity for 3PLs?
3D printing technologies have a number of implications for the
logistics industry.
For example, if a product can be printed on demand, it doesn’t
need to be transported to a warehouse and wait to be distributed to
a retailer, where it waits to be purchased.
Further, if the product is printed near the point of
consumption, it may not need to be transported at all.
The value of inventory sitting on U.S. shelves right now is $1.8
trillion dollars, representing a huge drain on profits.
With regard to value networks, direct manufacturing actually
brings the crowdsourcing paradigm to the realm of
manufacturing.
The rise of low-cost 3D printers and the growing democratization
of this form of printing have led to the producer platform business
model, where the user is both manufacturer and consumer.
For companies like UPS, 3D printing can be viewed as both a
threat and an opportunity. Take critical spare parts as an
example.
When companies sell mission-critical technology, such as a MRI
machine or a corporate server, they also usually sell a service
agreement that guarantees technical support within a specified
timeframe in the event of a problem.
To make good on their promise, these companies need parts stored
where they can be easily accessed.
UPS supports that need with nearly 1,000 facilities around the
world known as field stocking locations.
But if parts can be printed on demand using 3D technology, is
that network and are all the employees who come with it still
needed? The implications could be game-changing for a logistics
company.
Our company has jumped preemptively into the 3D printing
phenomenon through an investment in CloudDDM, a 3D manufacturing
company that has set up shop in UPS’s supply chain campus near our
hub at the Louisville International Airport.
CloudDDM can receive a 3D print order as late as 6 p.m.,
manufacture the part and have it delivered anywhere in the U.S. by
the next morning.
By aligning its extensive logistics network with CloudDDM’s
needs, UPS has a front-row seat to the integration of 3D printing
into corporate supply chains.
But what about all those jobs at our field stocking locations?
For starters we’ve learned that creating a virtual inventory of
critical parts for out-of-production machines is an easy foray into
3D printing.
Today, when a company sunsets a piece of technology, it
typically makes a “last-time buy” of parts to cover service
agreements on those machines.
These parts are produced, transported and stored “just in
case.”
The inventory cost is significant, as is the waste. But with
CloudDDM and UPS providing a virtual inventory option, the
customer’s cost is lower on those “last-time buys.”
By providing greater value to customers, UPS plans to grow its
service parts business, which will grow jobs in both the field
stocking locations as well as our core transportation business.
Change will happen; it’s inevitable.
Companies that choose to embrace the change, leveraging
innovations to help customers solve their challenges better or less
expensively, will be the winners.
In the process, they’ll help grow jobs.
Alan Amling oversees marketing efforts for UPS's global
logistics and distribution services.
Reprinted with permission of Longitudes, the UPS
blog devoted to the trends shaping the global economy.
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