Infrastructure plays a critical role in bolstering supply chains, and it is essential investments are being made considering these trends to mitigate the impacts of vulnerabilities in trade routes.
Digitalisation
Technology has been changing logistics for many years, but more recent advancements in artificial intelligence, robotics, drones and autonomous vehicles are set to truly change the sector over the next cycle. Digitalisation is helping to drive greater efficiencies throughout the industry and businesses need to be planning for how it will impact their operations and strategies, and how they can best harness the benefits.
A significant progression in digitalisation has been brought about by AI. It enables decision-makers to decode and translate the myriad of data points collected by sensors on elements such as location, temperature, humidity and more into smart business decisions. This reveals previously untapped opportunities and we have seen reworkings of supply chains that are now more efficient and effective.
Decarbonisation
All organisations should be striving to be more carbon-conscious in their material sourcing, production, infrastructure, transportation and storage – essentially across the entire supply chain. In the EU, this will become more critical with businesses soon required to report on indirect emissions under Scope 3, alongside Scope 1 and 2, as part of the Corporate Sustainability Reporting Directive (CSRD).
Renewable power generation, such as solar panel installations at warehouses, is a basic first step that is becoming standard across the industry and other simple solutions including low-carbon fittings are also prevalent. However, for maximum impact, decarbonisation strategies need to be holistic and embedded in the design of infrastructure right at the start.
An emerging infrastructure planning framework is regionalised logistics parks, and these are an excellent driver of decarbonisation. Multiple tenants operating in one vicinity means that adjacent warehouses can share energy-efficient infrastructure and resources such as heating and cooling systems, on-site solar power generation and electric vehicle charging points.
Within the ecosystems of logistics parks, tenants will often fulfil different parts of the supply chain, which means they can work together to make it more efficient. For example, if a company’s fulfilment warehouse is located next to its transportation provider, the supply chain is shortened therefore reducing emissions. We expect to see the footprint of logistics parks rise significantly in Europe because of the carbon-conscious benefits.
Deglobalisation
Shorter, regional supply chains also support the third pillar – deglobalisation. Disruptions from the likes of geo-political events and changing consumer habits mean that it is becoming crucial for supply chains to be resilient and moving away from one global source is a key way of achieving this.
Battery manufacturing is a prime example of a sector that’s pushing the deglobalisation agenda. Increasingly, companies are looking to move away from mega-factories in Asia and spreading operations across several European markets so they are not at the mercy of disruption in one area.
Moving towards nearshoring comes with its challenges as it completely changes the flow of goods. Consequently, there is fierce competition for warehouse leases on the continent and therefore requires high levels of pre-planning to ensure suitable infrastructure is in place for the long term.
In conclusion
Supply chain resilience is firmly on the agenda for companies as they navigate the changing landscape that can be fraught with disruption to ensure fulfilment efficiency and subsequent customer satisfaction.
Placing the three Ds at the heart of supply chain strategy and infrastructure investment will ensure that there are appropriate premises available to support the strong, data-driven, carbon-conscious supply chains of the future.