Will Disruption Take a Bite Out of Logistics Jobs?

Alan Amling | 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. 

This article first appeared on Longitudes, the UPS blog devoted to the trends shaping the global economy. Subscribe here to receive new content.