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6 Ways 5G Could Impact the World’s Supply Chains

A new report from CSCMP and AT Kearney paints a picture of a time when 5G helps to speed up, connect, and add new levels of visibility across the world’s supply chains.

As fifth-generation cellular wireless (5G) continues to come into focus, its promise of bringing greater speed (to move more data), lower latency (to be more responsive), and the ability to connect a lot more devices at once (for sensors and smart devices), is starting to stoke conversations around how 5G will affect the world’s supply chains.

In CSCMP’s Annual State of Logistics Report, which was authored by AT Kearney, the organization examines the potential impacts of 5G on logistics, noting that it will help companies more efficiently execute operations, increase real-time decision-making, and improve service delivery.

“The 5G mobile broadband and communication standard will provide astounding improvements over 4G networks,” CSCMP points out. “It will be so fast that you can download 20 videos in the time it takes for one today; it will be so efficient with network energy that your sensors’ batteries will last 10 years instead of one; it will connect up to 1 million devices per square kilometer with 100 times more capacity than today, thus powering full-scale deployment of the Internet of Things (IoT).”

When is 5G Going to be Here?

5G network availability will increase in 2020, but it won’t be ubiquitous in the U.S. for at least another year or two, according to CNN. For example, Verizon already offers fixed and mobile 5G in several areas, while AT&T has mobile 5G for select customers in 21 cities (and wider coverage coming soon). T-Mobile provides commercial 5G service in parts of six cities, with nationwide coverage coming in December.

According to CSCMP, these and other 5G rollouts will drive these six supply chain trends: 

  1. Improved “business as usual”. Operations requiring low skill levels and limited decision- making will be early targets for 5G applications—and will achieve cost reductions within a short term. “Because they can be modularly deployed from commercial vendors with few technological complications or changes in operating models,” CSCMP points out, “applications such as video monitoring and augmented reality-based productivity tools will be among the first success stories.”  
  2. Early adopters in last-mile shipping. The growing demand for faster delivery and greater visibility into shipment tracking continues to compress margins for transportation providers and for retailers. Thus, there is a clear case for early investment in 5G-powered technology that will help meet these growing consumer expectations, according to CSCMP. 5G will enable ground-breaking methods of quick, cost-effective delivery—examples are air and land drone delivery at scale and real-time brokerage services to connect demand with supply for services or personnel. 5G also promises to enable more visibility and control over transportation systems—true real-time tracking of product movement in the journey from factory to consumer, which will lead to better customer experience.  
  3. Next frontier in productivity. 5G will be a game-changer, particularly in boosting warehouse and distribution center performance from automation. Replacing wired networks with 5G connectivity will make a major difference. “Many warehouses are piloting automation, robotics, and IoT devices that rely on wired systems that aren’t well coordinated or flexible,” CSCMP reports. “5G connectivity will also improve the performance of robots that currently follow inflexible warehouse paths, which can be made more precise with 5G.”
  4. Emerging revenue opportunities. With 5G, logistics players will invent additional sources of revenue and high-end service offerings. CSCMP says these may include real-time supply chain orchestration with complete visibility from manufacturing to store shelves, cloud-based logistics services, video analytics capturing real-time full-time video of products being shipped, and custom climate-control solutions.
  5. Vertical integration of service providers. Because new cutting-edge use cases will often extend into adjacent value chain segments, many players will seek to capture ecosystem synergies and incremental revenues by expanding their offerings beyond traditional segments, according to CSCMP. For example, a long-haul trucking company with strong data and 5G capabilities might decide to use drones or autonomous vehicles to enter the last-mile delivery segment.
  6. End-to-end view of the supply chain. The eventual spread of 5G and the anticipated appetite for adoption will lead to many ecosystem entrants with thousands of applications in this space—finally creating the opportunity for an end-to-end view of the entire supply chain. “With the large, inflexible ERP systems of the past, it would have been cost-prohibitive to instrument an entire supply chain, if such a task were even possible,” CSCMP reports. “Connecting all elements of the supply chain would be laudable but impossible. But because 5G offers the ability to more flexibly connect all elements and providers throughout the supply chain, this vision can finally become a reality.”

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